Chinese-backed Myanmar pipelines to be completed this month
28 May 2013
Two oil and gas pipelines across Myanmar from the Bay of Bengal coast to south western China, which will make Myanmar the newest trade hub in South East Asia, are expected to be completed by the end this month.
The two parallel pipelines which run from Kyaukphyu in Myanmar's Rakhine state to Ruili in China's Yunnan province are being built by a joint venture between Chinese state-owned China National Petroleum Corp (CNPC) and Myanmar Oil and Gas Enterprise (MOGE).
CNPC holds 51-per cent stake in the venture with the remaining held by MOGE.
The 800-km pipelines are being constructed at an approximate cost of $2.5 billion.
One of the pipelines is designed to transport natural gas from Myanmar's Shwe gas field off the country's west coast, and is expected to become operational by mid-year.
The other will transport part of China's crude oil imports from the Middle East, Africa and South America, and is likely to go on stream towards the end of the year.
The CNPC-Moge pipelines will help cut short drastically the transportation of oil and gas through the Strait of Malacca. According to some estimates, China currently receives about 37 per cent of its oil through the Strait of Malacca, which could be reduced to 30 per cent by the new Myanmar oil pipeline.
The pipelines pass through two of the most troublesome states of Myanmar, Rakhine and Shan, which are marked by frequent conflicts and sectarian violence.
In a presentation earlier this month, CNPC said that the project has a positive significance for the economy and society of both the countries and obtains wide support and affirmation across Myanmar. It also stated that Chinese project developers are sticking to the commercial principles of ''open, transparent and lawful operations''.
Shwe Gas Movement (SGM), a coalition of Burmese activists, claimed that the construction of the Shwe gas project, as well as CNPC's Maday deep sea port and oil and gas pipelines, have damaged the livelihood of local people and the environment.
''From the beginning there has been a total lack of transparency and accountability for this project,'' Wong Aung, an SGM activist said.
CNPC said that it has contributed significantly towards the development of the affected region. The company has spent millions of dollars on electricity transmission, community projects on health, education and vocational training of local people.
''We do appreciate the socio-economic benefits that the community projects bring, but this is very small amount of money compared the billions of dollars that they will make from this project,'' Wong Aung said.
SGM also said that there has been ongoing forcible land confiscation, providing no compensation or a limited amount compensation for the acquired rice farms and lands.
The organisation urged the government to establish and enforce laws to protect local people's environment, livelihoods, culture and customs in line with international standards.
The Shwe gas project is developed by South Korea's Daewoo International Ltd with a 51-per cent stake.
Other partners include India's ONGC Videsh Ltd with 17 per cent interest, Myanmar Oil and Gas Enterprise with 15 per cent, India's Gas Authority of India Ltd (GAIL) and Korea Gas Corp, each holding 8.5 per cent stake.
Daewoo, which has been exploring natural gas in Myanmar since 2000, discovered the Shwe gas field in 2004.
The project is expected to deliver 12 billion cubic metres (bcm) of gas to China per year, earning revenues of about $1.5 billion. Another 1 bcm will be reserved for domestic use, according to Myanmar's energy ministry.
The country already earns about $2.5 billion per year on its export of natural gas to neighbouring Thailand.
Myanmar is expected to gain about $35 million yearly as ''road right fee'' and transit fee for the transportation of oil and gas.