November 21, 2008

China to build pipeline through Myanmar

China plans to proceed with a $2.5 billion oil and gas pipeline through Myanmar to connect its Yunnan province, with construction set to start next year.

Mi Gongsheng, director of the province's reform and development commission, told the official Xinhua news agency the pipeline is one of a series of large energy projects in which the province plans to invest about $10.5 billion.

China is a major trading partner of Myanmar, formerly called Burma, which has been under military rule since the 1960s. The junta last year brutally put down pro-democracy protests led by Buddhist monks.

The pipeline is a major move by China to gain a toehold on emerging Asian energy markets, the Press Trust of India reported. The Asian giant has outbid Indian oil firms for contracts in Myanmar, it said.

The pipeline is expected to provide an alternative route for China's crude imports from the Middle East and Africa and to meet its rising energy demand, China Daily reported. It said the project will ease China's concerns about over-dependence on transportation through the Strait of Malacca.

The report quoted Japanese media as saying the project includes a $1.5 billion oil pipeline and $1.04 billion natural gas line. China National Petroleum Corp. will reportedly hold a 50.9 percent stake and manage the project while Myanmar Oil & Gas Enterprise will own the rest.

A BBC report said the house arrest of Nobel prize-winner Aung San Suu Kyi and detention of thousands of other political prisoners have deterred many Western companies from investing in Myanmar.