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Myanmar-China pipeline to benefit both countries?

May 30, 2013 at 3:34 PM   |   Comments

NAYPYIDAW, Myanmar, May 30 (UPI) -- China's $2.5 billion oil and natural gas pipeline in Myanmar will mutually benefit both countries, said Myanmar President Thein Sein.

Thein Sein's remarks of support for the project -- being built jointly by China National Petroleum Corp. and Myanmar Oil and Gas Enterprise -- followed a meeting with CNPC general manager Liao Yongyuan earlier this week, Chinas' official Xinhua News Agency reports.

In what is seen as a gesture to appease opposition to the pipeline, CNPC has donated $12.5 million for the construction of 45 schools and 24 health clinics and other projects along its route in Myanmar.

Liao, in his meeting with Myanmar's president, cited those projects as an example that CNPC has fulfilled its social responsibility in the course of the pipeline construction.

The pipelines will have a capacity of 440,000 barrels of crude a day and 12 billion cubic meters of natural gas.

The oil pipeline starts at Maday Island and the gas pipeline at Ramree Island, both in Rakhine state, on the west coast of Myanmar, with the two lines entering into China at Ruili, Yunnan province.

The project is considered crucial for China to reduce its dependence on the Strait of Malacca, from where most of China's oil is shipped before reaching the South China Sea, an area facing intensifying territorial disputes.

"The way the Chinese have been able to develop their energy oil import infrastructure in recent years has been hugely impressive," Richard Gorry, an analyst at consultancy JBC Energy was quoted as saying by The Wall Street Journal.

"When you're an economic powerhouse like China, you want to make sure you're not held hostage to potential supply disruptions in the Malacca Strait or South China Sea," Gorry said.

Myanmar's Energy Minister Than Htay told the Journal that natural gas will start flowing in June and the oil in September but Chinese officials have said oil may not start until the end of the year.

Aside from receiving payments from China for land rental and transit fees, Than said his country is entitled to draw 40,000 barrels of crude oil a day from the pipeline.

"We will have very good access to those pipelines," he said, adding that relations with China remain solid. "This is a very big advantage for our country."

But government sources have said regional security concerns could cause a delay for gas and oil to start flowing, The National newspaper reports.

Recent flash points include clashes between Myanmar government forces and ethnic militia fighters in Shan state and fighting with the Kachin Independence Army in Kachin state in the north, bordering China.

Topics: Thein Sein
© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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