China, Kazakh pipeline expansion on Hu visit agenda

BEIJING, June 4 Fri Jun 4, 2010 3:34pm IST

BEIJING, June 4 (Reuters) - Chinese president Hu Jintao will sign an agreement to increase crude pipeline capacity from Central Asia during a trip to Uzbekistan and Kazakhstan next week, part of China's efforts to diversify oil sources.

Hu will also attend the annual meeting of the Shanghai Cooperation Organisation (SCO), a regional security grouping that is led by China and Russia. Regional economic development will also be on the agenda there.

Iranian president Mahmoud Ahmadinejad will attend the meeting, Chinese assistant foreign minister Cheng Guoping said, but added that there are currently no plans for a Sino-Iranian bilateral meeting.

During the Kazakh leg of his visit, Hu will sign a deal to start feasibility studies for the phase-two expansion of the landmark Kazakh-China crude pipeline, said a PetroChina official based in Almaty.

Plans are to double the capacity of the line to 400,000 barrels per day by 2013, but the study will consider whether to revamp the existing 620 km (385 miles) pipeline from Kumkol to Atasu, or to build a new line.

Phase I of the expansion, a 794 km line connecting Kenkiyak and Kumkol, was completed about a year ago, allowing China access to the vast oil deposits in western Kazakhstan.

The Sino-Kazakh line accounts for roughly 4 percent of China's total crude imports, which hit a record high of more than 5 million bpd in April.

It is now pumping at its full capacity of 200,000 bpd, said the official.

Chinese planners worry that the country's increasing dependence on crude oil imports makes China strategically vulnerable over the long shipping routes, and therefore have been pursuing overland pipeline projects.

But crude imports from Central Asia carry their own risk, since they pass through Xinjiang. That frontier region is home to the Uighurs, a central Asian people who chafe at religious and linguistic restrictions of Chinese rule and at economic policies that favour Chinese migrants and corporations.

Hu will seek cooperation from Kazakhstan in combating "East Turkestan" separatism, Cheng said.

China blames separatists for unrest in the region, including bloody riots in Urumqi last July that grew out of protests over the killing of Uighur migrant workers in south China. Hu's visit to Uzbekistan will also be marked by deals to expand infrastructure and agricultural cooperation, Cheng said.

The SCO membership comprises China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Iran, Pakistan, Mongolia and India are observers, while Belarus and Sri Lanka have the lesser status of dialogue partners.

The bloc's activities have focused on military cooperation, intelligence-sharing and the fight against terrorism and drugs.

The interim foreign minister of Kyrgyzstan will attend the meeting, Cheng said.

China has taken a cautious view on a bloody April revolt in Kyrgyzstan. Cheng said only that China "hopes and believes" the interim government will take steps towards establishing a legally based government.

(Editing by Paul Tait)

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