YODOGAWA PETERSON

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AN OPPORTUNITY FOR PROGRESS: CHINA,
CENTRAL ASIA, AND THE ENERGY CHARTER TREATY
NORIKO YODOGAWA* AND ALEXANDER M. PETERSON**
I.    INTRODUCTION ................................................................................. 112 
II.    CHINA’S FORAY INTO RUSSIA’S SPHERE OF INFLUENCE TO
OBTAIN HYDROCARBON RESOURCES ........................................... 114 
A.  Central Asia’s Hydrocarbon Resources.................................. 114 
B.  Russia’s Domination of Central Asian Hydrocarbon
Resources ................................................................................... 116 
C.  Chinese Competition................................................................. 120 
1.  The Central-Asia China Gas Pipeline; Turkmenistani
Hydrocarbons ...................................................................... 120 
2.  Kazakhstani Hydrocarbons ................................................ 121 
3.  Uzbekistani Hydrocarbons ................................................. 123 
4.  Pressure on Russia............................................................... 123 
D.  Sino-Russian Cooperation in Relation to Central Asian
Energy Resources is Unlikely .................................................. 125 
III.    AN INTRODUCTION TO THE ECT .................................................... 127 
A.  Energy Charter Transit Protocol ............................................. 130 
B.  PEEREA .................................................................................... 131 
C.  Trade Amendment .................................................................... 131 
IV.    APPLICATION OF THE ECT IN CENTRAL ASIA IF CHINA
BECAME A CONTRACTING PARTY.................................................. 132 
A.  Why China’s Joining the ECT Would Benefit Central
Asian Contracting Parties ......................................................... 132 
1.  Trade ..................................................................................... 132 
2.  Transit ................................................................................... 132 
3.  Investment ............................................................................ 133 

* Legal Counsel, Energy Charter Secretariat. L.L.M. in International Legal Studies, New
York University School of Law. L.L.B., The University of Tokyo. The author has co-written this
Article in her personal capacity. This Article does not necessarily reflect the views of the Energy
Charter Secretariat or those of the Energy Charter Treaty Contracting Parties, Signatories, or
Observers. The author has made no attempt in this Article to define the legal status of the
Russian Federation in relation to the Energy Charter Treaty.
** Associate, Squire Sanders (US) LLP, Tokyo, Japan. L.L.M. in International and
Comparative Law / J.D., Cornell Law School. The author has co-written this Article in his
personal capacity. This Article does not necessarily reflect the views of Squire Sanders (US)
LLP.

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[Vol. 8

B.  Why China’s Joining the ECT Would Benefit China ............ 138 
1.  ECT Investment Provisions ............................................... 138 
a.  Protection Against Appropriation.............................. 138 
b.  Fair and Equitable Treatment..................................... 138 
c.  Prohibition of Unreasonable or Discriminatory
Treatment ...................................................................... 139 
d.  Most Favored Nation and National Treatment......... 139 
2.  Counterbalancing Russia’s Soft Power in Central Asia .. 140 
C.  Costs to China in Relation to China’s Acceding to the
ECT ............................................................................................. 140 
1.  Dispute Settlement .............................................................. 140 
2.  Transit ................................................................................... 141 
3.  Energy Efficiency ................................................................ 141 
V.    THE BENEFITS OBTAINED BY CHINA BY JOINING THE ECT
OUTWEIGH THE COSTS..................................................................... 142 

I.

INTRODUCTION

On December 14, 2009, the leaders of the People’s Republic of China
(China), Turkmenistan, the Republic of Uzbekistan (Uzbekistan), and
the Republic of Kazakhstan (Kazakhstan) inaugurated the Central AsiaChina Gas Pipeline (CACGP),1 a 1,833 kilometer natural gas pipeline
that snakes from Turkmenistan through Uzbekistan and Kazakhstan to
China and connects with the Second West-East Gas Pipeline, which,
stretching across China, is the longest gas pipeline in the world.2 On
November 24, 2011, Turkmenistani gas traveling through the CACGP
started to supply Shenzhen, China, making a 6,811 kilometer journey.3
CACGP supply is expected to reach 65 billion cubic meters per year
(BCM/y) by December 2015.4 The pipeline is Kazakhstan’s first gas
export route that does not traverse the Russian Federation (Russia), and
was inaugurated following a diplomatic row between Russia and
Turkmenistan regarding hydrocarbon resources.5
The new pipeline presents an opportunity for China to counterbalance
Russia’s soft power in Central Asia by acceding to the Energy Charter
1. Central Asia-China Gas Pipeline, CHINA NAT’L PETROL. CORP., http://www.cnpc.com.cn/
en/aboutcnpc/ourbusinesses/naturalgaspipelines/Central_Asia-China_Gas_Pipeline_2.htm?CO
LLCC=849962296& (last visited Nov. 4, 2012).
2. Id.
3. Natural Gas Arrives at Guangdong from Turkmenistan, CHINA NATI’L PETROL.
CORP. (Nov. 25, 2011), http://www.cnpc.com.cn/en/press/newsreleases/Natural_gas_arrives_at_
Guangdong_from_Turkmenistan.htm.
4. Id.
5. Andrew E. Kramer, New Gas Pipeline from Central Asia Feeds China, N.Y. TIMES (Dec.
14, 2009), http://www.nytimes.com/2009/12/15/world/asia/15pipeline.html.

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Treaty (ECT).6 The ECT and the Energy Charter Protocol on Energy
Efficiency and Related Environmental Aspects (PEEREA) were signed
in December 1994 and entered into legal force in April 1998.7 The aim of
the ECT and the PEEREA is to strengthen the rule of law on energy
issues by creating a set of rules to be observed by all participating parties,
thereby mitigating risks associated with energy-related investment and
trade, specifically regarding the cross-border transportation of energy
resources.8
Russia signed the ECT in 1994 and, without ratifying it, applied the
ECT provisionally until 2009, when it announced that it would no longer
apply the treaty.9 In 2001, China became an observer of the Energy
Charter Conference, the decision-making body under the ECT, but has
yet to become a Contracting Party10 of the ECT. Kazakhstan,
Turkmenistan, Uzbekistan, and other Central Asian states are
Contracting Parties.11 China acceding to the ECT after Russia has left by
terminating its provisional application would mean a step towards
becoming a meaningful partner in the development of Central Asia as
opposed to a mere financier, which would help to counterbalance
Russia’s soft power in Central Asia. There are a few costs that China
would face by acceding to the treaty, including being subject to dispute
settlement by a few Central Asian states that are not already World
Trade Organization (WTO) members, enabling investors to use
international arbitration, and needing to adhere to certain environmental
rules and regulations. These insignificant costs, however, would be more
than outweighed by China being able to secure its investments and build
a bridge for further progress with its Central Asian partners.
This Article argues that acceding to the ECT is in China’s best interest
because the costs to China in acceding to the ECT would be outweighed
by the benefits. China would secure profitable, lasting relationships with
hydrocarbon-producing states in Central Asia through membership in the
ECT. Membership would demonstrate China’s commitment to engage as
6. Energy Charter Secretariat, 1994 Treaty, ENERGY CHARTER, http://www.encharter.org/
index.php?id=28 (last visited Nov. 4, 2012).
7. Id.
8. Id.
9. Energy Charter Secretariat, Members & ObserversRussia, ENERGY CHARTER,
http://www.encharter.org/index.php?id=414&L=0#c1338 (last visited Nov. 4, 2012); Russia PM
Putin Rejects International Energy Charter, REUTERS (Aug. 6, 2009), http://in.reuters.com/
article/2009/08/06/russia-energy-charter-idINL639469220090806.
10. See Energy Charter Secretariat, Members & Observers, ENERGY CHARTER,
http://www.encharter.org/index.php?id=61 (last visited Nov. 4, 2012) (listing China as an
observer to the Energy Charter Conference); Energy Charter Treaty art. 1, Dec. 17, 1994, 2080
U.N.T.S. 100 [hereinafter ECT] (a “Contracting Party” is a state or a regional economic
integration organization that has agreed to be bound by the ECT and for which the ECT is in
force).
11. See Energy Charter Secretariat, Members & Observers, supra note 10 (listing
Kazakhstan, Turkmenistan, Uzbekistan, and other Central Asian states as Contracting Parties).

Michael J. while not major hydrocarbon producers yet.com/about/production/projects/deposits/tajikistan/ (last visited Aug. 8 a partner for development with Central Asian states. 11. 2012). BP Statistical Review of World Energy June 2012.inogate. 2011). rather than be a mere exploiter of hydrocarbon resources. See. 13. e. Uzbekistan. Tajikistan Strategic Partnership..php?option=com_inogate&view=countrysector&id=54&lang=en (last visited Nov.15 12. available at http://www. Kyrgyzstan.. Cain. TURKM. June 19. R. CENT. His successor.universalnewswires.com/about/production/ projects/deposits/kyrgyzstan/ (last visited Nov. http://www. as well as the likely costs and benefits for China if it joins the ECT. Saparmurat Niyazov.universalnewswires.com/centralasia/ viewstory.usembassy.g.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publicatio ns/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energ y_full_report_2012. OF TURKISH & EURASIAN AFF. ADMIN.org/index. See. Finally. BP at 6. (Jan. until 2006. Central Asia’s Hydrocarbon Resources Two countries in Central Asia appear to have substantial hydrocarbon resources: Kazakhstan with crude oil and Turkmenistan12 with natural gas.thewashingtonreview. id. AND ENERGY LAW [Vol. ENERGY INFO.eia. at 20. Part IV moves on to explore the likely benefits that Central Asian Contracting Parties would obtain. 2012). BP Says. who isolated the country while pursuing a personality cult. Gurbanguly Berdymukhamedov. http://www.html. GAZPROM. http://turkmenistan. this Article concludes by finding that China should join the ECT because the benefits of accession outweigh the related costs. 19.G. Turkmenistan was ruled by a long-standing dictator.cfm?fips=UZ (last updated Jan. 2012). e. CHINA’S FORAY INTO RUSSIA’S SPHERE OF INFLUENCE TO OBTAIN HYDROCARBON RESOURCES A.gov/ countries/cab. http://www.gov/ics. But see Tethys Discovers ‘Supergiant’ Hydrocarbon Reserves in Tajikistan. In addition. See Kyrgyzstan Energy Sector Review. CENT. 4. GAS. Takijistan’s Energy Woes: Resource Barriers in Fragile States. 20 (June 2012). 15.YODOGAWA PETERSON 114 3/12/2013 3:18 PM TEXAS JOURNAL OF OIL.html. ASIA NEWSWIRE.com/centralasia/viewstory.bp. But see Uzbek Fuel Reserves Lower than Government Estimates. such resources generally are being used to support its domestic demand rather than being exported. are critical for the transportation of hydrocarbon resources in the region because such hydrocarbon resources are landlocked.pdf. 14. 16. WASH. China would benefit from the mutually beneficial provisions of the ECT. 4. II. .org/articles/tajikistans-energy-woes-resource-barriers-in-fragile -states. 2012. ASHGABAT.14 Kyrgyzstan and Tajikistan. has allowed a limited opening of Turkmenistan’s energy sector.aspx?id=12251. http://www. Part III proceeds to provide a brief overview of the ECT and the application of the ECT in Central Asia. Turkmenistan generally remains closed to outside investors.gazprom. U. (Feb.. http://www. However. 2012).S. GAZPROM.aspx?id=12447. ASIA NEWSWIRE (July 19.S. Part II of the Article reviews the current status of hydrocarbon resource transport agreements in Central Asia. THE INOGATEPROGRAMME. http://www. EMBASSY OF THE U. however. http://www. See 2012 Investment Climate Statement (Turkmenistan). 2012). 15. 2012).gazprom.g.13 Uzbekistan is also estimated to have considerable gas resources..

a larger increment in oil demand than any other country. See id. 2011). See Tongia & Arunachalam.. 24. supra note 18. in LNG form using specialized tankers.S. receiving and storage terminals.24 China’s gas demand increased by 22% year‐on‐year in the first half of 2010. Best Time to Invest in Building Pipelines May Be the Next Few Years. 4. supra note 16. which can be shipped by tankers. id. however.26 16. 2009).20 LNG transport is more capital intensive than pipeline transport. pipelines are a less expensive option to transport gas than LNG shipments. 26.19 The other method of transporting gas.S.org/ publications/freepublications/publication/overseas_china-1.16 Shipping natural gas through pipelines requires high-pressure pipelines with compressor stations to repressurize gas that loses pressure due to friction. KENNEDY.pdf. U. 23. KENNEDY. at 1057.g.21 Accordingly. Id. usually entails less direct commercial and political interaction between buyer and seller states than gas. See Tongia & Arunachalam.iea. http://www.YODOGAWA PETERSON No. http://www. 25. 22. PIPELINE & GAS JOURNAL (Feb. transportation in tankers. 20.000 kilometers. 1054 (1999). at 11. which generally requires an agreement between two or more states.. 18 ECON. 18.com/best-time-invest-building-pipelines-might-be-next-few-years. Natural Gas Imports by South Asia: Pipelines or Pipedreams. and regasification facilities to reconstitute the LNG into usable gas.. e. at 12. . its net total oil imports reached 5. JOHN L. 2 (Sept. Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts. at 1060.22 China became the second largest net oil importer in the world behind the United States in 2009.gov/countries/analysisbriefs/China/china.18 Investment in pipeline infrastructure is economically beneficial only if there is reasonable certainty regarding supply and purchase. 2012). 17. 19. Rahul Tongia & V.17 Pipelines generally operate most economically at volumes of about 20 BCM/y or greater. Little. See. INT’L ENERGY AGENCY 11 (Feb. at relatively short distances of approximately 3.23 and it seems that China will need to import 79% of the oil it consumes by 2030. at 1054.g. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 115 Oil. Country Analysis BriefChina. which is transported mainly over ground through dedicated pipelines or over sea in specialized tankers in liquefied natural gas (LNG) form. 21. ENERGY INFO. See. e. ADMIN. Arunachalam.25 Even exploiting domestic resources. at 24. Hogfoss & Catherine D.pdf. Id.g. supra note 18. Julie Jiang & Jonathan Sinton. including unconventional gas.at 72. WKLY. and is expected to reach up to 230 billion cubic meters (BCM) by 2015 and 340 BCM by 2020. Robert E. is advantageous in that LNG may be shipped to any state and does not require the long-term state-to-state commitments that the pipeline method requires. because shipment in LNG form requires liquefaction plants to turn the gas into LNG. See. much of China will need substantial gas imports to operate in the near future. e. OIL AND GAS PIPELINE FUNDAMENTALS 24 (1993).5 million barrels per day in 2011.eia. available at http://pipelineandgasjournal. & POL.

