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No longer a pipe dream

oil-pipe-w

Myanmar has a track record when it comes to transporting essential supplies to China. Famously the Burma Road was built between Lashio (in Myanmar) and Kunming (in southwest China) in 1938, covering 1,154km. For the next four years it supplied Chinese leader Chiang Kai-shek with military and other essential materiel, offering a lifeline as his retreating forces fought against Japanese troops (which were busy occupying China’s eastern seaboard). It was owing to the strategic importance of the Burma Road that Japan’s army invaded the country in 1942.

This past week a signing ceremony in Beijing signalled the strategic importance of Myanmar’s location once again. The heads of state of both governments watched as a new agreement was signed for the operation of the Sino-Myanmar Crude Oil Pipeline. The oil link had been tested as far back as 2014 but later disputes saw its commercial opening delayed and the crucial final 2.5km remain unbuilt. According to the South China Morning Post, the breakthrough came more recently when the Myanmar government agreed to lower transit fees through the pipeline. That permitted the Chinese and Myanmar sections of the oil link to be connected this month.

The opening of this key piece of cross-border infrastructure will be welcome news for President Xi Jinping and his Belt and Road blueprint. The pipeline will have capacity to transport 22 million tonnes of crude annually to China from the Middle East and Africa, with tankers no longer having to navigate the Strait of Malacca and pass through the South China Sea. Bypassing the Strait is viewed by security strategists as vital – that’s because that sea lane is a chokepoint that could be used by an adversarial navy to block oil imports from the Middle East.

In more purely economic terms, Chinese state media reports that the pipeline will alleviate shortages of oil in southwestern China. To this end the oil major CNPC has constructed a refinery in Kunming capable of processing 13 million tonnes of crude per year and says it will become operational once the pipeline starts to pump the required volumes. That will be soon: last Sunday a Suezmax tanker arrived at the pipeline’s starting point in Myanmar and began discharging its cargo of 140,000 tonnes of oil. Xinhua said this formally inaugurated the project – which is China’s biggest investment in its neighbour.

The Financial Times points out none of this has been without controversy on both sides of the border. In Myanmar there have been protests about land grabs – and potential oil leaks – along the pipeline’s route and in Kunming residents have demonstrated against the refinery and the pollution that it will generate. The SCMP says there are also concerns that the pipeline may have to halt operations if armed conflict flares up between ethnic groups in northern Myanmar. Last November three such militias attacked police stations and government offices in Muse and Kutkai, temporarily halting Sino-Burmese cross-border trade.


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