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Beijing-Islamabad-Moscow forming energy triangle

Editor: Li Kun 丨CCTV.com

08-24-2015 15:21 BJT

By Tom McGregor, freelancer based in Beijing

The global energy landscape is undergoing a dramatic shift due to plunging oil and gas prices. A buyer’s market has ensued for economies, such as China and Pakistan, which rely on energy imports. Meanwhile, Russian oil and gas companies have to adapt to changing market conditions or risk failure.

Hence, the timing appears preferable for Beijing-Islamabad-Moscow to push forward on an energy triangle. Due to Western-imposed sanctions against Moscow, Russian oil and gas suppliers must contend with lower international demand.

Accordingly, such circumstances have inspired Moscow to pave smoother economic and diplomatic relations with Beijing and Islamabad. Last year, China and Russia signed a pipeline deal that would provide a significant flow of Russian liquefied natural gas (LNG) for 30 years to the world’s second largest economy.

Pakistan is capturing benefits since China and Russia have pledged to construct a vast oil and gas pipeline network for the country.

Energy bridge: China-Pakistan Economic Corridor

Islamabad can act as the bridge-builder for Beijing and Moscow. Pakistani Prime Minister Muhammed Nawaz Sharif has championed the $45bn Chi-Pak Economic Corridor (CPEC) to encourage more Chinese investments in the country.

CPEC offers preferential treatment for Chinese companies to set up manufacturing bases and build major infrastructure projects, such as roads, railways and airports that could make the economic zone a regional energy transit hub.

Yet, Pakistan cities have endured constant power outages, although the nation has enjoyed remarkable economic development in recent years. Higher economic growth rates mean soaring demand for electricity. However, Beijing is helping Islamabad open up new nuclear power plants.

Business Recorder also reports that earlier this month Pakistani and Chinese companies have inked 20 MOUs (memorandums of understanding) valued at over $2bn when high-level officials from both countries met at the Karaway Government Municipal Auditorium.

Pivot to pipelines

Location! Location! Location, seems to be the strongest benefit Pakistan can offer to Beijing and Moscow. Pakistan shares a border with China and stands just south of Euro-Asian countries that are closely allied with Russia. So it makes good sense to have more oil and gas pipelines in the region.

Rostekh Corporation, a Russian state-owned enterprise has agreed to a partnership deal with Inter State Gas Systems (ISGS) to build a $2.5bn LNG pipeline connecting Karachi in southern Pakistan with northeast Lahore.

According to Russia & India Report, the project is expected to have five compressor stations with the contract stipulating that, “technology, materials, equipment and products should originate from Russia as much as possible.”

Added guarantees are: Rostekh Corp. holds the rights to designated Pakistani land for constructing the pipeline, pipe-laying, research and other works. The Russian company will own these rights for 30 years until handing them over to Pakistan-based ISGS.

Pakistan to join SCO ranks

For additional proof that Islamabad is cementing a stronger alliance with Beijing and Moscow, Pakistan has accepted permanent membership status from the Shanghai Cooperation Organization, starting in 2016. Current members are: China, Russia, Kazakhstan, Tajikistan and Uzbekistan.

In addition, the Chi-Pak Economic Corridor would likely spark a stronger Russian presence in the zone, even though the two nations have succumbed to icy relations during the Cold War.

The development of relations with Pakistan has lagged behind for a long time, because of Russia’s traditional orientation towards India,” Vladimir Moskalenko , a researcher at the RAS Institute of Oriental Studies, told Russia & India Report.

He added, “Now, Moscow must make haste not to lose the Pakistani market to China, which is becoming Islamabad’s main economic partner.”

China-Pakistan-Russia triangulate for greater cooperation

Economic slowdowns appear on the horizon for both China and Russia. Therefore the two nations should enhance their energy cooperation deals while securing more support from Islamabad as they work together to form an energy superpower triangle.


( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )



Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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