China

China’s Oil Pipeline Through Myanmar Brings Both Energy and Resentment


Until recently, 80 percent of China’s oil and gas imports were transported by ship through a narrow waterway separating Indonesia and Malaysia, known as the Strait of Malacca. The possibility that hostile forces could one day block that crucial passageway and starve the country of energy has long made China’s leaders nervous.

In 2009, two state-owned energy giants inked a $2.5 billion agreement to loosen the pinch: China National Petroleum and Myanmar Oil & Gas Enterprise agreed to lay down more than 500 miles of oil and gas pipelines from Myanmar’s western coast to China’s southwestern Yunnan province. When the oil pipeline goes online later this year, tankers carrying crude from the Middle East and Africa will be able to dock at Myanmar’s port of Kyaukpyu and send as many as 440,000 barrels of oil a day overland to China. Industry news service Platts (MHFI) reports that the oil pipeline is 75 percent complete and should be operational by June.

A parallel gas pipeline went into operation last July, capable of transporting as much as 12 billion cubic meters of natural gas per year across Myanmar to China. “China’s piped gas is mainly imported from areas around the Malacca Strait,” Lin Boqiang, a professor with the China Center for Energy Economics Research at Xiamen University, told the state-run Global Times. “Now we have one more pipeline from the land instead of the seabed, which will decrease” China’s energy vulnerability.

At the time the pipeline project was launched, Myanmar was still ruled by a military junta and acted as a de facto vassal state to China. Neither is the case today. “Myanmar’s remarkable democratic transition over the past couple of years has unleashed a wave of anti-Chinese feeling,” Tom Miller, managing editor of China Economic Quarterly, wrote in a research brief last summer. “Myanmar is starting to act less like a client state and more like an independent one. China knows its pipelines are vulnerable to a strike by nationalist rebels—or, potentially, to an unfriendly government.” Miller referenced a text message that went viral across Myanmar in late 2012: “Chinese get out. We’re not afraid of you.”

One recent clash at a pipeline work camp seemingly attests to the rise of anti-Chinese sentiment in Myanmar. Last week police detained more than 20 Burmese pipeline workers after a feud with Chinese workers at the same construction site escalated to arson, ending with an oil-storage facility and another building engulfed in flames on Jan. 27; an investigation is ongoing.

One Burmese resident of a nearby town told the newspaper Irrawaddy: “It is unjust that the Chinese are the ones who started the problem but none of them got arrested.” Expect more sparks to fly.

Larson is a Bloomberg Businessweek contributor.

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