China and the World

Passing gas

Pipeline delay may signal tensions with Burma

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Even some of the most difficult projects undertaken by China National Petroleum Corp (CNPC) have been delivered on schedule. In the toughest of circumstances, such as in war-ravaged Iraq or Afghanistan, the company has usually finished on time.

So when a strategically important pipeline to deliver gas to China’s energy-hungry southwest fails to meet its deadline, eyebrows are raised.

Even more so when the pipeline runs partly though Burma (also known as Myanmar), a country in which resentment at Chinese involvement in its domestic affairs (past and present) seems to be becoming more vocal.

The 2,500-kilometre pipeline was planned to transport gas from the Shwe field off Burma’s west coast to the Chinese province of Yunnan, as well as the Guangxi Autonomous Region. It was scheduled to begin operations on May 30; with a second pipeline to carry oil into Kunming in Yunnan also expected to open later this year.

Now it seems that neither project is going to be ready on time.

On June 4 CNPC put out a statement saying the gas pipeline had been completed “within” Chinese territory and that the oil pipeline over the same stretch (i.e. to the Chinese border with Burma) was 94% finished. But the company also suggested that the reason for the delay in both projects was the political situation in Burma.

“The Sino-Burmese oil and gas pipelines have been undertaken in a complex international and economic situation and amid changes to Burma’s political system. As a result, the construction process was delayed,” it said.

China inked the original pipeline deals in 2009 when Burma was still under the rule of the military junta, as well as relying heavily on support from Beijing.

Since then the Burmese generals have ceded much of their control to a quasi-democratic government. Western sanctions on the country have also been lifted meaning that Chinese companies now have to compete for contracts. In several cases – most famously that of the Myitsone Dam and the Leptadaung copper mine – previous agreements with Chinese entities have been torn up or rewritten.

To regain influence in Burma, China’s firms are going on a charm offensive, according to the New York Times.

For example, CNPC has invested $20 million in schools and clinics along the route of the pipeline, for instance. But this hasn’t stemmed the sudden outpouring of anti-Chinese sentiment.

“As well as misjudging grassroots sentiment in the country, China’s failure to understand the nation’s political situation may also be rooted in its erroneous belief that it can venture wherever Western multinational companies cannot,” lamented the author of article on China.org.cn, a website run by the State Council information office.

China wants to open the pipelines because they knock almost 2,000 kilometres off the traditional sea route though the Malacca straits. Between them, the two projects will deliver an annual supply of 12 billion cubic metres of gas and 22 million tonnes of Middle East and African oil, which will arrive in tankers at the Burmese port of Kyaukpyu.

Despite all the talk blaming the changing political situation in Burma, at least one Chinese newspaper suggested that the reasons for the delay might be found closer to home.  Century Weekly contradicted CNPC’s explanation, claiming that the pipeline on the Burmese side of the border is largely finished but that the connecting infrastructure on the Chinese side of the border hasn’t been completed, in part because of street protests in Kunming, sparked by the construction of a refinery in the city.

Burmese officials have been saying the same thing.

“The pipeline construction inside our country is 100% finished. But the Chinese portion is over 1,600 kilometres and they have not been able to finish it in time,” Than Htay, the Burma’s energy minister told the Irrawaddy newspaper.

“For our domestic utilisation, we can take gas starting from July,” he added.


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