Basic Information

Chinese Name: 中亚天然气管道 A、B、C 线
Name: Central Asia–China Gas Pipeline (Line A, Line B, and Line C)
Location: Turkmenistan, Uzbekistan, Kazakhstan, and China
Type of Project: Energy
Project Developer(s):  Trans Asia Gas Pipeline Company (later merged into Sino-Pipeline International Company Limited, subsidiary of China National Petroleum Corporation)
Main Contractor(s): China Petroleum Pipeline Engineering Co., Ltd. (subsidiary of China National Petroleum Corporation); China Petroleum Engineering and Construction Corporation (subsidiary of China National Petroleum Corporation)
Known Financiers: China Development Bank
Cost: 14-20 billion USD
Project Status: Operational (Line A has been operational since 2009; Line B since 2010; and Line C since 2014)

Project Outline

Since the mid-2000s, when China’s gas consumption exceeded the country’s production capacity, Beijing has been actively searching for potential sources of gas supply. Central Asian gas was seen as a good option to mitigate the risks related to dependence from liquefied natural gas from the Middle East. Geopolitical considerations aside, the Central Asia–China Gas Pipeline network has not only enhanced China’s ability to meet its growing energy needs, but also reduced the country’s excessive reliance on environmentally damaging coal. Since the beginning of its operations in 2009 and as of the end of 2020, the network has delivered a total of 336 billion cubic metres of gas to China.

The Soviet-era gas pipeline infrastructure made Central Asian gas exporters entirely dependent on Russia as the sole buyer and transit country. With the Russian authorities using their position of power as leverage against the region’s gas producers by applying a discriminatory pricing policy and then reexporting Central Asian gas for twice or three times as much, Central Asian countries were counting on the Central Asia–China Gas Pipeline to reduce their dependence on their northern neighbour and improve their bargaining power vis-à-vis potential customers.

The three lines of the Central Asia–China Gas Pipeline start at the city of Gedaim, on the border between Turkmenistan and Uzbekistan, and run through central Uzbekistan and southern Kazakhstan before reaching Horgos in China’s Xinjiang Uygur Autonomous Region. The 1,830-kilometre-long pipelines then connect to China’s Second West-East Gas Pipeline, further carrying Central Asian gas for another 8,704 km inside the country. Construction of Line A and Line B commenced in July 2008, with the former beginning to operate in December 2009 and the latter in October 2010. The construction of Line C was completed in 2014. The first two lines are designed to transport 30 billion cubic metres per year, while Line C has the capacity to deliver 25 billion cubic metres per year.

In 2007, the national gas company Turkmengaz signed a production sharing agreement with China National Petroleum Corporation (CNPC) to develop the right bank Amudarya gas field. CNPC also agreed to purchase up to 30 billion cubic metresof gas per year for 30 years. The terms of the agreement granted CNPC exclusive rights to explore and extract onshore gas fields in Turkmenistan.A subsequent framework agreement signed in 2008 increased the volume to 40 billion cubic metres per year to be reached by 2015. During the Shanghai Cooperation Organisation’s Summit in Beijing in June 2012, the presidents of the two countries, Hu Jintao and Gurbanguly Berdymukhamedov, agreed to increase the annual volume of gas exports up to 65 billion cubic metres. Lines A and B are exclusively dedicated to importing gas from Turkmenistan. Line C is supplied with 10, 10, and 5 billion cubic metres of natural gasper year respectively from Turkmenistan, Uzbekistan, and Kazakhstan.

To construct the three lines, the developer Trans Asia Gas Pipeline Company formed 50/50 joint ventures with Kazakhstan’s KazTransGas and Uzbekistan’s Uzbekneftegaz (both state-owned enterprises), with each company responsible for the financing, construction, and operation of the pipelines within its country. The cost for Lines A and B was originally estimated at 7.3 billion USD in total, and 2.2 billion USD for Line C. Media reports from 2009 estimated that the total cost of the projects could reach 20 billion USD. But according to a 2017 interview with a Chinese official with the China-Kazakhstan joint venture company, the total investment for all three lines amounted to over 14 billion USD. Other sources have given even higher estimates. China’s CNPC covered half of the cost as its own share, while a China Development Bank-led syndicate provided loans to Uzbekistan and Kazakhstan for the remaining 50% of the share, which would be recouped through gas sales.

Project Impacts

CNPC officials portray the Central Asia–China Gas Pipeline as a symbol of solidarity and mutually beneficial cooperation. China counts on Central Asian gas to enhance its energy security, while revenues from exporting resources are expected to boost socioeconomic development in the region. Some issues, however, complicate the picture.

• Limited energy export capacity: All countries along the pipeline are grappling with problems related to their limited export capacity.

