January 17, 2006	Tuesday	Zilhaj 16, 1426

BEIJING, Jan 16: The future of Central Asia’s oil and gas reserves will become a focus of an increasingly ambitious regional security group, including energy-hungry China, officials said in Beijing on Monday.

The Shanghai Cooperation Organization, which comprises China, Russia, Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan will form an “energy working group”, probably later in 2006, the group’s Secretary-General Zhang Deguang told reporters.

“Energy is very important. We have to talk more about maintaining market stability in the region — with a balance between supply and demand — as well as joint development of energy resources,” he said.

The energy group will bring together experts from member states’ energy bureaucracies to consider regional gas and oil pipelines, hydropower projects and other ventures, Vladimir Zakharov, a Beijing-based official with the SCO told Reuters.

“Energy is priority number one for us. All the countries are eager to move forward as soon as possible with closer cooperation,” he said. Energy officials from the member countries already met in Tashkent in December, he said.

Victor Trifonov, an economic adviser with the SCO, said it may play a coordinating role in hydro-electric projects in Tajikistan, where Russia recently agreed to spend $1.8 billion on hydro stations mothballed after the collapse of the Soviet Union and build adjoining aluminium plants.

Excess electricity from the hydro project may be shipped throughout Central Asia and far western China, he said. The energy group may also coordinate and eventually expand gas pipelines joining Russia and China to Kazakhstan’s fields, he added.

The SCO was founded in Shanghai in 2001, based on an earlier, looser regional group, and it originally focused on combating “terrorism, separatism and extremism”. But since 2004 it has broadened to include regional economic development.

Mongolia became an observer member in 2004, and so did India, Iran and Pakistan in 2005, but Zhang said there were no specific plans to make them full members.

He rejected claims voiced by some critics that the SCO is seeking to counter Western influence in Central Asia.

“The Shanghai Cooperation Organization will never become a military bloc or an exclusionary one,” Zhang said. “We’re not an Eastern Nato,” he said, referring to the North Atlantic Treaty Organization — the West’s key military pact.

Zhang, a former Chinese diplomat, said the SCO had not discussed either Mongolia’s recent government downfall or Iran’s nuclear standoff with the United States and European Union.

Although Russia is the world’s top producer outside the Organization of Petroleum Exporting Countries, it is keen to shore up its regional influence as some former satellite states like Ukraine shift to pro-western governments.

China is increasingly looking to its Asian neighbours for oil and gas supplies, because of a growing reliance on imports to feed its booming economy.

Crude began flowing down a pipeline from Kazakhstan in December and the two nations are mulling building a parallel gas pipeline.

China is also staking a more direct claim to its neighbour’s assets. Top producer CNPC bought listed PetroKazkhstan late last year, while offshore firm, CNOOC Ltd is considering a bid for privately owned Kazakh producer Na