HONGYI LAI. bowed to Russia as a way to increase prosperity for themselves and their nations. 28. 34. 35.33 Central Asian states emerged from the Soviet Union bound by inefficient arrangements that benefited Russia: rail. ASIAN ENERGY SECURITY: THE MARITIME DIMENSION (2009).. Central Asia’s Pipelines: Field of Dreams and Reality.29 Prior to and during the Soviet Union. mutually beneficial relationship with the Central Asian states to secure its future energy needs. Chow & Leigh E.iea. 8 China likely will seek to import the oil and gas that it needs from Central Asia. e. 32. Central Asian oil and gas exports are expected to more than double by 2036. who each had varying individual ethnic. all Central Asian states were tied vertically to Russia and did not create strong bonds horizontally with each other. See. THE NEW CENTRAL ASIA: THE CREATION OF NATIONS (2000). and air transport were linked with Russia and nowhere else.pdf. id. 2004) [hereinafter THE TRANSFORMATION OF CENTRAL ASIA]. 30. See generally OLIVER ROY. Allworth ed. http://www. 33. 2011). Therefore. id. CENTRAL ASIA: ONE HUNDRED THIRTY YEARS OF RUSSIAN DOMINANCE. at 31. 1994) (1967) [hereinafter RUSSIAN DOMINANCE]. available at http://csis.g. Chow & Hendrix. Russia’s Domination of Central Asian Hydrocarbon Resources Russian culture. river. supra note 32. See Caspian Oil and Gas Exports are Poised for Take-Off.g. including all pipelines.g.27 Especially in light of the various territorial and sea lane disputes in which China is involved. refineries in eastern Kazakhstan processed West Siberian crude oil then shipped the oil to Samara. especially in the realm of transportation infrastructure.28 China should seek to import its needed hydrocarbon resources through secure pipelines rather than solely through oil or LNG shipments. See THE TRANSFORMATION OF CENTRAL ASIA: STATES AND SOCIETIES FROM SOVIET RULE TO INDEPENDENCE 247–48 (Pauline Jones Luong ed.. and values are instilled in Central Asia. Russia united the Central Asian states under Russian-imposed ideals. See. Press.34 At the time of the collapse of the Soviet Union. and all oil and gas infrastructure.31 In effect. See.35 Russia used this position of 27. Hendrix. Chow & Hendrix. supra note 32. Duke Univ.30 Top political leaders. 3d ed. China should seek to create a lasting. with Kazakhstan mostly exporting oil and Turkmenistan mostly exporting gas. language... in 23 NAT’L BUREAU OF ASIAN RES. A HISTORICAL OVERVIEW (Edward A. at 31.. and business people from all Central Asian states. academics. linguistic. GAS. For example.org/files/publication/1009_EChow_LHendrix_ CentralAsia. e. NBR SPECIAL REP. the only outlet for hydrocarbon resources from Central Asia was via Russian territory and through state-controlled Russian pipelines. 29. Russia. 29. 31. e. Edward C. supra note 32. ran to Russia. See THE TRANSFORMATION OF CENTRAL ASIA. and cultural backgrounds. AND ENERGY LAW 3/12/2013 3:18 PM [Vol.YODOGAWA PETERSON 116 TEXAS JOURNAL OF OIL. 15. See. B. INT’L ENERGY AGENCY (Mar..32 The collapse of the Soviet Union highlighted the lack of horizontal connections among the Central Asian states. and states such as Azerbaijan received the oil from Russia . 31 (2010).org/index_info.asp?id=1881.

See Barylski. available at http://www. supra note 32. Chevron opted to transport oil from the Tengiz oil fields in Kazakhstan. supra note 37. at 32. Chow & Hendrix. supra note 36.tengizchevroil. PETERSEN & BARYSCH. supra note 32. Today Kazakhstan. CHINA AND THE GEOPOLITICS OF ENERGY IN CENTRAL ASIA 27 (2011). Russia. J. and the Caspian Energy Hub.YODOGAWA PETERSON No. at 31. http://www. See MARTHA BRILL OLCOTT. at 31. 36.42 Consequently. 41. “The company made offers to Russian oil pipeline monopoly Transneft to invest in upgrading the capacity of that line and in debottlenecking the Tikhoretsk to Novorossiysk segment of the major Russian export line to the Black Sea.businessweek. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 117 power to continue to dominate Central Asian hydrocarbon resources. 39. BP and its partners in the Azerbaijan International Oil Consortium (AIOC) wanted to take advantage of the existing Soviet-era pipeline by reversing the direction of flow so that early oil production from offshore Caspian fields could be shipped via Black Sea by connecting with the same line to Novorossiysk. supra note 32. Russia does not follow international practice by continuing to use the Soviet practice of trading oil by weight instead of volume.org. 1992). certain Central Asian statesincluding Kazakhstan and the Republic of Azerbaijan (Azerbaijan)attempted to open their hydrocarbon resources to Western oil companies such as Chevron Corporation. at 28.com/stories/1992-05-24/today-kazakhstan-tomorrow-russia. 37.cer.40 The Western oil companies saw using the old Soviet pipeline system as the most efficient way to transport low volumes of oil in order to defer capital expenditures on new transportation infrastructure. 38. 16. see Robert V. continuing to travel to Samara. From Tengiz. developing the Tengiz and Korolev oil fields in Kazakhstan. Russia sought to use its stranglehold on the transit of such hydrocarbon resources to continue to exercise political and economic influence38 over Central Asia. The West. Chevron and BP had to pursue more costly and inefficient options.asp#1991 (last visited Aug. which does not adjust for market values of different crude oils based on quality differences. supra note 41. Russia. 217 (1995). For example. Similarly. Chow & Hendrix. 2012). while BP chose to transport oil from offshore Azeri-ChiraqGuneshlioil fields in Azerbaijan. supra note 32.pdf. BUSINESSWEEK (May 24. as had been arranged during Soviet times. Kazakhstan.com/en/about/tco_history. so as to defer costly construction of a new line for initial Tengiz production.39 In 1991. developing the Azeri-Chiraq-Guneshli oil and associated gas fields in Azerbaijan.36 Russia has not and currently does not allow non-Russian companies to use its pipelines for transit: “every molecule of oil and gas that enters Russian territory becomes Russian. TENGIZCHEVROIL. supra note 32. based its initial plans on production of hydrocarbon resources in Tengiz. 43. supra note 41. at 32. at 32.43 Chevron eventually bypassed Russia’s rather than from Kazakhstan itself.41 However. CENTRAL ASIA’S SECOND CHANCE 193 (2005). Russia thwarted the Western oil companies’ attempts. which was the first major entrant in Central Asia.uk/sites/ default/files/publications/attachments/pdf/2011/rp_010-4118. 49 MIDDLE E. Chow & Hendrix. Barylski.”37 As oil and gas are the biggest sources of income for Central Asian states bordering the Caspian Sea. See Barylski. and BP. Tomorrow Russia?. The History of the Tengiz Field. RUSSIA. 42. Id. Chow & Hendrix. Chevron Corporation shipped crude oil by rail and barge to the Black Sea via Georgia and Ukraine. 40. See OLCOTT.” a Russian city that sits on the Black Sea. Chevron Corporation. Chow & Hendrix. “BP and most of its AIOC partners invested over $500 million in constructing a . ALEXANDROS PETERSEN & KATINKA BARYSCH. available at http://www.

See Kazakhstan Fact Sheet.worldbank. supra note 37.pdf. supra note 32. at 29. Gelb. & SILK ROAD STUDIES PROGRAM (S. 8 continued obstruction by implementing the Caspian Pipeline Consortium (CPC). http://www. CHEVRON 2 (Apr. 2012). JOINT UNITED NATIONS DEVELOPMENT PROGRAMME / WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME. 2005). specifically 100 BCM/y from 2010 onward.. 2005).50 Open Joint Stock Company Gazprom (Gazprom). Russia prevented the Central Asian states from gaining independent access to pipeline from Azerbaijan to a new marine terminal in Supsa.pdf. PETERSEN & BARYSCH.com/atimes/Central_Asia/GA13Ag01. 2006). Russia dominated the purchase of Turkmenistan’s vast gas reserves. available at http://www. see THE BAKU-TBILISI-CEYHAN PIPELINE: OIL WINDOW TO THE WEST.policyarchive. at 32. at CRS–2 (Feb. ASIA TIMES ONLINE (Jan.com/f/posts/51/402390/annual-report-2011-eng.YODOGAWA PETERSON 118 TEXAS JOURNAL OF OIL. Steven Woehrel & Bernard A. buying almost all of Turkmenistan’s general output of around 50 to 60 BCM/y. 2012). which started operations in 2006. 12. at 32.44 which began operations in December 2002. CROSS-BORDER OIL AND GAS PIPELINES: PROBLEMS AND PROSPECTS 102 (2003). and its own energy transportation infrastructure. ASIA-CAUCASUS INST.com/ documents/pdf/kazakhstanfactsheet. 53. Russia’s Cutoff of Natural Gas to Ukraine: Context and Implications. http://www. RES. for many years.chevron. supra note 32.S. GAZPROM 135 (May 22.53 By buying Central Asian gas and shipping it through its own pipelines. AND ENERGY LAW 3/12/2013 3:18 PM [Vol.52 generated significant profits by buying Turkmenistani gas cheaply to supply Ukraine while selling Russia’s own gas to Western European customers at three times the sale price to Ukraine.pdf. CONG. created in 1989 by the Soviet Union Ministry of Gas Industry51 and currently controlled by the Russian government. GAZPROM. http://www. 50. http://www. the approximate value to Turkmenistan was $200 billion and the approximate value for Russia was $300 billion. Western companies with capital and know-how. Turkmenistan claimed that over the twenty-five-year period. CTR. PETERSEN & BARYSCH. at 51. 51. Sergei Blagov. See Chow & Hendrix.49 In April 2003. Reaching New Horizons: 2011 Annual Report. 49.pdf.atimes.gazprom. Russia Gas Dreams. 13.46 Russia’s refusal to work with new potential partners by opting to keep its stranglehold on the oil resources of Central Asia cost Russia the opportunity to become a cooperative member of a three-way synergy between Central Asian states with abundant oil reserves. Id.html.” Chow & Hendrix. U. 52. Cornell eds. supra note 37. Jim Nichol. About Gazprom 1989-1995. 48. Chow & Hendrix.47 Russia’s monopoly of Central Asian gas resources also slowed its own growth and dampened the Central Asian states’ opportunities.45 and BP led its partners in the creation of the Baku-Tbilisi-Ceyhan Pipeline (BTC). See PETERSEN & BARYSCH. 45. 46. 44. or a total of 2 trillion cubic meters by 2028. Georgia. 15. supra note 32. See id. available at http://siteresources. supra note 37. 2012). Russia and Turkmenistan signed an agreement stipulating that Turkmenistan would supply Russia with gas until 2028.gazprom.org/ INTOGMC/Resources/crossborderoilandgaspipelines.org/handle/ 10207/bitstreams/4324. . 47. GAS.48 For example. SERV. Fredrick Starr & Svante E.com/about/history/ chronicle/1989-1995/ (last visited Feb.

