The first phase of a China-Myanmar-South Korea-India gas pipeline
venture was started in July 2013. Together, they will explore the
resources of ‘Shwe Fields’. The pipeline will start from Kyaukryu port
in Rakhine State on the west coast of Myanmar and enter China at
Yunnan’s border city of Ruili. In addition to the gas pipeline, for
almost the entire distance across Myanmar, a crude oil pipeline will run
parallel to the gas pipeline. This pipeline is designed to transport
the 22 million tons of oil per year (440,000 barrels per day) that China
imports from the Middle East and Africa to Southwest China. The
commencement of the pipeline raises some questions; what is the
significance of the pipeline for China? What are the larger interests of
China in the region vis-à-vis the pipeline? How will Maynmar benefit?
The pipeline is of immense importance to China as it caters to its
domestic energy needs, ensures a smooth supply of gas and oil, and also a
viable alternative to the Strait of Malacca. China is expecting 12 bcm
of natural gas from this pipeline every year. Once fully operational,
the crude oil will be shipped from the Middle East via the Indian Ocean
through this route. The consortium expects to extract 500 million cubic
feet of natural gas per day.
Related to the pipeline’s construction are other infrastructure
developments by China in Myanmar. It is constructing river, road and
rail transport infrastructure across Myanmar to connect the landlocked
Yunnan province as a bridge with the Andaman Sea, Bangladesh and the Bay
of Bengal. Two routes have been envisaged in this regard; one route
will be created by constructing road/railways to connect Ruili (Yunnan),
Kyaukphyu (Rakhine State) and a deep sea port near Kyauphyu. The second
route will be created by constructing a river port on Bhamo in Kachin
State, from which the Irrawady River will lead to Yangon and Thilawa
Port.
These infrastructure projects will add to the economic restructuring
of the south western region of China. The pipeline is a key element in
governmental plans to transform Kunming into a petro-chemical refining
and production base as stated in the 12th five year plan. The project
will be a major part of China’s plans to promote inland economic
development in the south western provinces of Yunnan, Tibet, Guizhou,
and Guangxi as well as Chongqing Municipality. These are the areas in
China which have had difficulties receiving stable fuel supplies from
the refining centres at Lanzhou and Guangzhou.
Today, almost eighty per cent of China’s oil tankers pass through the
Strait of Malacca. The pipeline will help in significantly reducing the
distance from Middle East and Africa through the Strait; thus changing
the energy map of the region. Thus this route is the first alternative
route to the Strait of Malacca for China. This is a major breakthrough
in China’s strategy for energy diversification and in further reducing
the cost of transportation of oil and gas. In fact this will be the
fourth corridor to supply oil and gas.
Strategically, Myanmar is important for China’s two-ocean strategy to
gain access to both the Pacific and Indian Oceans. With its naval
ambition of transforming into a ‘Blue Water Navy’ by 2030, the Indian
Ocean Region remains its primary focus of interest. In the long-term,
the region is important as a ‘land bridge’ for the People’s Liberation
Army Navy (PLAN) to reach the Indian Ocean via the Myanmar-controlled
Coco Islands. The PLAN would be able to shorten the distance by 3000 km,
reducing the voyage by five to six days by not passing through the
Strait of Malacca to reach the Bay of Bengal. It has now emerged as a
potential target of China’s long-term strategic ambition, which involves
transforming the whole region as part of a golden ‘quadrangle’ regional
trade zone with Yunnan, Myanmar, Thailand and Laos.
Myanmar will get twenty per cent of the gas from the pipeline. In
addition, CNPC may pay an annual transit fee of USD 150 million to
Myanmar per year for the use of the pipeline in Myanmar. The pipelines
contract is expected to run over 20-30 years, with CNPC paying as much
as USD 4.5 billion in transit fees to the Myanmarese government. It will
benefit Myanmar with other foreign investments and shares. The pipeline
will benefit the local communities as well.
This development has come at a very critical time, with Myanmar set
to chair the ASEAN Summit in 2014. It will help act as a bridge between
China and ASEAN. It can be gleaned that the project is linked to the
logistical arrangement between China and Myanmar which will eventually
give a boost to their economic ties. The project serves as a logistical
supply station for the IOR shipping grounds. Once fully operational, it
will become a prosperous economic corridor. Forging of stated bilateral
ties will therefore have implications for India, which demand closer
inspection.
Teshu Singh
Senior Research Officer, CRP, IPCS
Email: teshu@ipcs.org
Senior Research Officer, CRP, IPCS
Email: teshu@ipcs.org
source: Eurasiareview
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