China-Myanmar oil pipe work to begin this year

Beijing, Apr 22: China expects to start building a crude oil pipeline this year linking its southwestern Yunnan province with a deepwater port in neighbouring Myanmar, the official Xinhua agency said on Saturday, quoting top refiner Sinopec.

China also plans to invest 8 billion yuan ($1.04 billion) in a 2,380-km gas pipeline between the two countries, Xinhua added without giving a source, despite uncertainty about who will get the gas from some of Myanmar's largest offshore deposits.

South Korea's Daewoo International Corp. operates Myanmar's large A-1 and A-3 natural gasfields, which have been the subject of a geopolitical tug-of-war between nearby China, India and Thailand as well as potential liquefied natural gas (LNG) buyers South Korea and Japan.

An energy official from the military-ruled nation told Reuters in December that Myanmar had delayed a decision on what to do with gas from the two offshore blocks, pending findings from new appraisal wells to be completed by May.

But Korea's Chosun Ilbo paper in March quoted an official from Seoul's energy ministry as saying that Myanmar had committed its gas to China as Beijing had agreed to build pipelines for free, with only price negotiations yet to be finalised.

Daewoo shot down the report, and China's state-run CNPC also denied knowledge of any discussion or agreement that it would build gas pipelines for Myanmar without any charges.

Daewoo has a 60 percent stake in the blocks. Other stakeholders include Korea Gas Corp. with a 10 percent stake, India's Oil and Natural Gas Corp. with 20 percent, and India's natural gas utility GAIL owns 10 percent.

Oil For SouthWest:

The National Development and Reform Commission approved the crude pipeline at the start of April, the report said, without detailing how large capacity would be or when work might be completed.

It will carry oil from Sittwe in Myanmar to Kunming, capital of Yunnan. Neighbouring Chongqing municipality is lobbying to have the pipeline extended to supply feedstock for a planned new refinery.

Details of the project could not be found on the Sinopec or Commission Web sites on Sunday, and neither could be immediately reached for comment.

The pipeline would help supply crude to one of China's more remote areas and allow importers to bypass the packed and piracy-infested waters of the Malacca Straits, one of the world's busiest shipping channels.

It also reflects a growing energy relationship between China and its isolated neighbour, as Beijing scours the globe for resources to fuel its booming economy.

Top Chinese oil and gas producer CNPC in January signed production sharing deals for three deepwater oil and gas blocks off the western Myanmar coast and has started feasibility studies with its Myanmar partner.

Its three energy majors -- Sinopec, CNPC and CNOOC -- have all stepped up work in Myanmar and have a total exploration acreage larger than that in the country's own Bohai sea, Xinhua quoted Han Jingkuan, deputy director of the planning institute of PetroChina Company Ltd., saying.

Reuters