(EnergyAsia, January 30 2015, Friday) — Myanmar has officially started up the final 771-km section of a major pipeline to deliver crude oil from a new deepwater port on the Bay of Bengal in southwestern Rakhine state to China’s landlocked Yunnan province.
Twinned with a 793-km natural gas pipeline launched in July 2013, the oil pipeline forms part of a China-led effort to develop overland infrastructure across Myanmar to facilitate trade to bypass the use of the increasingly congested Straits of Malacca that has long been the main channel linking East Asia to Europe, Africa and the Middle East.
Myanmar Vice President U Nyan Tun officially launched the project with the January 28 ceremony commissioning a crude oil unloading terminal on Maday Island that is linked by the pipeline to Yunnan’s Anning city where PetroChina is planning to build an oil refinery and petrochemical plant.
China National Petroleum Corp (CNPC) and Myanma Oil and Gas Enterprise (MOGE) are joint owners of the South-East Asia Crude Oil Pipeline Company Ltd (SEAOP), the operator of the pipeline that is designed to deliver 22 million tons of imported crude oil per year from the new Kyaukphyu deep-sea port and terminal. The Chinese firm has a 50.9% majority stake in the pipeline.
The gas pipeline and six processing stations are owned by South-East Asia Gas Pipeline Company, Ltd (SEAGP), a consortium comprising six Asian companies to deliver 12 billion cubic metres of natural gas per year. Led by CNPC, its other members are Daewoo and Korea Gas Corp of South Korea, ONGC Videsh Ltd and GAIL of India, and state-owned Myanmar Oil and Gas Enterprise (MOGE).
Continuous protests by environmental groups and local residents have delayed the project including the oil pipeline which was completed last May after four years of construction.
CNPC has also built oil storage tanks on the island to support trade and infrastructure development in southwestern Myanmar. Alongside the twin pipelines, China is also investing in a major rail line and a highway to link Kyaukpyu to the Yunnan cities of Ruili and Kunming.
The project fulfils a dream by the British colonial power and other regional governments since the late 18th century for an alternative passage to the Straits of Malacca to serve trade East Asia.
The project could alter the pattern of international trade in Asia as the 960-km Straits of Malacca leads to Singapore as the region’s main transshipment and distribution point for the region. China and Myanmar are hoping to develop Maday Island into a major transshipment hub.