Tuesday 19 November 2013

Contested Sino-Myanmar oil pipeline nears completion

Local construction on the controversial US$2 billion crude oil pipeline that would flow from China to Myanmar is near completion though operations will be delayed until next year, officials said.

Requesting anonymity, an official from South-East Asia Crude Oil Pipeline Co Ltd, the firm that will operate the pipeline once it comes online, said Myanmar would complete its end of the pipeline this year.

“Construction is now 96 percent complete,” he said, adding that an oil refinery has yet to be built in China.

Nevertheless, the Chinese government doubts any oil will be pumped through before the targeted deadline of December 31 as the essential refinery that would process oil has yet to be built.

“It is not known when operations will begin because the construction of an oil refinery has been delayed,” Huo Wenjun, third secretary at the Chinese Embassy in Myanmar told The Myanmar Times on November 13. “First the refinery was to be built in Kunming, but now it will be elsewhere in Yunnan province.”

Once operational, the pipeline will move 200,000 barrels of crude oil each day, 40,000 of which will go to Myanmar, while the government is working on plans to install a refinery able to process 25,000 barrels a day, said Ken Tun, CEO of the Parami Energy Group of Companies.

“Still, a refinery producing less than 100,000 barrels each day cannot be commercially profitable. We should consider the long term and wait to see what will happen over the next 10 years.”

The China National Petroleum Cooperation (CNPC) began the project in 2008 in order to create an outlet to import oil from the Middle East and Africa. For Myanmar’s role as a transit area, it would be paid US$7 million each year in addition to another $1 per tonne of crude oil that passes through, the SEAOP has said.

Work on the $2 billion pipeline, which stretches 771km from Rakhine State to the Chinese border, began in 2011 and was immediately dogged by controversy as protestors claim safety and human rights violations, land-grabs and environmental damage.

“We understand that the project is to provide power for China, while nearly 80 percent of our people are living in darkness,” said Wong Aung an advocate at the Shwe Gas Movement.

“In Rakhine State, fishermen were banned from entering some areas and farmers were reportedly forced to surrender their land. Pipeline security has increased the military presence in northern Shan State,” he said. “We want the project to be halted until federalism is established and the issue of resource ownership is dealt with in a way acceptable to ethnic nationalities.”

The CNPC has 50.9pc ownership of the project, while MOGE (Myanmar Oil and Gas Enterprise) holds 7.37pc, Daewoo 25.04pc, KOGAS (Korean Gas Corporation) 4.17pc, GAIL (Gas Authority of India Limited) 4.17pc and ONGC (Oil and Natural Gas Corporation from India) 8.35pc.

source: The Myanmar Times

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