Situated at the heart of the Xinjiang region, Karamay is rich in oil and increasingly vital to China’s energy strategy. The ‘black gold’ has fueled local development, and transformed this sleepy backwater. But ethnic splits could create conflict.
KARAMAY (Xinjiang) – Standing in front of a stopped truck in the desert, two workers in red overalls are pumping water out of an oil slick before installing a new derrick. The landscape is moonlike. Off on the horizon is the city of Karamay, a bona fide boomtown in northwestern China that has multiplied in only a few short years.
"Here everyone works either directly for oil, or in a service connected to it," one of the workers says. Eight or 10 years ago, Karamay, at the heart of the autonomous region of Xinjiang, was a faceless stop on the road to nowhere. Now, it is difficult to find a bank, hotel, or bus that doesn't bear the Petrochina logo. The company's local headquarters lies proudly at the entrance of the city, and is taller than that of the Communist Party. Between 85% and 90% of the city's economy is directly linked to black gold.
Here and there, dripping oil forms puddles on the ground. The story goes that back in the 1940s, an old Uighur man named Salimuhu discovered the mysterious "black oil" that would give this city its name as well as provide heat and light. He hastened to transport the liquid on the back of a donkey. The country's first oil well—managed directly by Beijing—was opened 10 years later.
The growth in Chinese energy consumption has accelerated the movement. On May 12 the economic planning body of the government announced the suspension of Chinese diesel exports and the "strict control" of foreign sales of other refined petroleum products. The National Commission for Development and Reform called on the three large Chinese producers (Petrochina, Sinopec, and China National Oil Offshore Company) to "ensure full operational capacity," in order to "maintain social stability and support economic growth," just as the price of a barrel of oil had reached 100 dollars.
In 1993, China became a net importer of oil, but the country continues to export refined petroleum products to Vietnam, Japan, and Singapore, as well as some Western countries.
This appetite is noticed in the "city of black oil," where oil rigs are pumping as far as the eye can see. In February, Petrochina announced an increase in production for the Karamay oil field, which in just two months has gone from 25,870 tons to 29,000 tons per day. The most important oil field in the west of the country produced nearly 11 million tons of crude oil last year. In 2011, Petrochina began the exploitation of local oil reserves of heavy crude, whose density makes transporting and refining it more expensive.
"Margin of Development"
The reserves found in Xinjiang explain, in part, Beijing's interest in the region, where ethnic tensions between the migrant Hans and Uighurs are lively and even led to bloody riots in Urumqi (the capital of Xinjiang) in July 2009. In Karamay, the equation is simpler because three-fourths of the population are migrant Hans, recruited by Petrochina. The Uighurs say they can be hired only if they can speak Mandarin Chinese. Nevertheless, the two communities rarely mix.
Professor Gou Haitao, a researcher at the Chinese University of Petroleum, explains that Xinjiang is crucial for the energy strategy of the country. A pipeline connects the region to Kazakhstan before the imported oil from Central Asia and the oil produced in Xinjiang are delivered to the coastal industrial provinces of the East. Closest to these dynamic coastal zones, the oil fields of the northeast are emptying.
"In the East, the reserves of black gold are declining after decades of exploitation. The petroleum from Xinjiang offers a very real margin of development," says M. Guo. "The high prices of imported oil are a heavy burden, and China has to change its rate of energy consumption, become more efficient, and reach an equilibrium with available oil resources."
In March, Beijing adopted a new five-year plan that will guide its strategic choices until 2016, anticipating a reduction of its historical dependence on carbon, which currently supplies two thirds of its energy needs, by relying more on renewable energy.
It also predicts new investments in oil, notably in inner Mongolia and of course here in Xinjiang.
Photo - D. Perstin