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Myanmar-China oil pipeline marks latest step in a growing relationship

The growing relations between China and Myanmar have been solidified by the inauguration of a section of a new shared crude oil pipeline between the two nations.

The Myanmar-based section of the 2,400 km pipeline was completed in May 2014 and is managed by a subsidiary of state-owned China National Petroleum Corporation (CNPC).

With the ability to carry 440,000 barrels per day, it is hoped the pipeline will help ease China's reliance on shipments through the narrow Malacca Strait, which has long been racked with uncertainty, but a key facet of the development is the further strengthening of ties between the two nations.
 

Long time coming

After kicking off in June 2010, the project has seen the CNPC work in cooperation with Myanmar’s state-run Oil and Gas Enterprise (MOGE), with 51 per cent of the project belonging to the CNPC and the rest owned by MOGE, in an arrangement that is representative of the growing accord between the countries.

However, the relationship has not been free from uncertainty, with the pipeline's future thrown into doubt in 2013 due to political changes in Myanmar.

Though the long-held belief was that the project would have ensured energy security and increased regional influence, the fact that Chinese companies in Myanmar tended to work only with the government meant that the pipeline's success was under a cloud of doubt when Thein Sein’s elected government replaced the military junta.

The oil and gas pipelines were strongly opposed by locals and NGOs from the start of the project, but were built with the support of the old junta, and as such the CNPC had to take action to ensure the pipeline was not shelved.

With the International Energy Agency estimating that China’s economic growth will mean it will rely on imports for 82 per cent of its crude oil needs by 2025, there was no question of postponement, and as such the CNPC spent large amounts on social responsibility.

Its investments extended to building 43 schools, 2 kindergartens, 3 hospitals, 21 clinics, a reservoir and an electricity supply system, all of which were carried out by the Myanmar government.
 

Easing fears

While there were some initial question marks over the effect on Myanmar, the construction of the pipeline served to illustrate China's commitment to the region.

It also helped to quell China's anxiety about its reliance on the Malacca Strait for its imported energy, where piracy has long been a problem and geopolitical complexities often cause problems.

Chinese leaders wanted a pipeline through Myanmar to safeguard their fuel supplies and this has been realised, with the new oil pipeline able to transmit 22 million tonnes of crude a year from Myanmar’s Madae Island, which is due to be officially opened on Friday.
This will complement another project launched in 2013, which will see a pipeline transport natural gas over 2,500 kilometers from western Myanmar to south-west China, and is a growing indication that the two nations will continue to operate new oil and gas projects that offer mutual benefits in the years ahead.


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