August 2009 Vol. 236 No. 8

Projects

Chinese Pipeline Program Raises Indian Eyes

China will soon begin to lay parallel oil and natural gas pipelines from the Kyaukpyu deep-sea port on Myanmar’s Arakan coast in the Bay of Bengal, all the way up to China’s Yunnan province.

That will significantly enhance its energy security while establishing the presence of Chinese ships in India’s eastern backyard.

The 1,100-km gas pipeline will tap into key blocks in Myanmar’s energy-rich Shwe gas fields (bigger than any gas field in India). The fields have been given on a 30-year lease to a Chinese-led consortium although India’s Oil & Natural Gas Commission has a 30% stake in the field. The pipeline reduces China’s dependence on the narrow Malacca Straits through which pass 80% of its oil imports of 4 million bpd.

When the oil and gas pipelines are completed by 2013, according to China National Petroleum Corporation (CNPC), Chinese tankers will dock at Kyaukpyu port to transport 0.6 million bpd from West Asia and Africa. The gas pipeline, meanwhile, will move about 12 Bcm/a to Kunming.

Myanmar has become the center of Sino-Indian rivalry for energy resources, with Myanmar agreeing in 2004-05 that India build a pipeline from its newly discovered A-1 block in the Shwe gas fields, through Bangladesh, to serve India’s north-eastern states. When Bangladesh refused India transit permission, PetroChina was waiting to make a counter-offer, and willing to fund the cost of the pipeline.