supra note 37. 60. http://en. European Energy Security: Reducing Volatility of Ukraine-Russia Natural Gas Prices. PETERSEN & BARYSCH. supra note 32.56 Russia’s greedy guarding of Central Asian hydrocarbon resources has stalled development of critical production and distribution infrastructure in Central Asia. 59. 58. supra note 57. (Apr.59 The project still seems to be at a standstill. 2009). 2009). Turkmenistan. at 35. 2009). PETERSEN & BARYSCH.oxfordenergy. GAZPROM.pdf. Moscow and Ashgabat Fail to Agree over the Caspian Coastal Pipeline. Pre-Caspian Gas Pipeline.pdf. Chow & Hendrix. and Kazakhstan signed an agreement in 2007 stating that such operations would take place by 2012. BBC NEWS (Jan. and a dispute between Russia and Turkmenistan ensued. available at http://www. however.uk/2/hi/europe/7240462. GOV’T OF THE REPUBLIC OF KAZ. at 35.gazprom.58 Another example of failure to develop needed infrastructure is the Pre-Caspian gas pipeline. NAT’L DEF. and Gazprom and the Kazakhstani and Turkmenistani oil and gas companies signed an agreement in 2008 setting forth basic principles for cooperation regarding construction of the pipeline. Russia and Turkmenistan Agree to Renovate the Caspian Gas Pipeline.54 It was not until 2008.YODOGAWA PETERSON No.government. 6 (Feb. Simon Pirani.60 Russia’s tight grip on Central Asia creates an opportunity for 54. CENT. available at http://www.mil/dtic/tr/fulltext/u2/ a545411. that Russia offered to pay more for the gas that it bought from Central Asia. 12. at 35.pdf. which is controlled by Gazprom and delivers almost all of the gas from Turkmenistan to Russia via Uzbekistan and Kazakhstan.org/new/docs/Silkroadpapers/2007/0709China-Central_Asia..57 The Soviet-era Central Asia-Center gas pipeline. 2011). 55. 8.silkroadstudies. has failed to receive necessary updating and repair. ASIA-CAUCASUS INST. Q&A: Russia-Ukraine Gas Row. at CRS–2.dtic. Cutler.com/about/production/projects/pipelines/pg/ (last visited July 17.bbc. Cutler. Chow & Hendrix. and Kazakhstan signed an agreement in 2007 promising that the Pre-Caspian gas pipeline would be developed. Andres & Michael Kofman. http://www. Russia announced that it would move to “European market prices” in its gas sales and started raising prices for countries such as Ukraine shortly thereafter. Sébastien Peyrouse. U. 56. available at http://www.kz/site/news/ 052007/16 (last visited Dec. supra note 37.org/?q=node/5080. See Robert M. 2007). even though Russia. Nichol. supra note 53. which was proposed to be built on the eastern side of the Caspian. CENT. The Russo-Ukrainian Gas Dispute of January 2009: A Comprehensive Assessment. ASIA-CAUCASUS INST. Chow & Hendrix. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 119 lucrative western markets. supra note 32. 2012). OXFORD INST.stm. 2011). Richard B. 68–69 (Sept. STRATEGIC F. Woehrel & Gelb. 10 (Feb.org/wpcms/wp-content/uploads/2010/11/NG27-TheRusso UkrainianGasDisputeofJanuary2009AComprehensiveAssessment-JonathanSternSimonPiraniK atjaYafimava-2009. European gas demand and prices plummeted with the global economic recession. Turkmenistan.55 After the price for Turkmenistani gas was raised in 2009. supra note 32. Kazakhstan. Jonathan Stern & Katja Yafimava.co. In 2005. 20. at 29. . http://news. even though the leaders of Russia. FOR ENERGY STUD. and only then due to the increased likelihood of competition. http://cacianalyst. at 29. Economic Aspects of the ChineseCentral Asia Rapprochement. 57.

cnpc.66 Line A started operation in December 2009. http://www. Chinese companies did not attempt to acquire substantial rights until 1997. 14. Specifically.upstreamonline. 2008). 12.62 1.com/live/article139613. See.65 The international. The Central-Asia China Gas Pipeline.ece. CNPC and the Kazakhstan state-owned oil and gas company signed an agreement regarding the construction and operation of the KazakhstanChina Gas Pipeline. Flow of Natural Gas from Central Asia. 602 (2012). Sheng Zhang. and entered into a gas sales and purchase agreement that envisaged annual deliveries of 30 BCM of gas from Turkmenistan to China through the CACGP until 2037.com/live/ article152400. http://www.. UPSTREAM (Aug.115 kilometers in Kazakhstan. AND TRADE 597. 64.. CHINA NAT’L PETROL. 30. China and Turkmenistan signed a production sharing agreement for certain gas fields in Turkmenistan. Id. CORP.63 That same month. when China National Petroleum Corporation (CNPC) acquired certain rights to oil and gas fields in Kazakhstan. http://www. Note that the Kazakhstan-China Gas Pipeline is not the same as the KazakhstanChina Oil Pipeline. OF WORLD INV. GAS. 62. and 1. http://www. 66.atimes. 2012). China acquired rights to the Aktobe field in Kazakhstan. China stated that it aimed to take advantage of resources abroad in order to strengthen the Chinese economy.g. Claudia Perez Rivas. 2013). CNPC and the Uzbek state-owned oil and gas company signed an agreement for the construction and operation of the Uzbek section of the CACGP. Turkmen Break Ground on China Pipe. .com/atimes/Central_Asia/NH16Ag01. Uzbek Energy Company Uzbekneftegas has Formed a Joint Venture with China National Petroleum Corporation (CNPC) to Build a Pipeline to Bring Gas from Turkmenistan to China.. 13 J.833 kilometers of two parallel lines (Line A and Line B) with 188 kilometers in Turkmenistan. Id. 530 kilometers in Uzbekistan. 63. e.html. Central Asian section of the CACGP is 1. 8 China to engage Central Asia as a new partner for meaningful development.YODOGAWA PETERSON 120 3/12/2013 3:18 PM TEXAS JOURNAL OF OIL. Vladimir Socor. BO KONG. C. Jonathan Davis. Turkmenistani Hydrocarbons In July 2007. in November 2007.upstreamonline.64 Later that year.cn/en/press/Features/Flow_of_natural_gas_from_Central_Asia_.htm (last visited Jan. 2007). CHINA’S INTERNATIONAL PETROLEUM POLICY 175 (2010). AND ENERGY LAW [Vol. ASIA TIMES ONLINE (Aug. Chinese Competition Whereas Western companies moved to obtain rights to hydrocarbon resources in Central Asia immediately after the collapse of the Soviet Union in the early 1990s. 65.ece. 16. in the Tenth Five-Year plan for National Economy and Social Development. Id.com.61 By 2001. Kazakhstan Expands Gas Transit Pipeline Capacities and Own Exports to China. while Line B 61. which included the Zhanazhol oil and gas condensate field and the Kenyiak oil field. The Energy Charter Treaty and China: Member or Bystander?. UPSTREAM (Apr.

68 In December 2011. CORP. PIPELINES INTERNATIONAL (Mar. 71.htm (last visited Dec. 16.811-kilometer journey from Turkmenistan. http://www. CHINA NAT’L PETROL.com.67 As of June 2012.com. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 121 became operational in 2010. OIL & GAS TECH. http://www. Charlotte Owen.YODOGAWA PETERSON No.cnpc. supra note 66. traveling from Turkmenistan through Uzbekistan and Kazakhstan to China. which China and Kazakhstan agreed to construct in June 67. (Dec. CORP. Id. 2012). begins operation.com. Hong Kong Branch of Second West-East Gas Pipeline Starts Construction.4 BCM of natural gas through the CACGP.cn/en/press/ newsreleases/Joint_stock_and_cooperation_framework_agreement_signed_on_the_Third_West -East_Gas_Pipeline.cnpc.htm. Joint Stock and Cooperation Framework Agreement Signed on the Third West-East Gas Pipeline. a commencement ceremony was held for Line C of the CACGP.oilandgastechnology. CHINA NAT’L PETROL. and the total transportation capacity for CACGP by the end of 2012 should be 30 BCM/y. 2011). (June 6. CHINA NAT’L PETROL. 69.70 the CACGP connects to the longest gas pipeline in the world. CHINA NAT’L PETROL. . China’s domestic Second West-East Pipeline.75 2. 2012). (Mar. the world’s longest. http://www. (May 31.72 Construction expanding the Second West-East Pipeline will soon bring natural gas to Hong Kong as well.73 CNPC has also committed to constructing a Third West-East Gas Pipeline.cn/en/press/newsreleases/Hong_Kong_ branch_of_Second_West-East_Gas_Pipeline_starts_construction.com/news/construction_on_third_ line_begins_for_central_asia-china_gas_pipeline/066998/. 68. the 1. Construction on Third Line Begins For Central Asia-China Gas Pipeline.74 This commitment was made in May 2012 after a visit from Turkmenistani President Berdymukhamedov to China in November 2011 led to an agreement to increase the supply of Turkmenistani gas to China via the CACGP by 25 BCM/y to a total of 65 BCM/y. Trunk line of Second West-East Gas Pipeline.cn/en/press/newsreleases/ Line_Cs_Uzbekistan_section_of_Central_Asia-China_Gas_Pipeline_starts_construction_. 73. Natural Gas Arrives at Guangdong from Turkmenistan.475-kilometer BeyneuShymkent line. 2011). 2012). CORP.cnpc. and will increase the supply of natural gas the CACGP brings into China to 55 BCM/y by December 2015.htm. CORP. 7. 70. 74. 2012). Natural Gas Arrives at Guangdong from Turkmenistan. http://www.htm. China had imported around 18.com.69 Once it reaches western China. 75. http://pipelinesinternational. Socor. supra note 66. supra note 3.000 kilometer pipeline network with a capacity of 30 BCM/y to deliver gas received via the CACGP throughout China. 30 BCM Passes Through Turkmenistan-China Pipeline. Socor. http://www. Kazakhstani Hydrocarbons In addition to the three CACGP lines. Line C’s Uzbekistan Section of Central Asia-China Gas Pipeline Starts Construction.cn/en/press/Features/Trunk_Line_of_the_ Second_West-East_Gas_Pipeline_begins_operation. which will provide an additional domestic 5.net/pipelines/30bcm-passes-through-turkmenistan-china-pipeline. 5.71 Gas from the CACGP is supplied to Shenzhen and Guangzhou in southern China after making a 6. 72. supra note 3.cnpc. which will follow the same path as Lines A and B..

com. AND ENERGY LAW 3/12/2013 3:18 PM [Vol. CHINA NAT’L PETROL. 106 (2008). Id. 81. Kenkiyak Oversalt. Id. after acquiring a 60. 89. Michael Clarke. (July 14. and obtaining a further 25. 78. 82. PETROMIN PIPELINER. http://www.3% stake in AktobeMunaiGasthe fourth-largest oil company in Kazakhstanin June 1997. available at http://www. 79. 6 CHINA AND EURASIA F.cnpc.–Mar. 83. 8 2010. http://www. and in accordance with an agreement reached with the Kazakhstan Ministry of Energy and Mineral Resources. Id. CORP.82 Additionally.79 AktobeMunaiGas has production licenses for the Zhanazhol. 86. China’s Integration of Xinjiang with Central Asia: Securing a “Silk Road” to Great Power Status?.80 After taking over AktobeMunaiGas.76 The pipeline will go into operation in two phases and eventually will provide 10 BCM/y to 15 BCM/y of gas when both phases are completed by 2013 and 2015. Jan. at 6.78 For example. CNPC acquired PetroKazakhstan in October 2005. 80. See China’s Pipeline Gas Imports: Current Situation and Outlook to 2025. stretching 962 kilometers from Atasu in Kazakhstan to Xinjiang in China. retaining the remaining 67% stake.42% of the company’s shares. Id. and in reconstructing an existing oil and gas processing plant as well as building a new one. transferred 33% of its shares in PetroKazakhstan to KazMunaiGazthe Kazakhstan state-owned oil and gas companyin July 2006.85 In July 2009.5 billion in building production. Id.safan. CNPC invested over $1. Q. The PetroKazakhstan assets included full or part ownership of eleven oilfields and licenses for five exploration blocks covered by thirteen exploration and development contracts.84 In December 2005. CNPC is extremely active in the Kazakhstani energy sector. and transportation facilities. GAS.86 The output of the pipeline is set 76. 85.com/mag/ ppl0311/r06. obtained high-yield oil flows from various exploration projects in Kazakhstan in 2007. 8. supra note 66. 2013). CNPC in Kazakhstan.com. and Kenkiyak Subsalt oil fields and a contract for an exploration block in Kazakhstan.77 Aside from the CACGP. reaching the Caspian Sea..YODOGAWA PETERSON 122 TEXAS JOURNAL OF OIL.81 These substantial efforts and investments have been met with promising results. the first stage of the Kazakhstan-China Oil Pipeline was completed.cnpc.pm-pipeliner. storage.83 CNPC’s acquisition of PetroKazakhstan allowed CNPC to obtain ownership of numerous oilfields and licenses in relation to several exploration blocks. will also transit gas to China. 2009). Socor. CNPC and AktobeMunaiGas Corp. Kenkiyak-Kumkol Section of Kazakhstan-China Oil Pipeline Becomes Operational. respectively.pdf.cn/en/press/newsreleases/ 2009/Kenkiyak_Kumkol_section_of_Kazakhstan%EF%BC%8DChina_Oil_Pipeline_becomes_ .12% in May 2003. 84. China and Kazakhstan completed a 792-kilometer extension of the oil pipeline to the far west of Kazakhstan. CHINA NAT’L PETROL. 2011. Id.cn/en/ cnpcworldwide/kazakhstan/ (last visited Jan. 77. 3. CNPC now holds 85. CORP.

