A rivalry among East Asian states is intensifying over access to Central Asian energy. China to this point has been the clear leader among East Asian states in Central Asia. But Japan, South Korea and Malaysia are stepping up efforts to attract the attention of Central Asian energy suppliers.
Tsutomu Saito, editor in chief of the Japanese newspaper Sankei Shimbun, recently told a Central Asian audience that those countries "should stop cooperating with China within the [context of the] Shanghai Cooperation Organization" and embark upon a broader program of trade with Asian states including Japan. [For background see the Eurasia Insight archive]. Saito's remarks underscored the fact that Japan is actively trying to raise its Central Asian profile.
Tokyo's efforts have already produced some results. In early May, for example, Japanese and Kazakhstani officials signed a memorandum of understanding on projects relating to the peaceful uses of atomic energy. In addition, Japan is investing in Kazakh uranium mining operations in two sectors of the Mynuduk field. Those operations are expected to commence later in June. Overall, Japan has expressed interest in completing 24 atomic-energy related projects in Kazakhstan.
The Japanese emphasis on developing cooperation in the atomic-energy sphere is seen as the fastest way for Tokyo to establish a foothold in Central Asia, which would put it in better position to compete with Russia and China in other energy-related spheres.
South Korea is also intent on becoming a major player in the Central Asian energy contest. Earlier this spring, First Vice-Foreign Minister Kwon Jong-rak unveiled a new diplomatic blueprint for Seoul, under which the country would strive to promote an "energy silk road" connecting Central and South Asia to the eastern parts of the continent.
The first major step toward fulfilling that vision came in mid-May, when a delegation led by Prime Minister Han Seung-soo departed on a 10-day tour of Kazakhstan, Uzbekistan, Turkmenistan and Azerbaijan. In a statement, Han described the Caspian Basin as "the second Middle East," adding that the visit was expected to "increase the regional awareness of South Korea and help build comprehensive and mutually beneficial cooperative ties with those countries."
One of the highlights of the trip was a $4.5 billion deal in which the South Korean manufacturing giant Samsung will build a power plant in Kazakhstan. Han also signed a pact with Uzbek Prime Minister Shavkat Mirziyoev worth an estimated $400 million, under which Tashkent will supply 2,600 tons of uranium to South Korea.
The South Korean-Uzbek economic partnership gained momentum back in February, when Uzbek leader Islam Karimov visited Seoul. That trip produced an agreement between Uzbeknefgaz (UNG), the Uzbek state-controlled energy company, and a South Korean energy consortium to develop the Surgil gas field, which holds an estimated 131 billion cubic meters of gas. The deal also includes the construction of an industrial complex to produce polyethylene and polypropylene. [For background see the Eurasia Insight archive].
In connection with Han's Central Asian tour, a South Korean consortium headed by the Korea National Oil Corp. finalized a deal to obtain a 27 percent stake in Kazakhstan's Zhambyl Oil block, located in the Caspian Sea. The deal is worth $85 million. Exploration of the block will be conducted jointly by the Korean consortium and the Kazakhstani entity KazMunaiGaz.
Outside of the energy sphere, South Korean brokerage firms are flocking to the area to take advantage of potentially lucrative investments as raw materials prices rise. Daishin Securities and Hyundai Securities are two South Korean firms that have already opened an office in Kazakhstan.
Like Japan and South Korean, Malaysia is on the outlook for energy cooperation. The state energy firm Petronas announced May 14 that it had signed a production sharing agreement (PSA) with Uzbekistan for a gas-to-liquid project in the Urga, Kuanish, and Akhchalak fields. A wholly owned subsidiary of Petronas, Petronas Carigali Overseas Sdn Bhb, will possess a full ownership stake in the development projects, which will substantially add to Petronas' existing holdings in Uzbekistan in the Aral Sea, Surkhanaasi, and Baisun investment blocks. Finally, Petronas is also undertaking joint studies with Uzbekistan's National Gas Company (UNG) to cooperate in developing downstream petrochemical projects in Uzbekistan.
All these deals -- and there are other projects involving Central Asia and East Asia in the works -- signify the growing ability of Central Asian states to attract foreign energy and raw materials investment. They also are indicative of East Asian states' growing need for energy, as well as their investment capabilities.
This kind of globalization could enable Central Asian states to escape being merely the object of international rivalry. The greater the competition for their goods, the greater their leverage will be. Thus, the likelihood of their coming under Russian or Chinese economic influence will decline correspondingly.
Stephen Blank is a professor at the US Army War College. The views expressed this article do not in any way represent the views of the US Army, Defense Department or the US Government.
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