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Myanmar Attracting Major Energy Investors

China's national oil company said it's finished building six new oil storage tanks on a tiny island off the coast of Myanmar. More work is planned there in terms of pipeline infrastructure as China tries to get around busy shipping lanes. Investments in Myanmar have increased in response to a series of democratic reforms that began with general elections in 2010. Human rights groups worry the international community is doling out the rewards too soon. Myanmar President Thein Sein scrapped a controversial dam in 2010 and the government has since backed transparency initiatives, however. Though religious violence has continued in Myanmar, it's possible the country is developing as a viable investment opportunity.

China National Petroleum Co. said it's finished work on six oil storage tanks on a tiny island off the western coast of Myanmar. Oil and natural gas pipelines there could help China tap into more energy reserves from the Middle East and Africa. OPEC, in its monthly report for May, said "a large portion" of the growth in world oil demand is expected from China. Pipelines from offshore Myanmar could deliver as much as 440,000 barrels of oil per day and 12 billion cubic meters of natural gas per year to mainland China.

Related article: North Korean "Insanity" Part of Geopolitical Game

Afghanistan is a better place to do business than Myanmar, according to a recent report on transparency from Resource Watch Institute. The report said Myanmar was one of the countries that haven't disclosed "any meaningful information about the extractive sector," adding mismanagement in extractive industries feeds government corruption. Last year, the United States started easing some sanctions on Myanmar in response to political reforms and the European Union followed suit earlier this year. Human rights groups contend that it was those sanctions that brought about reforms in the first place, saying it's too early to start handing out rewards to Myanmar.

The end of military rule in Myanmar coincided with an outbreak of violence between Buddhists and minority Muslims. Two dozen Muslims were killed in broad daylight earlier this year. In a May report, Amnesty International said more than 140,000 people, most of them minority Muslims, are displaced in Rakhine state alone. When President Thein Sein visited Washington in May, President Barack Obama expressed his "deep concern" about violence directed toward the Muslim community.

Last week, the government of Myanmar made further political progress, however, by committing to the implementation of the Extractive Industries Transparency Initiative.

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"The United States and Myanmar reaffirm their shared objectives to manage their natural resources, including oil and gas, and the revenues they generate, transparently and for the benefit of all their citizens," a joint statement read.

CNPC projects planned offshore Myanmar have sparked demonstrations from islanders that say their land was stolen to build a deep-water port there. When protesters complained about a $3.6 billion dam project, Myanmar's president scrapped it altogether. Myanmar is eager to attract foreign investors to an untapped market.  Some voices say it's too soon to start exploiting Myanmar's resources. Oil and natural gas auctions have coincided with political reforms, though cries of ethnic cleansing have drowned out some of the progress. If the agreement on EITI is any indication, however, perhaps Myanmar is a case where pessimism will eventually lose the shouting match.

An oil and natural gas conference starts June 17 in Myanmar.

By. Daniel J. Graeber of Oilprice.com




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