which provided for exploration and development of oil and gas deposits in 12. 2010. 2010).92 The CACGP was the first. at 40. 2009). and so far is the only.89 This was in addition to the oil and gas exploration agreement that CNPC signed with Uzbekistan National Oil/Gas Group Corporation in June 2006.CORP.88 CNPC signed a production-sharing contract in August 2006. supra note 37. See PETERSEN & BARYSCH. at 42.htm.com/article/2010/06/04/china-kazakhstan-pipelineidINTOE65307A20100604. 2012). China announced it was making a $10 operational.000 square kilometers of the Uzbekistan area of the Aral Sea with a consortium comprising of CNPC. 89. CNPC in Uzbekistan. 2013).oilandgaseurasia. China.YODOGAWA PETERSON No. at 42. 90. at 1. available at http://www. PETERSEN & BARYSCH.kazakhembus. 16. 87. Kazakhstan Sign $10 Billion Loan-for-Oil Agreements. Id. 14. at 43. http://www. China. PETERSEN & BARYSCH. 91. 93. 94.cnpc.ispionline. Lucy Hornby & Chen Aizhu.91 The CACGP struck an economic blow to Russia.87 3.000 square kilometers in Uzbekistan. 95. China loaned $10 billion to Kazakhstan in April 2009 in return for certain ownership rights of a large Kazakhstani oil producer.90 4. Pressure on Russia China used its economic strength to extend a bridge into Central Asia.. and South Korea’s Korea National Oil Corporation.96 A few months later. Kazakhstan Agree on Sino-Kazakh Oil Pipeline Extension to Caspian Sea.95 Specifically. See id.bloomberg. see also Fabio Indeo.pdf. CHINA NAT’L PETROL. http://www. Malaysia’s Petronas. 2009). 88. REUTERS (June 4. http://www. Eugene Tang. Id. Russia and China in Central Asia: Growing Geopolitical Competition.. Kazakh Pipeline Expansion on Hu Visit Agenda.com. See id. Uzbekistan’s Uzbekneftegaz. 19. China Trumps Russia in Turkmen Gas Buy.. which covered five land exploration blocks covering a total area of 34. 7.com/apps/news?pid=newsarchive&sid= aRkoxDWplmJY. supra note 37. EMBASSY OF THE REPUBLIC OF KAZ. Russia’s Lukoil. 92. Uzbekistani Hydrocarbons CNPC currently operates two different oil and gas cooperation projects in Uzbekistan.reuters. BLOOMBERG (Apr. Oct. 96. major international gas pipeline to break Russia’s stranglehold on Central Asian gas transport. ISTITUTO PER GLI STUDI DI POLITICA INTERNAZIONALE. .93 It was also China’s first major gas import pipeline.cn/en/ cnpcworldwide/Uzbekistan/ (last visited Jan. 3.com/tech_trend/china-trumps-russia-turkmen-gas-buy. China. OIL & GAS EURASIA (Dec. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 123 to double by 2013.94 China offered Central Asian states loans for economic stimulus and energy investments during the recent global financial crisis to further expand its influence in Central Asia.it/it/documents/PB_199_2010. http://in. http://www. supra note 37.com/archived_article/chinakazakhstan-agree-on-sino-kazakh-oil-pipeline-extension-to-caspian-sea (last visited Apr.

TIMES (London) (Dec.98 China further committed $4 billion to Turkmenistan to assist in the development of Turkmenistan’s largest gas field. Gazprom Pays More for Turkmen Gas – Business – International Herald Tribune.000 cubic meters. http://www. 100.) (Dec.2700002. 13. Russia signed an agreement with Turkmenistan to purchase 50 BCM of gas during 2009101 and also promised to start paying more for Turkmenistani gas in early 2009.nytimes.htm.xinhuanet.YODOGAWA PETERSON 124 TEXAS JOURNAL OF OIL.aspx?id=3923. composed of China.100 The CACGP and loans from China highlighted Russia’s comparative weakness as an economic partner. http://www. ECONOMIST (Jan.com/intl/cms/s/0/20dfe82e-ef69-11de-86c4-00144feab49a. Tajikistan and Uzbekistan. Id. 8 billion loan to the Shanghai Cooperation Organization (SCO)97 to assist members during the economic crisis.ft. GAS. 2006). China’s Approaches to the Institutionalization of Regional Multilateralism. Kyrgyzstan. 15. 102. 27. granting Turkmenistan a $4 billion loan to develop the South 97. Sergei Blagov. 99.org/departments/insight/ articles/eav011410. “In 2006. China.” China Trumps Russia in Turkmen Gas Buy. http://www. CENT.C. 7:00 PM). in June 2010. Turkmenistan sold most of its gas to Russia at not much more than $50 per 1. Isabel Gorst. http://www. 2009). XINHUA (June 16.99 followed by another $4. Backgrounder: Shanghai Cooperation Organization. Deidre Tynan.1 billion loan to Turkmenistan in April 2011. 2011). Gazprom ceased importing gas from Turkmenistan entirely. 101.106 Turkmenistan initially insisted that the blast was caused by Gazprom’s violation of the gas supply agreement between Russia and Turkmenistanand indicated that it planned to seek financial compensationbut later dropped the allegations.org/programs/edm/ single/?tx_ttnews%5Btt_news%5D=35839&tx_ttnews%5BbackPid%5D=485&no_cache=1. Turkmenistan lost income of between $7 billion and $10 billion. http://www.shtml. 107. See generally Chien-Peng Chung. SUMMIT 2012 (Jun.com/node/15393705. FIN. 17 J.org/english/201006/07/c_13337029. there was an explosion on Turkmenistan’s gas pipeline supplying Russia.com/centralasia/viewstory. 2010. China Lends Turkmenistan $4. supra note 94.103 While Russia was pressuring Turkmenistan in April 2009 to reduce the amount of gas Turkmenistan provided. 105. In early 2009 it sold its exports at the European price of over $300 per 1.com/2006/09/05/business/worldbusiness/05ihtgazprom. supra note 104. OF CONTEMP. China in Central Asia: Riches in the Near Abroad. AND ENERGY LAW 3/12/2013 3:18 PM [Vol. 103. A non-governmental organization that seeks to address political and economic issues in Central Asia. N.104 In response. the South Yolotan gas field.1B in Return for Future Gas.ORG (Jan. Russia Welcomes End to Turkmen Gas Dispute. Russia no longer needed the Turkmenistani gas.html. 2009).107 China exploited the dispute. http://www.html. 2010). China to Provide 10-Billion-Dollar Loan to SCO Members. EURASIANET. and Russia. 104. 5. supra note 101. Turkmenistan: Gas Flows Again to Russia.102 As European gas demand fell in 2009 with the economic recession. To compete with China.jamestown. 2009. Kazakhstan. 2010). EURASIA DAILY MONITOR (D. Russia Struggles to Revive Energy Ties With Turkmenistan. While Discontent Simmers. however. Russia. 8:28 PM). approximately a quarter of its annual gross domestic product. Blagov. 23.eurasianet.universalnewswires.economist. TIMES (Sept. 7.scosummit2012.000 cubic meters. SHANGHAI COOPERATION ORG. http://news. Gorst. .com/english/2009-06/16/content_11552439. 106.105 Due to the interruption of gas supply.htm.Y. CHINA 747 (2008). http://www. ASIA NEWSWIRE (Apr. 28. 98.

110. REUTERS (Feb. and would be a step towards China becoming a leader in Central Asia. Cf.brookings. BROOKINGS. supra note 99.stroytransgaz. Russia’s lack of cooperation with China in the energy sector is evidenced by the glaring lack of Sino-Russian cross-border energy infrastructure.. Blank.edu/~/media/Research/Files/Papers/2010/8/china%20russia%20energy %20downs%20hill/08_china_russia_energy_downs_hill. 111.111 Russia’s cooperation is likely a symptom of its vying to stay connected with Central Asian hydrocarbon production and to keep China from replacing Russia in its position as financier and overseer.. See. China in Central Asia: Riches in the Near Abroad. http://www.pdf (describing China’s growing dominance in the energy transit sector and possible responses by Russia). See Chow & Hendrix. at 38 (arguing that “[t]he Russian attitude seems to be.com/article/2008/02/19/turkmenistan-chinaidINL194546920080219).com/press-center/smi/itar-tass/2009_10_23. e. Henry J. supra note 29.YODOGAWA PETERSON No.113 For example. 11 ASIA-PACIFIC REV. an Irkutsk to China gas pipeline that was proposed in Soviet times did not begin to be realized until BP bought half of a Russian oil company in 2003 and the merged company started to take 108. China does not enjoy the linguistic and cultural dominance in the region that Russia maintains. 23. Russia. Stephen J.. 36 (2004). 12 BROWN J. built the Turkmenistani stretch of the CACGP. Kenny. supra note 101. a Gazprom subsidiary. Two Steps Back? The Realities of a Rising China and Implications for Russia’s Energy Ambitions. and the Central Asian States. 53 (2005).reuters. RUSSIAN DOMINANCE. even though Gazprom was interested in cooperating with Turkmenistan to build a pipeline from South Yolotan to link into a new pipeline from Central Asia to Europe. . it is better for the gas to go east than west. Russia is more likely to compete than cooperate with China.g. 2009). 112. See. 109. China’s becoming a Contracting Party of the ECT would signal to Central Asian states that China is willing to undertake binding policy decisions in the interest of being a mutual partner in relation to energy development rather than a mere exploiter.g. The Eurasian Energy Triangle: China. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 125 Yolotan gas field in Turkmenistan.. if Central Asian gas is to be exported by a route other than Russia. Russian Company Wins Turkmenistan Pipeline Tender. e. 2008).108 Despite China’s economic inroads into Central Asia based on its willingness to invest money. Aug. PJSC STROYTRANSGAZ (Oct. Igor Danchenko et al. 19. available at http://www. id. 2010. Sino-Russian Cooperation in Relation to Central Asian Energy Resources is Unlikely Stroytransgaz. One Step Forward.110 While some commentators have noted that such action suggests that Russia would rather cooperate with China than with the West.”) (citing Marat Gurt. 113.112 Therefore. available at http://in. where it would compete against Russian gas in its primary European market. D. Gorst. WORLD AFF. Turkmenistan Ends Building its Gas Pipeline Section to China.109 China must convince Central Asian states that it is committed to a long-term relationship with Central Asian states to counterbalance Russia’s soft power in the region. supra note 32. China and the Competition for Oil and Gas in Asia.

