China-Kazakhstan Energy Cooperation Under The Shanghai Cooperation Organization Framework:How Do Chinese NOCs Operate The New Silk Road?

This paper intends to study energy cooperation between China-Kazakhstan in the context of the Shanghai Cooperation Organization Framework. Although the overseas expansion activities of China’s National Oil Companies are primarily commercially driven, their investment activities in Kazakhstan are increasingly enjoying more policy support from the Chinese government, which is facilitated by the SCO and its nascent energy club. Diversifying its energy supply and vertical integration of value chain are among the primary motivations behind Chinese NOCs’ investment in Kazakhstan. Since both objectives have strategic significance for not only China, but also Kazakhstan, it is worth examining the involvement of SCO as a inter-governmental platform in China-Kazakhstan energy collaboration. This article shows that although in the sense of trade creation and diversion effects, SCO has yet contribute significantly to the welfare of both China and Kazakhstan, it still has great potential in terms of further enhancing cooperation on energy issues.