Energy investment and trade opportunities emerging in Central Asia, Northwest China

Cooperation in the business of oil and natural gas among governments of Central Asia and Northwest China could help the countries overcome obstacles to development of their vast petroleum resources. The most important obstacle facing these countries is also the one most widely discussed: limited infrastructure for transporting energy. But there are other problems holding back oil and gas development. They include poor communications infrastructure, unstable government structures, political conflict, payments difficulties, and inadequate energy policies. For countries analyzed in a recent Asian Development Bank (ADB) study of economic cooperation in the region--Uzbekistan, Kazakhstan, the Kyrgyz Republic, and the Xinjiang autonomous region of the People's Republic of China (Xinjiang PRC)--oil and gas are the most abundant and valuable natural resources. While Central Asia is poised to become a major world supplier of energy, especially oil and gas, countries in the region emphasize energy self-sufficiency at the expense of developing new trading linkages. Governments thus tend to ignore the benefits of regional cooperation and remain reluctant to commit to area-wide trade and other forms of cooperation. The paper discusses oil and gas sectors; major energy trends, including restructuring, foreign investment, and energy diversification; opportunities for cooperation; impediments to cooperation; and models of cooperation