1. Turkmenistan: With less than 40 billion cubic metres of gas export capacity,Turkmenistan is trying to keep up with Chinese gas demand by reducing exports in all other directions. This is making Turkmenistan highly dependent on one single gas market, a situation that the country was striving to avoid in the first place.
2. Uzbekistan: Natural resources, particularly gas, account for over 50% of Uzbek export to China. However, outdated and inefficient natural gas transportation systems, growing internal energy demand, and the fact that no major natural gas reserves have been developed in recent years have limited the country’s capacity to increase its gas export. Furthermore, Uzbekistan cannot considerably increase gas export to China without compromising domestic gas consumption. An attempt to keep up with the growing Chinese demand will constrain Uzbekistan’s ability to meet its own energy needs. For instance, due to domestic gas shortages in the winter of 2020, Uzbek authorities were forced to cut gas exports to China. In early 2020, Prime Minister Abdulla Aripov said that by 2025 Uzbekistan would stop exporting natural gas and start processing it domestically, mainly due to a shortage of gas in the domestic market and growing discontent among the population.
3. Kazakhstan: The Beineu–Bozoy–Shymkent gas pipeline, designed to supply 10 billion cubic metresof Kazakh gas to the southern regions of the country, is also expected to fill the Central Asia–China Gas Pipeline with additional 5 billion cubic metres of gas. Chinese interests in moving gas out of the region may compromise Kazakhstan’s capability to supply a sufficient amount of gas to its southern regions.

• No longer profitable gas trading arrangements: Construction of pipeline networks to move energy resources in a landlocked Central Asia requires significant upfront investments. Central Asian gas producers were not capable of covering the construction cost (50% of each pipeline), and China stepped in to offer financial support in the form of loans. Central Asian exporters agreed to return the loans in resources. With the falling price of gas amid the crash of the global oil prices, the gas trading arrangements are no longer as profitable as the Central Asian authorities expected them to be when they signed the contracts. For instance, in 2017 Turkmenistan was selling gas to China at the price of 185 USD per thousand cubic metres, compared to the 340 USD of 2012. Other sources suggest that Turkmen gas has been sold at prices as low as 60 USD per thousand cubic meters. Not only is the country now paying off its debt to China by selling gas at depressed prices, but the recent changes in the market have also significantly impaired the ability of the Turkmen authorities to generate revenues.
• Socioeconomic impacts: The loss of revenue due to falling gas prices is having an impact on society at large in the Central Asian countries involved in the pipeline. This is particularly evident in Turkmenistan, where revenues from gas export have fallen from an average of 43% of the GDP from 2000 to 2009 to 18% in the following decade. This has directly affected the economic development and social welfare of the country.
• Asymmetrical dependence: The terms of the gas trading arrangements were supposed to be attractive for the Central Asian exporters as long as the volume of export via the Central Asia–China Gas Pipeline constituted only a fraction of the total export. The downside effect of the Central Asian producers’ energy export diversification policies is that they have basically swapped dependence on Russia into excessive reliance on China, as almost all Turkmen and Uzbek gas export is now heading in the Chinese direction. Such dependence on a single customer puts regional suppliers in a very vulnerable position both economically and politically.
• No effective conflict-settlement mechanism: It is unclear whether the terms of the arrangements between China and Central Asian exporters have ‘take-or-pay’ clauses, that is an agreement that protects the seller in case the buyer refuses to buy or take delivery of the items, for instance by requiring the buyer to accept the delivery of the goods at a specified date or otherwise pay a fine. Yet, even if such clauses exist, given the relative geopolitical and economic weakness of the Central Asian states, they have little leverage to ensure Beijing fulfils its obligations. Should disputes arise, there is no effective conflict-settlement mechanism, either bilateral or within multilateral institutions such as the Shanghai Cooperation Organisation.

In-depth Sources

• Aminjonov, Farkhod. 2017. ‘Re-thinking Central Asian Energy Security: Pitfalls of Export Diversification Policies.’ Central Asia Institute for Strategic Studies. Link
• Aminjonov, Farkhod. 2018. ‘Central Asian Gas Exports Dependency: Swapping Russian Patronage for Chinese.’ The RUSI Journal 163, no. 2 : 66–77.
• Aminjonov, Farkhod, Alina Abylkasymova, Anna Aimée, Bahtiyor Eshchanov, Daniyar Moldokanov, Indra Overland, and Roman Vakulchuk. 2019. ‘BRI in Central Asia: Energy Connectivity Projects’. Central Asia Regional Data Review, no. 22: 1–14.
• Hess, Maximilian. 2020. ‘Central Asia’s Force Majeure Fears: Impact of COVID-19 Outbreak on China’s Natural Gas Supply Demands.’ Foreign Policy Research Institute. Link.