China Expects To Complete Pipeline From Myanmar By May: Report

Oil and natural gas travelling from the Middle East to China may begin to bypass the traditional Strait of Malacca shipping route as soon as the end of May, reported state-owned Xinhua News Agency on Tuesday, following the projected completion of a 1,100km Sino-Myanmar pipeline that will transport energy imports to China’s Yunnan province via Myanmar’s Indian Ocean coast.

Oil and natural gas travelling from the Middle East to China may begin to bypass the traditional Strait of Malacca shipping route as soon as the end of May, reported state-owned Xinhua News Agency on Tuesday, following the projected completion of a 1,100km Sino-Myanmar pipeline that will transport energy imports to China’s Yunnan province via Myanmar’s Indian Ocean coast.

According to Gao Jianguo, the head of the project under the China National Petroleum Corporation (CNPC), construction on the main parts of the pipelines in Myanmar were already completed; while the pipelines are set to undergo pressure tests and a drying process next month, before operations can fully begin – less than three years after construction started.

The pipeline, which travels from the port of Kyaukpyu in Myanmar to Ruili city in Yunnan, is reportedly able to transport 22 million tonnes of oil and 12 billion cubic metres of natural gas a year “if everything goes as planned”, cutting China’s reliance on the Strait of Malacca shipping route by about one-third – where it currently accounts for about 80 percent of all Chinese crude oil imports.

The new pipeline will also cut the transport distance for African and Arabian oil shipments by about 1,200km, giving China an alternate and shorter supply route.

Should the Strait of Malacca ever be blocked because of piracy, terrorism or conflict, China’s energy needs will remain relatively secure, told Stephanie Kleine-Ahlbrandt, northeast Asia director at International Crisis Group, to the Financial Times.

[quote]“Beijing also fears that the straits could be threatened or cut off by the US if there was ever a conflict between the countries in the Taiwan Strait or elsewhere,” Kleine-Ahlbrandt said.[/quote]

Related: How China Beats The US At Energy Leveraging: Gail Tverberg

Related: Russia To Build $38 Billion Gas Pipeline To Asia

But the pipeline also has had its detractors, mainly among Burmese citizens, who have lost their land as a consequence.

Residents of Kyaukphyu Township in Rakhine State, Myanmar, called for a suspension of the project until concerns over its environmental and social impacts were addressed, while others have criticised China for failing to compensate displaced citizens.

[quote]”In our village, each landowner received 500,000 kyat ($582) regardless of the size of their plot of land,” told a resident of Nong Pang village to Deutsche Presse-Agentur. “In other areas, some get nothing, and in others some get 500,000 kyat per acre (0.4 hectares).”[/quote]

“It (the pipeline) is not in accordance with international standards, for what’s considered necessary to prevent the consequences from leakage and other risks,” added a spokesman for The Shwe Ga Movement, which monitors the project’s environmental impact.

A CNPC spokesperson however denied the allegations, claiming “the Chinese government will take action if we don’t follow their rules and regulations in big projects”.

“We negotiated with local governments, the farmers and the company [contracted to build the pipeline] to pay compensation for land. We gave the set price,” the spokesman said, as cited by Eleven Media in Myanmar.

The dual pipelines, one for gas and one for oil, are being buried at a depth of 0.76 metres, which is in accordance with international standards, the CNPC spokesperson added.

Chen Jian, China’s Deputy Minister of Commerce, called on CNPC last week to investigate the allegations, but said that the project would have mutual benefits for both countries.

[quote]“Myanmar people will know the mutual benefits if they go to the project area and study it,” Chen Jian said, adding: “I heard that the protesters are not locals in some project areas.”[/quote]

According to FT, Myanmar will be allowed to take no more than 2 million tonnes of crude oil and 2 billion cubic metres of gas a year from the pipeline for its domestic consumption. China will also reportedly pay Myanmar $13.81 million per year in royalties, on top of additional royalties based on the amount of oil and gas transported. Sources told Eleven Media that the total could exceed $600 million over 30 years.

Related: World Bank Offers $245 Million In Aid To Myanmar

Related: India, Thailand, Myanmar To Build 3,200km Trilateral Highway