Belarus. Tajikistan. even if China economically dominates Russia. let alone the ability to have the shared practice. precedent. and insight of numerous members from around the world to affect rulemaking and adjudication like the ECT. 8 action. supra note 32.uk/news/business-18292483. The Collective Security Treaty Organization is focused too specifically on military issues to be an effective forum for cooperation. an argument between BP and its Russian partners regarding the control of gas exports stalled the project for more than five years. at 37.117 This lack of cross-border energy infrastructure highlights the fact that China and Russia have not engaged each other as meaningful partners in the energy arena.116 Despite years of mutual agreements and negotiations between Russia and China. Kazakhstan.org/EN/ (last visited Jan. there is a lack of cross-border infrastructure needed for cost-effective delivery of oil and gas from Russia to China. 5 CTR.118 Furthermore. PROGRAM 35. Danchenko et. 119. http://www. AND ENERGY LAW 3/12/2013 3:18 PM [Vol.. Nitkin. ASIA-CAUCAUS INST. . See. 115. e. and Uzbekistan. Chow & Hendrix. & SILK ROAD STUD.co. A security organization composed of Russia. the SCO has not yet proven itself as a forum in which members may negotiate economic agreements with the detail necessary for cross-border energy investment. strategically. Russia should not welcome China as a competitor for Central Asian hydrocarbon resources.115 Subsequently. supra note 112. See Alexander I. http://www. See id. something that China cannot buy. supra note 36. 118.121 Also. 120. RUSSIAN DOMINANCE. See also OLCOTT. 2013). Cooperating with China could damage Russia’s most valuable asset by sharing Russia’s reputation in Central Asia with China.119 and even if Russia was willing to cooperate with China in certain circumstances by lending backing to China’s projects in Central Asia. at 2. supra note 29. THE SHANGHAI COOPERATION ORGANIZATION.114 Even after BP entered the picture. Armenia. Kyrgyzstan. BP announces plans to sell stake in TNK-BP. 2012).g. Russia’s value is derived from a unique position in the hearts and minds of Central Asians. GAS. because the SCO is limited in its geographic scope for membership and 114. Russia would lose the ability to obtain leverage by exercising such backing if it supported China as an equal power in the region. Id.bbc. 116. 35 (2007). BP announced that it would sell its stake in the company in June 2012. BBC (June 1.120 The SCO is not an effective forum for cooperation because Turkmenistan is not a member. 6.YODOGAWA PETERSON 126 TEXAS JOURNAL OF OIL.sectsco. International organizations in the region also fail to provide a forum for cooperative engagement of Central Asian hydrocarbons.. Only Russia enjoys the cultural and political dominance necessary to guide Central Asian states in their decisions regarding the exploitation of hydrocarbon resources. and a surge in sales of Russian oil to China. al. Post-Soviet Military-Political Integration: The Collective Security Treaty Organization and its Relations with the EU and NATO. 117. 121.

encharter.encharter. ENERGY CHARTER. See Energy Charter Secretariat. Kazakhstan. which was signed in December 1994 and entered into legal force in April 1998.125 The ECT is open to membership by any state or regional economic integration organization. supra note 6.org/index. 15. 44. Id. 1(2). it would not be efficient for the SCO to try to reinvent the wheel regarding cross-border energy investment institutionalization rather than using the established Energy Charter system. and to date the ECT has been signed or acceded to by fifty-one states. 124. Id. Accordingly. ECT.org/fileadmin/user_upload/document/ECT_ ratification_status. Central Asia does not pose any special issues that the ECT could not handle. ECT. Kyrgyzstan. 129. http://www. 2012). as opposed to private entities. art. Turkmenistan. Id. . 128. whereas fifty-one states and the European Union have joined the ECT. supra note 10.122 Furthermore. supra note 6. protect downstream interests. Energy Charter Secretariat.pdf (last visited Aug. Frequently Asked Questions. supra note 123. AN INTRODUCTION TO THE ECT The ECT.123 Even putting politics aside. The SCO has only five member states. Status of Ratification of the Energy Charter Treaty.128 Contracting Parties with energy resources can use the ECT to attract investment. including Azerbaijan. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 127 does not have a secretariat capable of administering such agreements. as well as the European Union and European Atomic Energy Community.129 Energy-importing Contracting Parties can use 122. 1994 Treaty. 125. Status of Ratification of the Energy Charter Treaty. 1994 Treaty. Energy Charter Secretariat.126 The ECT covers the whole energy value chainfrom exploration to end-useand all energy products and energy-related equipment. Energy Charter Secretariat. 1994 Treaty. supra note 6. III. Ukraine. 127. and Uzbekistan. China likely would be reluctant to use the SCO because doing so would offer Russia a comparatively stronger voice than if China approached energy investment issues through the global Energy Charter forum. Energy Charter Secretariat. 123. 2012) (listing signatories of the ECT).124 seeks to provide a framework for cooperation in the energy sector. China could use the gap left by Russia and showcase its difference from Russia by acceding and adhering to the ECT to become a meaningful partner for development in Central Asia. supra note 10. 126. See Energy Charter Secretariat. including Russia and China.127 States or regional economic integration organizations that have ratified or acceded to the ECT are referred to as Contracting Parties. art. http://www. furthermore. it is the only legally binding agreement of its kind that deals with intergovernmental cooperation in the energy sector. and ensure reliable transportation of energy.YODOGAWA PETERSON No. ENERGY CHARTER.php?id=18 (last visited July 22.

Energy Charter Secretariat. Frequently Asked Questions.130 All countries benefit from the ECT’s measures to encourage the efficiency of energy production and use and to minimize related negative environmental impacts. Frequently Asked Questions. art. 138. Id. Members & Observers. 8 the ECT to protect their investments and secure the supply of energy resources. see ECT.132 on December 17. Energy Charter Secretariat. in the case of investments. 2009 that it did not intend to become a Contracting Party.138 If a Contracting Party fails to amicably settle a dispute concerning its alleged breach of the ECT’s investment protection provisions or the 130. between investors and host states. Russia. 134.YODOGAWA PETERSON 128 TEXAS JOURNAL OF OIL. Russia agreed to provisional application of the ECT and PEEREA pending ratification when it signed the treaty. Energy Charter Secretariat. (3) resolving disputes between Contracting Parties. 2009.137 The ECT focuses on four main areas: (1) protecting foreign investments against key non-commercial risks. this provisional application ended on October 18. after Russia’s notification to the Depository on August 20. supra note 10. 131. supra note 9. supra note 10. and analyses. as well as energyrelated equipment where applicable. See ECT. ECT. China. as well as to participate in the working debates that take place within the Energy Charter process. 136. Members & Observers. AND ENERGY LAW 3/12/2013 3:18 PM [Vol. based on WTO rules to ensure reliable cross-border energy transit flows through pipelines. 45(3)(b). Energy Charter Secretariat. 137. (2) providing non-discriminatory conditions for trade in energy materials and products. GAS. Energy Charter Secretariat.131 China became an Observer of the Energy Charter Conference. Russia. 34. art. October 18. supra note 10. and other means of transportation. or prior to. reports. 1994 Treaty. art. supra note 10. supra note 10. 135. art. the decision-making body for issues related to the ECT. ENERGY CHARTER. . supra note 6. Energy Charter Secretariat. supra note 129. supra note 129. 45(3)(a). supra note 10. 132. and.134 Russia signed the ECT in 1994 but has never ratified it to date.133 Observers have the right to attend all meetings of the Energy Charter Conference and of its subsidiary groups. grids.135 However. and (4) promoting energy efficiency and minimizing harmful environmental impacts. 2001. 2009. in accordance with Article 45(3)(a) of the ECT. and receive all related documentation. See ECT. 45(1). Id. Members & Observers.136 Although not subject to the provisional application of the ECT or PEEREA. based on the extension of national treatment (NT) or most-favored nation (MFN) treatment (whichever is more favorable). Russia still has an obligation to adhere to the provisions of the ECT regarding investment protection and dispute settlement in relation to investments made in its territory on. 133.

140 The investor-state arbitration stipulated in Article 26 provides a choice of forum among the International Center for Settlement of Investment Disputes. an independent conciliator is appointed in order to assist the parties in reaching an agreement. but those are outside the scope of this Article. art. 26.144 The ECT also includes a unique conciliation procedure to deal specifically with disputes over transit that may be invoked by Contracting Parties. arts. ECT. supra note 10. Energy Charter Secretariat. but. then the conciliator must decide interim transit tariffs for a period of up to twelve months while negotiations between the parties continue. ed.145 Under this procedure. supra note 10. such Contracting Party may be subject to the ECT’s dispute settlement mechanisms. 27. and is faster and less formal than taking a dispute to arbitration.147 The aim of this procedure is to reduce the risk of interruptions to transit flows while an agreement is reached.143 The disputing parties. apart from this specific 139. Frequently Asked Questions. may have to consider certain standing and jurisdiction requirements.. art. 2006). breaches of the ECT. 145. available at http://www. 146. 27(1). 143. See id. 142. 26(3)(c). 26. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 129 application or interpretation of the ECT. art. art. Energy Charter Secretariat. Id.142 are subject to the ECT’s dispute settlement mechanisms.146 If an agreement is not reached within ninety days of the conciliator’s appointment. supra note 10. 28. See e. Id. including breaches of contracts that become breaches of the ECT under the umbrella clause (the last sentence of Article 10(1))..encharter. art. a sole arbitrator or an arbitral tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law.. supra note 129. 140. art. . as well as the arbitrators and tribunals. Energy Charter Secretariat. 144. 148. INVESTMENT ARBITRATION AND THE ENERGY CHARTER TREATY (Clarisse Ribeiro. ENERGY CHARTER SECRETARIAT. ECT. Id. 26(1). Frequently Asked Questions. THE ENERGY CHARTER TREATY: A READER’S GUIDE 26 (2002). See ECT. supra note 129. 7(7)(c)–(d). Frequently Asked Questions. Article 27 (state-state disputes). 147.139 The key dispute resolution provisions are in Part V of the ECT: Article 26 (investor-state disputes). 141. 10(1).org/fileadmin/user_upload/Publications/ ECT_Guide_ENG.pdf.148 The Secretary General of the Energy Charter Secretariat has a role in appointing the conciliator in such case.YODOGAWA PETERSON No. and an arbitral proceeding under the Arbitration Institute of the Stockholm Chamber of Commerce. supra note 10. and Article 28 (conditions for the application of Article 27 to trade-related disputes for which there is a more specialized dispute resolution procedure).g. 26(1).141 In effect. The states listed in Annex IA to the ECT do not allow disputing parties to refer their disputes concerning the umbrella clause to international arbitration. ECT. supra note 129.

7(1). supra note 129. Id. that progress was followed by a suspension of negotiations in 2003. pmbl. supra note 10. art. Energy Charter Transit Protocol The ECT also promotes reliable international transit flows. http://www. (5). ECT. Frequently Asked Questions. AND ENERGY LAW [Vol. “cataly[zing] economic growth by means of measures to liberalize investment and trade in energy. the European Union presented a new common position with regard to the negotiations on the draft Transit Protocol and argued that it no longer appeared opportune to continue such negotiations. art. supra note 129. 2. 152. or charges on energy materials and products in transit.158 Subsequently. 158.”151 The ECT does not create investment opportunities by forcing open access to resources or defining a certain market structure. and an obligation to secure established transit flows. ENERGY CHARTER. the ECT provides a stable interface between the foreign investor and the host government. Id. ENERGY CHARTER SECRETARIAT. 7(7)(b).encharter. based on complementarities and mutual benefits. supra note 10. the Secretariat itself is not involved in dispute settlement. in line with the principle of freedom of transit. restrictions. 150. 153. supra note 10.156 Negotiations on an Energy Charter Transit Protocol aimed to clarify the operational meaning of “freedom of transit. supra note 129.php?id=37&L=0 (last visited Aug. Frequently Asked Questions. Energy Charter Secretariat. . 159.149 The ECT seeks to promote and direct investment in Contracting Parties.154 However.153 The ECT includes an obligation on the Contracting Parties to facilitate energy transit across their territory. Energy Charter Secretariat. 8 instance. the ECT does not oblige any Contracting Party to introduce mandatory third party access to transit facilities. org/index. Transit Protocol. and agreement on certain critical issues was reached in 2002. 154. Id. 157.152 A. 151.YODOGAWA PETERSON 130 3/12/2013 3:18 PM TEXAS JOURNAL OF OIL. 155. Id. Energy Charter Secretariat.”157 Negotiations within the Energy Charter process to establish a Transit Protocol began in 2000. ECT. 2012). Energy Charter Secretariat. ECT.159 Taking this into consideration. at 29. 6. but once an energy investment is made between two Contracting Parties. however. art.”150 Article 2 confirms that the ECT aims to create a “legal framework in order to promote long-term cooperation in the energy field.155 In relation to transit tariffs. 156. Frequently Asked Questions. the Energy Charter Conference repealed the mandate for negotiations of the Transit Protocol 149. the ECT only requires that such tariffs be non-discriminatory and that there not be any unreasonable delays. GAS. in October 2011. supra note 143.

php?id=26&L=0 (last visited Jan. opened for signature. ENERGY CHARTER. were modified by the adoption in April 1998 of a set of amendments (Trade Amendment) to the ECT to bring the provisions into line with the rules and practices of the WTO. B. Status of Ratification of the Trade Amendment to the Energy Charter Treaty as of August 2012. PEEREA Article 19 of the ECT requires each Contracting Party to strive to minimize. pricing.164 C. both in terms of MFN treatment and NT.. harmful environmental impacts arising from energy use.163 In relation to the PEEREA. 1998. 163. http://www.161 The PEEREA was negotiated.160 If the negotiations are reset and the Transit Protocol is finalized. supra note 10. 2012). ENERGY CHARTER. http://www. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 131 at its 22nd Meeting. the Trade Amendment extended the ECT’s trade rules to energy-related equipment. particularly the principles of transparency and non-discrimination. held on November 29. ENERGY CHARTER. it ensures that investors will have access to equipment of their choice on a non-discriminatory basis. and other mechanisms to finance energy efficiency objectives. supra note 143.166 It is not mandatory for Contracting Parties to the ECT to also accede to the Trade Amendment. http://www.YODOGAWA PETERSON No. the parties to the PEEREA are encouraged to highlight some aspects of national energy efficiency strategies. http://www. ENERGY CHARTER SECRETARIAT. Id. art. 12. Trade Amendment The ECT’s trade provisions. Id. Energy Charter Secretariat.php?id=37&L=0 (last visited Aug.org/index. such as pipeline pipes. 19(1). such as taxation. 165. the Energy Charter process provides Contracting Parties with information regarding good environmental practices and a forum in which they can exchange dialogue on experiences and policy advice on energy efficiency issues. at 15. Energy Charter Secretariat. ECT. which were initially based on the trading regime of the General Agreement on Tariffs and Trade (GATT).162 The PEEREA requires its participating states and regional economic integration organizations to formulate clear policy aims for improving energy efficiency and reducing the energy cycle’s negative environmental impact.encharter. 6. 2012). in an economically efficient manner. 164. 2011. 2013). April 16. 162. See Energy Charter Secretariat.167 160.org/index. ENERGY CHARTER. At this forum.encharter.encharter. furnaces. . 161. turbines. Energy Charter Secretariat. environment-related subsidies. etc. 166. 1994 PEEREA. 1998 Trade Amendment. Energy Efficiency.encharter. 167. it could significantly impact hydrocarbon resource transport arrangements in Central Asia.php?id=27&L=0 (last visited May 6. and thus. and entered into force at the same time as the ECT.165 In addition. org/index.

