CNPC begins work on oil, gas pipelines in Myanmar

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 4 -- China National Petroleum Corp. said it has begun construction on two oil and natural gas pipeline projects that will link southwestern China and Myanmar.

CNPC, which made the announcement during Chinese Premier Wen Jiabao's state visit to Myanmar, said the 793-km gas pipeline and 771-km oil pipeline will extend from the Kyaukpyu port on Myanmar's west coast and enter China at Ruili, Yunnan Province.

Kyaukpyu is on Ramree Island about 400 km northwest of Yangon, and is due to become the import terminus for Middle East and African tankers supplying oil to China. The new port will be able to receive vessels of up to 300,000 dwt and will have storage capacity of 600,000 cu m.

According to CNPC, the $1.5 billion oil line has a designed transport capacity of 22 million tonnes/year, while the $1.04 billion gas line has a designed transport capacity of 12 billion cu m/year.

CNPC said Southeast Asia Pipeline Co., one of its affiliates, was put in charge of the design, construction, operation and maintenance of the pipelines under the agreement signed with Myanmar National Oil & Gas Co.

Analysts said the oil line will diversify China's import routes from the Middle East and Africa, enabling it to bypass the sea route through the piracy-prone Strait of Malacca. The gas line will help meet rapidly expanding demand in southern China.

Oil for the line will come from China’s Middle Eastern and African suppliers, while the gas line will be fed by fields in Myanmar, which has the most extensive gas reserves in Southeast Asia at 21.2 tcf.

Recent reports claim that Myanmar produces around 1.2 bcf/year of gas but wants to increase this to almost 2.2 bcf/year by 2015.

China signed 15 major agreements with Myanmar during Wen’s 2-day visit to the military state, ranging from the gas line, a hydro project, trade, and finance.

In November 2009, CNPC said it had started construction of a large-scale oil port in Kyaukpyu as a facility for the planned China-Myanmar oil line project (OGJ Online, Nov. 4, 2010).

Contact Eric Watkins at hippalus@yahoo.com.

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