A €1.9 billion pipeline that will ship oil and gas from Burma to energy-hungry China began operations last week in southwest China, a crucial element in Chinese efforts to improve energy security as its economy continues to expand.
With a capacity of 440,000 barrels of crude a day, it is expected to send 12 billion cubic metres of natural gas annually to Burma and southwest China, which will reduce coal consumption by 30.72 million tonnes per year, according to the China National Petroleum Corporation (CNPC).
The pipeline, which run from Yunnan province to the Indian Ocean at the Bay of Bengal in Burma, has gone into full operation after the completion of its end section connecting the cities of Lufeng and Guigang in southwest China, the CNPC said.
Around 793kms of the 2,520km trunk line are in Burma, or Myanmar as it is officially known, while the rest is in China.
Wu Hong, general manager of the CNPC's pipeline construction department, said the China-Burma gas pipeline will link with the pipeline that sends gas from China's remote northwest to the east coast, hence greatly increasing the reliability of supply to customers, particularly in case of emergency.
Dogged by problems
Construction of the gas pipeline began in 2010, and the Burma section started to deliver gas to China in late July.
The CNPC is the parent company of China's top oil and gas producer – PetroChina – and the project was jointly built with the Myanmar Oil and Gas Enterprise.
It had been dogged by problems, including clashes between government forces and ethnic militia fighters in Shan State, as well as fierce fighting with the Kachin Independence Army in Kachin State, a northern state that borders China.
In August, Beijing’s Commission of Reform and Development, the city’s economic planner, invited foreign investors to bid on 126 urban infrastructure projects collectively seeking 338 billion yuan (€40.28 billion) in financing.
The investment comes despite difficulties facing policymakers in China, who are keen to increase infrastructure spending to prop up flagging economic growth rates, but they don’t wish to add more high-risk debt on the books of Chinese banks, still reeling from the bad loans issued during the last infrastructure spending spree in 2009/10.