These states are Azerbaijan. Energy Charter Secretariat. Id. Transit Article 7(1) of the ECT says “[e]ach Contracting Party shall take the necessary measures to facilitate the Transit of Energy Materials and Products consistent with the principle of freedom of transit.171 which critically include Kazakhstan. 4. http://www. 169. Id. 168.YODOGAWA PETERSON 132 3/12/2013 3:18 PM TEXAS JOURNAL OF OIL. art. CHINA’S GROWING ROLE IN WORLD TRADE (Robert C.170 With regard to the relationships with non-WTO member states that are ECT members. supra note 165. APPLICATION OF THE ECT IN CENTRAL ASIA IF CHINA BECAME A CONTRACTING PARTY A. See ECT.htm (last visited Jan. WORLD TRADE ORG. See. GAS. although it is not mandatory for a Contracting Party to accede to the Trade Amendment. 1998 Trade Amendment. See generally Mary Amiti et al.169 Furthermore. 7(1). China already has assumed an obligation to ensure the above GATT rules in its relationships with many of the ECT Contracting Parties. Understanding the WTO: The Agreements.org/english/thewto_e/whatis_e/tif_e/agrm1_e. Bosnia and Herzegovina. 171.173 Accordingly. 4. Turkmenistan.172 Article 29 of the ECT incorporates the GATT discipline into China’s trade in energy with those states. Kazakhstan. it appears likely that China also would accede to the Trade Amendment due to its adherence and successful use of the WTO system. 5(1).wto. .. ECT. 170. 29. Trade Under the ECT. art. 173. Turkmenistan and Uzbekistan. China would ensure non-derogation from the GATT and Related Instruments (Article 4). AND ENERGY LAW [Vol. China’s becoming an ECT Contracting Party would permit such nonWTO member states that are ECT Contract Parties to use the ECT’s trade-dispute settlement mechanism to enforce disputes with China. e.pdf (last visited January 12. 2013). which they would not be able to do via the WTO. Belarus. 2010). supra note 10. 2013). 174. and Uzbekistan. Feenstra & Shang-Jin Wei eds.”174 China’s becoming subject to Article 7 of the ECT would be beneficial to the org/fileadmin/user_upload/document/Trade_Amendment_ratification_status. 2. supra note 10. and trade-related investment measures being consistent with Article III or XI of the GATT (Article 5(1)). Why China’s Joining the ECT Would Benefit Central Asian Contracting Parties 1. arts. 172...168 As a WTO member.. 8 IV. The ability for nonWTO members to have a proven and effective system for dispute settlement with China is an invaluable benefit of the ECT.g.

including Kazakhstan. On the contrary. Kyrgyzstan. See id.N.182 Theses BITs.org/sections/dite/iia/docs/bits/china_albania. WORLD TRADE ORG. 2013). art. supra note 178.org/sections/dite_pcbb/docs/bits_ china. 1994. 7. http://archive.wto.pdf [hereinafter Austl.YODOGAWA PETERSON No. 13. 182. 183. Id. See Total Number of Bilateral Investment Agreements Concluded. CONFERENCE ON TRADE & DEV.179 Kyrgyzstan. the investment protection and promotion provisions of the [ECT] are much more complicated and comprehensive. Austl.-China. supra note 37. Id. 1995. Understanding the WTO: Settling Disputes. Feb.180 Turkmenistan181 and Uzbekistan. supra note 10. China’s accession to the ECT would make China a much safer destination to send hydrocarbon resources than Russia. available at http://unctad.176 In particular.184 in most of the BITs concluded in the 1980s and 1990s. Agreement Between the Government of Australia and the People’s Republic of China on the Reciprocal Encouragement and Protection of Investments. [they are] rather simple and could not provide sufficient protection of foreign investment . do not provide nearly as much protection to investors as is afforded under the ECT. 181. at 27. 1993. 176.htm (last visited Jan. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 133 landlocked Central Asian states by ensuring that the hydrocarbons shipped to China are not stopped upstream on the way to China.pdf. where “every molecule of oil and gas that enters Russian territory becomes Russian. Bulg. See Zhang. art.”). Id. China-Alb. 1988. ECT’s transit-dispute settlement mechanism would present the only available source of uniform dispute settlement with China regarding transit. U. 178. 184. available at http://unctad. See Total Number of Bilateral Investment Agreements Concluded.-China]. Investment China has concluded a bilateral investment treaty (BIT) with fortynine states178 of the fifty-one states that are Contracting Parties or Signatories of the ECT. In this regard. at 603. 2011. Entered into force on June 4.org/sections/dite/iia/docs/bits/australia_china. 2012). Central Asian Contracting Parties would benefit from the ECT’s streamlined dispute settlement mechanism. PETERSEN & BARYSCH. . 180.unctad. See Agreement Between the Government of the People’s Republic of China and the Government of the Republic of Albania Concerning the Encouragement and Reciprocal Protection of Investments. Agreement Between the Government of the People’s Republic of Bulgaria and the Government of the People’s Republic of China Concerning the Reciprocal Encouragement and Protection of Investments. (June 1. See ECT. China did not agree to provide for NT185 or allow referral of investor-state disputes to 175. http://www. supra note 62.183 While the details of the specific BITs between China and Kazakhstan.177 3. . . Entered into force on September 1.-China. for ECT Contracting Parties that are not WTO members.”175 Also. 610 (“[T]hough China has entered into BITs with all members from CIS [Commonwealth of Independent States] . 185. 177. 1994. . 179. Entered into force on August 13.pdf [hereinafter China-Alb. specifically prepared for transit disputes. 4. Turkmenistan and Uzbekistan have not been made public. .]. . Id.. Entered into force on September 8.org/english/thewto_e/whatis_e/tif_e/disp1_e.. however. 7(7)-(8). July 11.

1985. 21. supra note 185.K.. Hung.. China-Den.org/sections/dite/iia/docs/bits/china_lithuania.YODOGAWA PETERSON 134 TEXAS JOURNAL OF OIL. available at http://unctad. The Government of the People’s Republic of China and the Government of Estonia. 187. 1991.org/sections/dite/iia/docs/bits/china_bulgaria. available at http://unctad. art. available at http://unctad. 8.org/sections/dite/iia/docs/bits/china_poland. 1989. 1993.].org/sections/dite/iia/docs/bits/china_iceland. Lith. available at http://unctad. and when both parties agree.pdf. Nov..pdf [hereinafter Hung. June 7.]... PRC. XII(2)(a). available at http://unctad. China-Nor. Mar.pdf. Lith. available at http://unctad.org/sections/dite/iia/docs/bits/china_sweden.pdf [hereinafter China-Greece].pdf [hereinafter China-Pol.. available at http://unctad. China-Alb. ChinaGreece. Austl.pdf [hereinafter Bulg. supra note 185. 1984.].-China. Agreement Between the Republic of Lithuania and the People’s Republic of China Concerning the Encouragement and Reciprocal Protection of Investments. June 3. 1991. Agreement on the Mutual Protection of Investments.org/sections/dite/iia/docs/bits/china_greece.-China.. 29. Norway Agreement on Mutual Protection of Investments. art.. 26.K. May 15.187 In contrast. China-Greece. China-Geor.-China. June 7. Sept. 8 an ad hoc arbitral tribunal186 for disputes other than those related to the amount of compensation for expropriation. supra note 185. China-Swed.pdf [hereinafter China-Den. 8(3). supra note 185. 2. E. U. art. art..g.pdf [hereinafter China-Croat.8(2).pdf. 13. China-Croat. Agreement Between the People’s Republic of China and the Republic of Turkey Concerning the Reciprocal Promotion and Protection of Investments. Apr.. Nov. art.. 10(2) (when both parties agree.-China. investment disputes in general may also be submitted to ad hoc arbitral tribunal).org/sections/dite/iia/docs/bits/china_estonia. supra note 185. Some of China’s bilateral investment treaties (BITs) do not provide any investor-state dispute settlement mechanism. 1992. art. China-Geor. supra note 185. China-Pol. 1993.org/sections/dite/iia/docs/bits/china_norway.pdf [hereinafter China-Est.. Agreement Between the Government of the People’s Republic of China and the Republic of Iceland Concerning the Promotion and Reciprocal Protection of Investments.pdf [hereinafter Lith. supra note 185. June 25.org/sections/dite/iia/docs/bits/china_turkey. AND ENERGY LAW 3/12/2013 3:18 PM [Vol.-China. China-Est. art. Agreement Between the Republic of Hungary and the People’s Republic of China Concerning the Encouragement and Reciprocal Protection of Investments. Hung.. 9(3). 1994. 8(2)(b) (referring disputes to the International Centre for Settlement of Disputes (ICSID) rather than to ad hoc arbitral tribunals. China-Den.org/sections/dite/iia/docs/bits/china_mongolia. Nov. art.-China. available at http://unctad. available at http://unctad. supra note 185. XII(2)(b) (when both parties agree.].]. May 29. ChinaCroat.-China. Agreement Between the Government of the People’s Republic of China and the Government of the Hellenic Republic for the Encouragement and Reciprocal Protection of Investments. 10(1). Agreement Between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China Concerning the Promotion and Reciprocal Protection of Investments with Exchanges of Notes.pdf [hereinafter U.. art.-China]. art. available at http://unctad.pdf [hereinafter ChinaSwed.org/sections/dite/iia/docs/bits/china_hungary. art. China-Ice. GAS.. 8(3). supra note 185. disputes in general may also be submitted to ad hoc arbitral tribunal). 1998. available at http://unctad. 8(3). 1986.org/sections/dite/iia/docs/bits/china_denmark.g.China]. supra note 185. supra note 185. Agreement Between the Government of the People’s Republic of China and the Government of the Polish People’s Republic Concerning the Reciprocal Promotion and Protection of Investments. Agreement Between the Government of the People’s Republic of China and the Government of the Republic of Croatia Concerning the Reciprocal Encouragement and Protection of Investments.. 31. 8(3). in the BITs June 27. Hung. available at http://unctad. China and Denmark Agreement Concerning the Encouragement and Reciprocal Protection of Investments. Agreement Between the Government of the People’s Republic of China and the Government of the Mongolian People’s Republic Concerning the Encouragement and Reciprocal Protection of Investments. China-Croat. 8(2).. China-Turk. E.org/sections/dite/iia/docs/bits/china_croatia.-China. supra note 185.pdf [hereinafter China-Geor.pdf [hereinafter China-Mong.-China]. 29.org/sections/dite/iia/docs/bits/uk_china. supra note 185. investment . China-Mong.. 1993. 9(3). 1990.-China].]. 186. Aug. China-Alb.. available at http://unctad. 1993. available at http://unctad. China-Est. Austl.org/sections/dite/iia/docs/bits/china_georgia. art. 1982. supra note 185. available at http://unctad. Other of China’s BITs provide that either party to the investment dispute may resort to domestic court proceedings.. Agreement Between the Government of the People’s Republic of China and the Government of the Republic of Georgia Concerning the Reciprocal Encouragement and Protection of Investments.]. Mar. art. China-Pol.

