The Transfer of Natural Gas From The Caspian Basin to The Eastern Markets, a Game Theory Approach

Over the past three decades, relations between China and Turkmenistan and Kazakhstan have developed based on strategic and bilateral cooperation, with China playing a pivotal role in the region as Kazakhstan's primary economic partner. This research investigates the potential scenarios for the transportation of natural gas from Central Asian and Caspian Sea countries to China using cooperative game theory. The study begins by addressing the problem statement, theoretical framework, literature review, and research methodology. In the second phase, the economic evaluation of existing infrastructure and the most likely scenarios for the next 30 years are conducted. In the final phase, the bargaining power of each country is calculated using the Shapley value in various scenarios. The findings indicate that Kazakhstan, due to its geographical location, holds the highest bargaining power among Central Asian countries. Additionally, production capacity and gas exports are identified as the second most important factors in determining bargaining power. The research shows that an alliance is not feasible without the presence of a key country, and both geographical location and natural resources are identified as sources of national power in the geopolitics of energy. The model further reveals that if Iran's production capacity increases and its pipeline infrastructure connects to Turkmenistan, Iran could play a significant role in supplying natural gas to China. This study also demonstrates that the simultaneous implementation of all projects benefits Kazakhstan, while the best scenario for Iran involves cooperation with Azerbaijan. This research addresses critical questions regarding the distribution of bargaining power among countries and the economic and political impacts of various scenarios in the oil and gas trade between Central Asia and China.