Summary of Key Points
This article focuses on the increased attention to cross-border oil pipelines following the crisis in the Strait of Hormuz, analyzing the operational status of three major Chinese cross-border oil pipelines: the China-Russia pipeline, the China-Kazakhstan pipeline, and the China-Myanmar pipeline. It particularly discusses why the China-Kazakhstan pipeline has not achieved its designed capacity and reveals the underlying logic behind China's oil trade with countries in the Commonwealth of Independent States (CIS), taking into account geopolitical factors, economic interests, and cooperation strategies.
I. The Three Cross-Border Oil Pipelines: Actual Operations and Their Role
China currently has three cross-border oil pipelines, but their actual functions and utilization rates vary significantly:
- China-Myanmar Oil and Gas Pipeline: This is not considered a "pure land-based pipeline"; crude oil is still transported by sea, with the ships unloading at Kyaukpyu Port in Myanmar, thus avoiding the Strait of Malacca and effectively "shortening" the maritime route.
- China-Russia Pipeline: It has become a key conduit since the Russia-Ukraine war. This pipeline is a branch of Russia's ESPO (Eastern Siberian Pipeline System), which was originally designed to supply Japan, South Korea, and China. After the war, Japan and South Korea reduced their purchases, so now most of Russia's oil exports to China (100 million tons in 2025) go through this pipeline, with 30 million tons transported by land to Daqing and 70 million tons by sea from Russian Pacific ports. The Western Siberian oilfields (such as the秋明 field) are far from Ukraine, making this route safer than the Black Sea/Baltic Sea routes.
- China-Kazakhstan Pipeline: This pipeline is significantly underutilized; although it was designed to transport 20 million tons per year, in 2025 only less than 40 million tons were transported, which is even less than half of the capacity in 2019.
II. Four Reasons for the Underutilization of the China-Kazakhstan Pipeline
The underutilization of this pipeline is due to a combination of market, cost, and geopolitical factors:
1. European Market Lockout: Kazakhstan's crude oil is mainly sold to Europe (the EU's third-largest supplier), and European capital has been involved in both the mining and pipeline construction. In contrast, there are no established natural gas pipelines between Central Asia and Europe, allowing China to obtain 80% of Central Asian natural gas exports (a new area of cooperation). However, oil is a market already dominated by Europe.
2. Processing Capacity Constraints: The terminal of the China-Kazakhstan pipeline is in Dushanzi, Xinjiang, where local refineries primarily use domestic oil; there is a shortage of raw materials, so the pipeline's capacity is not fully utilized.
3. Price Differences: The price at which Kazakhstan sells oil to Europe is close to the international benchmark (Brent price), while China can obtain cheaper Russian oil, making it less attractive for Kazakhstan to sell more to China.
4. Kazakhstan's Dilemma in Seeking Multiple Partners: Kazakhstan does not want to rely too heavily on either China or the West. For example, the Kazakhstani president attended the G20 summit hosted by the United States, indicating a desire to maintain balance between China and the U.S. to reduce market risks.
III. The Challenges of Transporting Oil from CIS Countries
The CIS (including Russia and Kazakhstan) is the world's third-largest oil-producing region, but its influence is less significant than that of the Middle East due to transportation limitations:
- High Geopolitical Risks: Most oil production is located near the Caspian Sea or in Russia, making it dependent on pipelines that can be affected by geopolitical events. For example, Kazakhstan's CPC pipeline passes through the Russian Black Sea port of Novorossiysk, which is now under threat from Ukrainian drones.
- Limited Capacity: Pipeline capacity is fixed and cannot be increased easily, unlike maritime transport, which has greater flexibility (e.g., the ESPO pipeline has a maximum capacity of 100 million tons per year).
IV. China's Cooperation with Central Asia
China's approach to cooperation with Central Asia is clear: it aims to create new opportunities rather than compete for existing markets dominated by Europe:
- Natural Gas: China has built pipelines to access Central Asian natural gas, securing a significant share of the supply.
- Critical Minerals: China participates in the development and transportation of minerals such as copper and uranium from Central Asia.
- Cross-Border Railways: China is investing in railway infrastructure to facilitate trade.
Oil is not the main focus of cooperation, as it is already a market dominated by Europe. Instead, China focuses on areas where both parties can benefit together.
Conclusion
The crisis in the Strait of Hormuz has drawn attention to cross-border pipelines, but each of China's three pipelines serves different purposes. The China-Myanmar pipeline relies on sea transport with a shorter route, the China-Russia pipeline provides stable supply, while the China-Kazakhstan pipeline has not reached its potential due to historical, cost, and geopolitical factors. China's cooperation with Central Asia focuses on creating new opportunities for mutual benefit, avoiding competition for existing markets and ensuring long-term stability.