New China-Myanmar Oil Route Nears Launch

A pipeline that will carry crude oil from the coast of Myanmar to southwest China is nearing its start as the two countries settle their differences regarding the terms of the oil transport project. That’s according to government sources from Myanmar who spoke to Reuters. The pipeline could turn Myanmar’s Bay of Bengal coast into a new major oil route.

The 770-km, $1.5-billion pipeline was completed two years ago, but disagreements between Beijing and Naypyitaw delayed the start of deliveries. Now the countries seem amicable again, with China last week blocking a UN statement of concern with regard to a security operation conducted by Myanmar forces in the Rakhine province.

The operation is believed by most of the UN Security Council to be too violent and could include crimes against humanity and ethnic cleansing of a Muslim minority in the Asian nation. Myanmar’s government says the operation was a response to insurgence among the locals. China was backed in its rejection of the statement by Russia.

Since some of the clashes with the Muslim minority are taking place near the Myanmar-China border, the latter is careful not to let it spill over, vocally supporting peace talks. What’s more, these areas are abundant in natural resources, which is one more reason for Beijing to take a more active part in the peace process.

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Myanmar is mostly rich in natural gas, which it exports to neighbors Thailand and China. It has some 50 million barrels in estimated oil reserves, but the crude that will feed the 260,000-bpd pipeline will come from overseas. Eventually, the pipeline should reach a capacity of 400,000 barrels per day, which is equal to 5 percent of China’s daily demand of imported oil.

The crude is to be supplied to PetroChina’s brand new Yunnan refinery, where test production is scheduled to start in June.

By Irina Slav for Oilprice.com

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