-China.188 which suggests that China has a positive attitude towards modernizing its BITs. arts. 9(2)(c).. 15.. 188. Fin.org/sections/dite/iia/docs/bits/China_czechrep. China-Belg.. 8(3). Nov... U. 3(2). supra note 188 (renegotiated BIT signed on Dec. supra note 188 (renegotiated BIT signed on Nov. 3(2). available at http://unctad. 2009. Agreement Between the Czech Republic and the People’s Republic of China on the Promotion and Protection of Investments.pdf [hereinafter CzechChina]. Total Number of Bilateral Investment Agreements Concluded. Agreement Between the Government of the People’s Republic of China and the Government of the Republic of Slovenia Concerning the Encouragement and Reciprocal Protection of Investments. replacing the previous BIT signed on June 17. China-Bulg. Agreement Between the People’s Republic of China and Bosnia and Herzegovina on the Promotion and Protection of Investments.org/sections/dite/iia/docs/bits/china_slovenia. and Sweden. available at http://unctad. China-Lat. France. 11(2)(b).. supra note 188 (renegotiated BIT signed on Jan. Portugal. 3(2). available at http://unctad. available at http://unctad. Sept.pdf. 3(1). 27. arts. Dec. 2003. This inference is supported by the fact that China has renegotiated its BITs with Germany. 190. available at http://unctad.pdf.189 the Netherlands. Spain. China-Pol. Total Number of Bilateral Investment Agreements Concluded. 191.org/sections/dite/iia/docs/bits/china_finland. 7. 2003. available at http://unctad.. China agreed to the implementation of both such matters. China-Slovn.7(1).-China. Nov. 12.K. Rus. Agreement Between the People’s Republic of China and the Federal Republic of Germany on the Encouragement and Reciprocal Protection of Investments.org/sections/dite/iia/docs/bits/russia_china_ru. supra note 178. China-Neth.-China. Total Number of Bilateral Investment Agreements Concluded. art. China-Bosn. . 10(3)(b). 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 135 concluded in the 2000s. Dec. 9. 15. arts. considering the fact that the United Nations Conference on Trade and Development’s country-specific list of BITs shows a signing date in the 2000s while its database of the texts of BITs displays those signed in the 1980s and 1990s. supra note 178.-China. 2009. supra note 185. supra note 185. China-Mong. China-Ger. 1985). 189. available at http://unctad.. It appears that China also renegotiated its BITs with Belgium and Luxembourg. Nov.-Lux.. available at http://unctad.-China. 13. 3(2). 27. See Switz. Agreement between the Government of the Russian Federation and the Government of the People’s Republic of China on the Promotion and Reciprocal Protection of Investments.pdf. 3(3).pdf (disputes are referred to the ICSID rather than to an ad hoc arbitral tribunal). 1986).191192 Nevertheless. 3(1). Romania.]. Agreement Between the Government of the People’s Republic of China and the Government of the Republic of Latvia on the Encouragement and Reciprocal Protection of Investments.org/sections/dite/iia/docs/bits/china_netherlands. 2001. 26. supra note 178.org/sections/dite/iia/docs/bits/china_belg_lux. See China-Neth. it should be noted that all the BITs that disputes in general may also be submitted to the ICSID).YODOGAWA PETERSON No.pdf [hereinafter ChinaNeth. art. arts. supra note 185.pdf [hereinafter Fin. 9(2)(b) Apr.]. 8. arts. 2004. Bulgaria.org/sections/dite/iia/docs/bits/china_bosnia. 1984.China].] (disputes are referred to the ICSID rather than to an ad hoc arbitral tribunal). Jan.190 and Switzerland. Agreement on the Encouragement and Reciprocal Protection of Investments Between the Government of Republic of Finland and the Government of the People’s Republic of China. 1. June 26. arts. Agreement Between the Swiss Federal Council and the Government of the People’s Republic of China on the Promotion and Reciprocal Protection of Investments. 8(2). 3(2). 2001. 2004. arts. 1. June 4.org/sections/dite/iia/docs/bits/Switzerland_China_new. See China-Ger. arts.pdf [hereinafter China-Bosn. respectively.pdf [hereinafter Switz. 1993. 26..org/sections/dite/iia/docs/bits/china_germany. art. & Herz. 9(2)(c). 1983).org/sections/dite/iia/docs/bits/China_Latvia. See Agreement Between the Government of the People’s Republic of China and the Belgian-Luxembourg Economic Union on the Reciprocal Promotion and Protection of Investments. replacing the previous BIT signed on Nov. 9(3). Switz. replacing the previous BIT signed on Oct. 4(2). 10(1). 2006.. 192. Agreement on the Encouragement and Reciprocal Protection of Investments Between the Government of the People’s Republic of China and the Government of the Kingdom of the Netherlands. available at http://unctad. available at http://unctad. supra note 186. 2005. Czech-China. 8(3). art. 9(2)(c).-China]. 2002. & Herz.pdf [hereinafter China-Ger.

available at http://unctad. Feb. available at http://unctad. 6. 25. 2004. the Government of the Republic of Korea and the Government of the People’s Republic of China for the Promotion. supra note 188. Nov. art.pdf. In addition to these states. available at http://unctad. 3. 194.-China. 9(3) (only China requires exhaustion of domestic administrative review procedures). available at http://unctad. art. available at http://unctad.org/sections/dite/iia/docs/bits/china_romania.194 Accord Entre le Gouvernement de la Republique Française et le Gouvernement de la Republique Populaire de Chine Sur L’Encouragement et la Protection Reciproques des Investissements. Acuerdo Para la Proteccion y Fomento Reciproços de Inversiones Entre el Reino de España y la Republica Popular de China. AND ENERGY LAW 3/12/2013 3:18 PM [Vol. 1988. July 12. GAS. Spain-China. China-Rom. available at http://www. 9. supra note 10. 1992. Kor.go. 8(2) (either party may require exhaustion of its domestic administrative review procedures). Protocol to the Agreement Between the Government of the People’s Republic of China and the Government of the Republic of Latvia on the Promotion and Protection of Investments. available at http://unctad. 1984. Protocol to the Agreement on Encouragement and Reciprocal Protection of Investments Between the People’s Republic of China and the Kingdom of the Netherlands.pdf (only China requires exhaustion of domestic administrative review procedures). Port. The exceptions allowed under this provision are: the Investor’s having already submitted . 9.org/sections/dite/iia/docs/bits/china_sweden.org/sections/dite/iia/docs/bits/china_finland. 15. China. available at http://unctad. Facilitation and Protection of Investment. 2003. art. & Herz. Feb. 9. art.YODOGAWA PETERSON 136 TEXAS JOURNAL OF OIL.org/sections/dite/iia/docs/bits/Switzerland_China_new. Nov. 29. Protocol to the Agreement Between the People’s Republic of China and the Federal Republic of Germany on the Encouragement and Reciprocal Protection of Investments. 1994.pdf (only China may require exhaustion of domestic administrative review procedures). 26. 9.193 This condition for consent to arbitration is not allowed under the ECT.org/sections/dite/iia/docs/bits/france_china_fr.. Fr. 1992.pdf. 2012. art. although this new trilateral agreement does not replace the BIT between China and Japan signed on August 27. art. Nov. Acordo Entre o Governo da República Portuguesa e o Governo da República Popular da China Sobre a Promoçío e Protecçío Mútua e de Investimentos. available at http://unctad. art.-China.mofa.. China-Swed. 11(2)(a). 2006. supra note 188.org/sections/dite/iia/docs/bits/china_germany. art.” ECT. 2012.15.org/sections/dite/iia/docs/bits/china_netherlands. 193.pdf (only China requires exhaustion of domestic administrative review procedures). it should be noted that Japan signed a trilateral investment agreement between itself. 10. Dec.pdf.org/sections/dite/iia/docs/bits/spain_china_sp. Agreement Between the Government of the People’s Republic of China and the Government of Romania Concerning the Encouragement and Reciprocal Protection of Investments. supra note 178.org/sections/dite/iia/docs/bits/russia_china_ru. 2001. “Subject only to subparagraphs (b) and (c). available at http://unctad. See China-Bosn. 1. Japan-S.pdf. Protocol to the Agreement on the Encouragement and Reciprocal Protection of Investments Between the Government of Republic of Finland and the Government of the People’s Republic of China.pdf. May 13. Czech-China. 2009. Jan.-China. 27. to art.org/sections/dite/iia/docs/bits/China_Latvia. 1982. art.org/sections/dite/iia/docs/bits/china_portugal_por.pdf (only China may require exhaustion of domestic administrative review procedures).jp/announce/announce/2012/5/pdfs/0513_01_01. Apr..pdf (either party may require exhaustion of its domestic administrative review procedures). 9. and South Korea on May 13. Agreement Among the Government of Japan. 26(3)(a) (emphasis added). Protocol to the Agreement Between the Government of the Russian Federation and the Government of the People’s Republic of China on the Promotion and Reciprocal Protection of Investments. Mar. Protocol to the Agreement Between the Swiss Federal Council and the Government of the People’s Republic of China on the Promotion and Reciprocal Protection of Investments. 8 were concluded in the 2000s and are publicly available include a provision that China could require the investor to exhaust domestic administrative review procedures before using the BIT-based dispute settlement proceedings. Agreement on the Mutual Protection of Investments. Total Number of Bilateral Investment Agreements Concluded.pdf. May 30. available at http://unctad.pdf (only China requires exhaustion of domestic administrative review procedures). each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration or conciliation in accordance with the provisions of this Article. available at http://unctad. 2004.

China-Alb. China may maintain the abovementioned exception of previous submission to a domestic court under Article 26(3)(b) of the ECT. in the definition of an investor. Fin. Switz. “a company or other organization organized in accordance with the law applicable in that Contracting Party..”195 This definition requires only the incorporation under the laws of the host state. art. The definition of the term “Investor” under the ECT is. the year in which China signed BITs with Kazakhstan. 26(3)(b)-(c). These newly incorporated changes would serve to protect the above mentioned Central Asian states’ investments in energy transport infrastructure. art. supra note 185.” “having registered office” or “hav[ing] their seat. art. 2011). it appears likely that China’s BITs with Kazakhstan. but also more recent BITs require actual presence by including. 10 Years of Energy Charter Arbitration. In any event.. and require that China treat such investments with a certain degree of fairness. 1(2)(b). 1(2)(b)(ii). supra note 188. do not include the full protection of investments included in China’s BITs signed in the 2000s.China... together with real economic activities” in the territory of the host state. supra note 10.” “having seat. 1(2)(b). Hung. Turkmenistan. In addition. 9(4). A number of China’s older BITs include the abovementioned exception of previous submission to a domestic court. 1(2)(a)(ii).196 The ECT’s broad definition of “investor” could enable a national or company of a non-ECT member state to enjoy protection under the ECT by making an investment via a holding company incorporated under the laws of another state that is a Contracting Party. art.g. China’s accession to the ECT would still benefit these states through the ECT’s definition of investor. supra note 185. supra note 10. all signed in 1992. ChinaGer. as several recent BITs allow the investor who has submitted its dispute to a domestic court to withdraw from the court proceedings and to resubmit it to arbitration. art. and Uzbekistan. Nils Eliasson.197 Although there is a its dispute to a domestic court. supra note 185. 1(2)(a). 1(2)(b). China’s accession to the ECT would mean that investors would not be required to exhaust domestic administrative review procedures before using treaty-based dispute settlement proceedings. . SALACUSE. which usually requires actual presence in the host state’s territory.YODOGAWA PETERSON No. 1(3)(a). art. THE LAW OF INVESTMENT TREATIES 188 (2010). Turkmenistan.g. supra note 188. art. ECT. supra note 188. Not only the BITs signed around 1992. art. ECT.-China. Even if China’s BITs with these Central Asian states do provide for the full protection of investments to the same extent as those signed in the 2000s.China-Greece. 196. 9(3). Kyrgyzstan. a requirement to be “domiciled. 197. and Uzbekistan. in terms of corporate or institutional investors. supra note 188. JESWALD W.. 1(7)(a)(ii). art. unlike the definition of “investor” used in China’s BITs. If this is true. these Central Asian states stand to benefit a great deal from having China subscribe to the ECT and thereby extend more beneficial terms regarding NT and investor-state arbitration for disputes other than those related to the amount of compensation for expropriation. However.-China. 1(2)(b). ensure enforcement of investors’ rights. Czech-China. supra note 188. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 137 Based on the aforesaid trends observed in China’s BITs. 1(3)(b). MANNHEIMERSWARTLING 21 (June 6. China might be willing to give up this exception for accession to the ECT. E. China-Lat. Kyrgyzstan. 195. E. art. and the dispute arising from the umbrella clause.

