If you believe Chinese oil and gas officials, ethnic clashes in the province of Xinjiang—where 150 people are reported to have been killed—have not affected any operations at oil fields or pipelines.
Sinopec said its facilities are far from the riots, and the situation in the westernmost area of Xinjiang appeared to have stabilized last week. Sinopec owns Tahe field in Xinjiang, which is one of its largest fields in China.
PetroChina said its facilities were not affected either. It operates two large oil and gas fields in Xinjiang, one in the Tarim basin in southern Xinjiang and another in Kelamayi, northwest of Urumqi. PetroChina also owns the 6 million tonne/year Dushanzi refinery.
No one denies such statements as much of the rioting seems to have taken place in and around Urumqi, the provincial capital. Moreover, the riots may well not result in wider attacks on state energy infrastructure unless they become more organized.
Restless Xinjiang
Still, as one observer noted, the Chinese government cannot afford a restless Xinjiang because the resource-rich region makes a significant contribution to energy security, sitting atop 20% of China’s oil reserves and about the same percentage of the country’s annual coal output.
No less important, Xinjiang’s long borders with oil-producing Central Asian countries make it strategically important to Beijing, a point underscored last week by an announcement that the extension of the oil pipeline from Xinjiang to central Kazakhstan and on to the Caspian Sea has passed initial tests.
The Kenkiyak-Kumkol pipeline will give China access to more of its Central Asian neighbor’s oil resources in its western regions, which begin at the Kenkiyak field managed by the China National Petroleum Corp.
With an eye to shepherding even more oil and gas its way, China has been engaging its Central Asian neighbors through the Shanghai Cooperation Organization, giving Beijing an opportunity to influence the region’s cash-poor but energy-rich member countries.
‘Loan-for-oil’
Earlier this year, for example, China and Kazakhstan agreed to a $10 billion “loan-for-oil” deal that allows CNPC to buy stakes in the company MangistauMunaigas—a strategic purchase as the Kazakh firm owns the fields near the extended oil pipeline.
Underlining their determination to acquire even more oil from their Central Asian neighbor, Chinese oil companies also have been buying shares in a host of Kazakh oil producers, including PetroKazakhstan and CNPC-AktobeMunaiGas, operator of Kenkiyak and Zhanazhol fields.
“The implementation of this project will have tremendous influence on the whole oil and gas industry, providing new opportunities for oil exports,” according to an official of KazStroyService, the Kazakh firm handling the pipeline extension.
But the success of China’s project clearly depends on Xinjiang, according to Zhang Dajun, a Beijing-based political commentator.
“In the context of the world’s third-largest economy’s strategy to secure its energy supply, Xinjiang has become more economically crucial than ever before,” said Zhang.