ASEAN KEY DESTINATIONS
Sino-Myanmar oil pipeline launch a good signal
The launch of the Sino-Myanmar oil pipeline following a two-year delay could be the Myanmar government's way of sending a positive signal ahead of its president's visit to China in April, Chinese experts said.
The project to pump oil 770 kilometers across Myanmar to Southwest China is set to begin, Reuters reported, citing Aung Myat Soe, deputy director of planning under the state-owned Myanmar Oil and Gas Enterprise, as saying that the project was awaiting a final go-ahead from the Minister of Electricity and Energy.
Major issues, including transport tariffs and Myanmar's tax take on the oil, have been settled, but port fees have yet to be finalized, a Myanmar-based industry source familiar with the matter told Reuters, adding that "the two sides are working to finalize the terms and sign the contract," and "the time that the deal would be sealed could be in a couple of days or early April."
"The possible start-up of the oil pipeline shows the Myanmar government attaches great importance to cooperating with China. It may be a 'gift' of the Myanmar president to China during his visit, intended to enhance cooperation in other fields," Zhu Zhenming, a deputy director of the Southeast Asia Research Institute affiliated with the Yunnan Academy of Social Sciences, told the Global Times.
The new government wishes to strengthen economic ties with China to promote development in the "special economic zone," such as the Kyaukpyu project, said Zhu, adding that both Myanmar and China will benefit from the pipeline project.
China National Petroleum Corporation (CNPC), the pipeline contractor and operator, declined to comment on Monday when reached by the Global Times.
The refinery project in Yunnan is awaiting operation. Based on the plan, the project will process half of the crude oil from the pipeline and generate 13 million tons of oil every year.
Ding Kebei, deputy manager of the company's office in Yunnan, told the media in November 2016 that the project will begin operations in 2017, and that final negotiations with the Myanmar government were underway.
Caijing magazine reported that China will pay $13.6 million to Myanmar every year, with the Myanmar government expected to earn $1 for each ton of transported crude oil.
Several National People's Congress deputies have also called for the construction of roads and railways connecting Southwest China's Yunnan Province to the port of Kyaukpyu in Myanmar, saying that road construction, especially the section outside of China, is a bottleneck in China's strategic plan of opening a trade route to the Indian Ocean.
In 2005, CNPC signed a deal with the Myanmar government for the purchase of natural gas over a 30-year period. Three years later, China and Myanmar agreed to build a $1.5 billion oil pipeline and a $1.04 billion natural gas pipeline.
The oil and natural gas pipelines run in parallel and start near Kyaukpyu and enter China at the border city of Ruili, Yunnan province. The 2,806-kilometer-long natural gas pipeline, running from Kunming, Yunnan to Southwest China's Guizhou Province and South China's Guangxi Zhuang Autonomous Region, went into full operation in October 2013 and has transferred 3.4 billion cubic meters of gas to a gas branch company as of October 2016.
However, the oil pipeline, which will allow China to import oil via the Bay of Bengal and has a capacity of 22 million tons of crude oil per year, has been sitting empty for two years.
Experts warned that safety remains a key issue.
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