. art. the unfair and inequitable treatment prohibited by this provision to include: breaching legitimate expectations created by the state and relied upon by the available at http://www. B.YODOGAWA PETERSON 138 3/12/2013 3:18 PM TEXAS JOURNAL OF OIL. or take a measure tantamount to expropriation. The ECT’s main investment protection provisions are summarized below.S. the company could establish a holding company in.pdf.%2030%20June%202011. (3) carried out under due process of law. company wanted to make an investment in the construction of a new pipeline similar to the CACGP. the higher security in investment climate that China must ensure under the ECT would encourage investment in China.200 b. if a U. Kazakhstan and have the holding company invest in China so that such investment benefits from ECT’s protections. Why China’s Joining the ECT Would Benefit China 1. the tribunals interpreted. and effective compensation. GAS. the investment would be made in China and not Kazakhstan.com/filearchive/4/41105/Report%20Ten%20Years%20of%20 ECT%20Arbitration. See SALACUSE. 8 caveat that the denial of benefit clause in Article 17(1) of the ECT might apply to such case. a. but the holding company incorporated in Kazakhstan would have some economic activities and generate tax revenues. say. In addition. For example. In relation to past arbitral awards. supra note 178. supra note 10. AND ENERGY LAW [Vol. ECT Investment Provisions With regard to the two ECT Contracting Parties with which China does not have BITsthe Republic of Ireland and the Principality of LiechtensteinChinese investors would obtain protection of their energy-related investments in these states under the ECT.sccinstitute. and (4) accompanied by payment of prompt. Protection Against Appropriation Under Article 13 of the ECT. or at least left room for interpreting. 200. see RUDOLF DOLZER & CHRISTOPH SCHREUER. unless the measure is: (1) conducted for a purpose in the public interest. 198. See Total Number of Bilateral Investment Agreements Concluded.199 In this hypothetical. even though the United States does not have a BIT with China. supra note 197. a host state may not expropriate foreignowned property or investments. 13(1). PRINCIPLES OF INTERNATIONAL INVESTMENT LAW 54 (2008). 199. (2) not discriminatory.198 this broader possibility of protection under the ECT could benefit the Central Asian states. adequate. ECT. Fair and Equitable Treatment Article 10(1) of the ECT sets forth a flexible “fair and equitable treatment” clause.

Electrabel S.36–9. AES Summit Generation Ltd. since China’s BITs with these states were signed in 1992. 10(1). 205. Ioannis Kardassopoulos and Ron Fuchs v. available at http://www. . supra note 201.27– 9. 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 139 investor.37. ARB/03/24. Plama Consortium Ltd.140 (2012). Case No.203 acting in an unreasonable or irrational way.encharter. ECT.pdf. and AES-Tisza ErömüKft. 207. 206. ¶¶9. and AES-Tisza ErömüKft. ¶ 177. ICSID. supra note 178. ¶ 7. Georgia.¶ 221. Partial Award on Jurisdiction and Liability. supra note 10.. ICSID. ICSID. art. Hungary. Award. Tajikistan.208 The ECT’s NT provision requires a host state to treat foreign investors and their investments no 201. 203. and AES-Tisza ErömüKft. Electrabel S. ARB/07/22. Decision on Jurisdiction. Kyrgyzstan. Applicable Law and Liability.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&d ocId=DC2853_En&caseId=C111. V (064/2008).YODOGAWA PETERSON No. use. v. ARB/07/22. 204.3. Plama Consortium Ltd.pdf. art. maintenance.org/fileadmin/user_upload/document/Plama_Bulgaria_ Award. supra note 201. and AES-Tisza ErömüKft. SCC. ECT.6–9. V (064/2008). v.3.3. ¶¶435–52 (2010). Mohammad Ammar Al-Bahloul v. and Uzbekistan. Petrobart Ltd. ARB/07/19.3.207 it is likely that they did not provide for the fullest protection of investments. Case No.pdf. Turkmenistan.36.pdf. ¶¶200–02 (2009). Prohibition of Unreasonable or Discriminatory Treatment Article 10(1) of the ECT also stipulates that investments “shall[] enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management. ARB/07/22.3.A v.com/sites/default/files/casedocuments/italaw1071clean. supra note 201.pdf. ARB/03/24. Case No. v.encharter. available at http://icsid. available at http://www. available at http://www. Bulgaria.3.encharter.30. See AES Summit Generation Ltd. Al-Bahloul. Case No. The ECT’s MFN provision prohibits states from discriminating against investors on the basis of nationality and requires states to provide equally favorable treatment to all investors no matter their nationality. ¶¶ 9. ¶ 7. ARB/07/15. Case No. 202. in the case of Kazakhstan and Turkmenistan. see AES Summit Generation Ltd. SCC.com/sites/default/files/case-documents/ita0628. supra note 201..3. 208. Case No. Case No. available at http://italaw. Most Favored Nation and National Treatment Kazakhstan. supra note 10. Case No. ICSID. at 75 (2005). In addition.. Case No. enjoyment or disposal.142. ARB/07/19. do not provide China with the benefit of MFN treatment and NT in the WTO’s easily enforceable multilateral treaty format. org/fileadmin/user_upload/Investor-State_Disputes/Partial_award_-_Mohammad-Tajikistan.italaw. 126/2003. The Republic of Hungary. Award. which are not WTO members.”206 d. ¶¶ 175–76 (2008). Total Number of Bilateral Investment Agreements Concluded. ARB/07/22.204 and failing to provide an opportunity for the investor to be heard or otherwise denying justice.201 failing to maintain a stability of legal framework.202 acting without transparency.¶ 9. available at http://www.org/fileadmin/user_upload/InvestorState_Disputes/Award_-_Ioannis_Kardassopoulos_vs_Georgia. ¶¶ 9. The ECT provides for this benefit for energy-related investments. Case No.205 c. Case No.26 (2010). See AES SummitGeneration Ltd.A. Case No. 10(3). Award.worldbank.

C. 212. See. 8 less favorably than its own nationals and companies in similar circumstances.C. id. supra note 170. See. China would be subjecting itself to ECT dispute settlement procedures with Central Asian states. and then political power. Central Asian states should want a partner that is willing to bind itself in front of the international community as a state that is willing to emerge as a partner for mutual development. 211. e. 10(7). Costs to China in Relation to China’s Acceding to the ECT 1. . China steps in as a leader for positive change. Counterbalancing Russia’s Soft Power in Central Asia China must make substantial progress to be perceived by Central Asian states as more than a mere economic tool. Dispute Settlement By becoming a Contracting Party.. but also in what such a move would symbolize: when Russia steps out of a multilateral framework that is beneficial enough for most Central Asian states to be members. and later Russia.214 such exposure to dispute settlement under an international 209.. supra note 10. China has not made a significant multilateral binding commitment that it will continue to be a beneficial economic partner. e. Mary Amiti et al. culture. supra note 29. are dominating forces that must be addressed. including non-WTO members that otherwise would not have available dispute settlement recourse under an international framework. 214. Costs in relation to acceding to the ECT are insignificant compared to the gains that China would receive. 29(7).g.211 China is making the proper inroads into Central Asia by first securing itself as a partner capable of beneficial economic relations. however. 213.4. Id. See. supra Part II. not only in terms of the ECT protection itself. 27. and even where not accepted. and values permeate every corner of Central Asia.213 However.210 Russia became the dominant power in the region by exerting economic.209 2.. 7(7). arts. as China is an active and successful user of the WTO’s dispute settlement system. cultural.g.g. See ECT. RUSSIAN DOMINANCE.g. e. should now be looking for a partner that is willing to give more than one-off promises and investments in infrastructure that may or may not lead to partnership as opposed to mere exploitation. AND ENERGY LAW [Vol. See.212 Up until this point. 210. only to find that such development was limited in light of what could have been...YODOGAWA PETERSON 140 3/12/2013 3:18 PM TEXAS JOURNAL OF OIL. Central Asian states that saw positive economic development from the Soviet Union. e. GAS. art. at 325–33. Russian language.

41. 218. See id. The ECT introduces a certain type of national treatment obligation “that may not be present in GATT Article V. 15. . 1] 3/12/2013 3:18 PM AN OPPORTUNITY FOR PROGRESS 141 framework would not likely pose much of a threat. . Trade in Energy: WTO Rules Applying under the Energy Charter Treaty. Nov. it almost certainly would be 215. 1999. Summary Record of the 4th Meeting of the Energy Charter Conference held on 7 December 1999 (CC 162). even if they have disputes with another country concerning this transit. at 37. 7. http://www.216 However. 15. unless the relevant contract so provides or the relevant court or conciliator authorizes such interruption. 2. General Agreement on Tariffs and Trade 1994. Members & ObserversMongolia.L.php?id=407#c1324 (last visited Jan. 221. 3.T. ENERGY CHARTER. 220. Article V of the GATT has already provided for freedom of transit. ENERGY CHARTER SECRETARIAT. if China acceded to the ECT.5.php?id=303#c931 (last visited Aug. Energy Charter Secretariat.YODOGAWA PETERSON No.org/index. 222. The Former Yugoslav Republic of Macedonia acceded to the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA) several months later than its accession to the ECT.218 it would not impose too much of a burden on China. See Energy Charter Secretariat.M. 1999. Members & Observers. supra note 143. 216. the Former Yugoslav Republic of Macedonia. December 2001. 1867 U. 2000. http://www.org/index. 1153 (1994).encharter. 2012). and. art. 219. art. ECT. The ECT explicitly covers grid-bound energy transport. Expansion of the Energy Charter Process (CC 146). See ECT. art. Transit Article 7 of the ECT could be troublesome for China.219 At its 4th Meeting on December 7. ENERGY CHARTER. Annex 2. 6.217 Therefore.215 Transit countries also are under an obligation not to interrupt or reduce existing transit flows.220 This policy says: “[t]he basic conditions for accession [] involve [] the acceptance of . each accession to the ECT that has taken place to date includes an agreement to adhere to the PEEREA. at 1. 6. 27.encharter.”221 Thus. China already is subject to this provision. 7(6).” Energy Charter Secretariat. Energy Charter Secretariat. as it obliges Contracting Parties to take measures necessary to facilitate transit of energy consistent with the principle of freedom of transit and to secure established energy flows.222 As such. supra note 10. as a WTO member. Energy Charter Secretariat. the obligations contained in the Energy Charter Treaty and the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects. 1994.N. Jan. supra note 10. Apr. at 9. the Energy Charter Conference “noted” the policy for the expansion of the Energy Charter process. at 29. Energy Efficiency ECT Article 41 provides that the terms for accession of each applying state shall be approved by the Energy Charter Conference. . 2013). 187. 217. although Article 7 of the ECT elaborates some rules specifically related to energy transit. art.S. 33 I.

ENERGY CHARTER. 2011). . 223. available at http://www. after Russia has stepped out.226 China should capitalize on its investment by having the ECT protect the infrastructure that it is building and its continued purchases of Central Asian hydrocarbons. a treaty that is beneficial to most Central Asian producer states. See PETERSEN & BARYSCH. as opposed to a mere financier.YODOGAWA PETERSON 142 TEXAS JOURNAL OF OIL. AND ENERGY LAW 3/12/2013 3:18 PM [Vol.225 V. at 611 (citing Cory Lam.encharter. 8 required to adhere to the PEEREA. The insignificant costs that China would face by being subject to dispute settlement by a few Central Asian states that are not already WTO members. allowing energy-related investors to use international arbitration without exhausting domestic administrative review procedures. THE BENEFITS OBTAINED BY CHINA BY JOINING THE ECT OUTWEIGH THE COSTS China has made inroads to developing Central Asian hydrocarbons by investing in long-term infrastructure and extending loans that are favorable to China’s partners in Central Asia. at 42. but doing so would improve China’s global image. and formulating certain environmental policies and programs. See Energy Charter Secretariat. 226. and create mutually beneficial and sustainable relationships with Central Asian states. l5. See Zhang. http://www.encharter. 12th Five Year Plan Hailed as ‘Greenest’ FYP in China’s History. China’s making a binding multilateral commitment to adhere to the ECT. China’s acceding to the ECT also would counterbalance Russia’s soft power in Central Asia because China would be stepping into the ECT. 12.org/index. 2013).pdf. underline its commitment to long-term development of Central Asian hydrocarbons. supra note 62.224 Creating and adhering to such strategies and policy aims could be a challenge for China. supra note 37. and thereby not unilaterally harm Central Asian Contracting Parties in the energy arena. Furthermore. GAS. China is committed to making environmentally sustainable growth a top priority. Apr.php?id=7&L=0 (last visited Jan. CHINA BRIEFING. About the Charter. Energy Charter Secretariat. under China’s Twelfth Five-Year Plan for National Economy and Social Development for the period from 2011 until 2015. 224. would mean a step towards becoming a meaningful partner in the development of Central Asia. 225.223 The PEEREA requires the Contracting Parties that have ratified or acceded to it to formulate strategies and policy aims for improving energy efficiency and reducing various environmental impacts. would be outweighed by China’s being able to secure its investments and foster a strong position with its Central Asian partners.org/fileadmin/user_upload/document/EN. THE ENERGY CHARTER TREATY AND RELATED DOCUMENTS: A LEGAL FRAMEWORK FOR INTERNATIONAL ENERGY COOPERATION (2004).