• 25 mins Kinder Morgan Warns About Trans Mountain Delays
  • 7 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 12 hours Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 16 hours Russia, Saudis Team Up To Boost Fracking Tech
  • 22 hours Conflicting News Spurs Doubt On Aramco IPO
  • 23 hours Exxon Starts Production At New Refinery In Texas
  • 1 day Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 2 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 2 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 2 days VW Fails To Secure Critical Commodity For EVs
  • 2 days Enbridge Pipeline Expansion Finally Approved
  • 2 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 2 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 3 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 3 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 3 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 3 days Aramco Says No Plans To Shelve IPO
  • 5 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 6 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 6 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 6 days Chevron Quits Australian Deepwater Oil Exploration
  • 6 days Europe Braces For End Of Iran Nuclear Deal
  • 6 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 7 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 7 days India Needs Help To Boost Oil Production
  • 7 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 7 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 7 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 7 days District Judge Rules Dakota Access Can Continue Operating
  • 8 days Surprise Oil Inventory Build Shocks Markets
  • 8 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects

China's Back-Door Natural Gas Supply

One of the most critical changes in global energy flows we've seen for years happened this week.

China inaugurated one of its boldest pipeline projects in recent memory. A 2,500 kilometre pipe to carry natural gas and oil from the Indian Ocean across Myanmar in southeast Asia and into southwest Yunnan province.

The gas portion of the line became fully operational this week, according to China National Petroleum Corp (CNPC). The line is expected to carry over 1 billion cubic feet of gas per day into China. The twin oil line is expected to follow.

This massive development has several key implications for the global energy balance.

For one, it means that Myanmar's significant offshore natural gas reserves (and growing production) now have a "go-to" market.

This could mean less natgas supply for other consumers in the region. Possibly the reason why fellow Myanmar gas user Thailand said this week that it wants to make coal its official fuel of choice going forward, moving away from natural gas.

It also shows that China is committed to diversifying its natural gas import base. As one of the highest payers for LNG imports on the planet, China needs all the gas it can get. And "back door" supply options like the Burmese pipeline are going to be a focus.

Finally, the oil segment of the pipeline has the potential to re-make the crude shipping business. The line is expected to deliver over 22 million barrels yearly, or about 440,000 barrels per day into China. Most of this will be tanked oil, offloaded at Myanmar for transit through the pipe.

This means that major crude shippers like the Middle East will now have a much shorter journey to get supply to China. They will also be able to avoid traversing the perilous and congested Straits of Malacca, between Malaysia and Sumatra.

This gives China a leg up in the race to secure oil supply. Oil sellers around the Indian Ocean may start favouring the Chinese market over longer-distance routes like Japan and South Korea. Currently those buyers receive about 75% of their crude through Malacca.

We'll see what the final effects are. But this is a development that could cause all kinds of shake up.

Here's to coming in the back,

By. Dave Forest




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News