A crude pipeline to southwestern China through its neighbor Myanmar began operations after years of delays, allowing the world’s second-biggest oil user to receive supplies faster from the Middle East and Africa.
A Suezmax-sized tanker, which can hold 140,000 metric tons (about 1 million barrels) of crude, began offloading oil for the pipeline on Monday at Myanmar’s Made Island, according to China’s official Xinhua News Agency. Operations on the line, which was completed in 2014 and originally scheduled to start the same year, are beginning after the government of Myanmar agreed to lower transit fees, Wang Dongjin, president of PetroChina Co., said last month.
The link, which allows China to import crude from the Middle East and Africa without having to ship through the Straits of Malacca and into the South China Sea, is part of President Xi Jinping’s “One Belt, One Road” infrastructure and trade development plan stretching across Asia to Africa and Europe.
“It may send a message to those countries that are still hesitating about whether to participate that the initiative is China’s top national strategy and can bring economic benefits to participants,” said Fan Hongwei, an international relations professor at Xiamen University who specializes in Myanmar.
For Myanmar, the initial benefits are probably minimal, said Suresh Sivanandam, a senior research manager for Asia refining at Wood Mackenzie Ltd. The country may get a small amount of oil and some revenue from oil storage and pipeline tariff fees, while experience from China in building energy infrastructure will be a boon for the country later, he said.
“Myanmar is growing very fast, and sooner rather than later they might need more oil refineries,” Sivanandam said. “The process of building energy infrastructure should help them in the long run to meet growing domestic demand.”
China and Myanmar on Monday signed an agreement on the pipeline, as well as eight other cooperation documents, after talks between Xi and Myanmar President Htin Kyaw, state-
run China Daily reported.
The pipeline ends in China’s Yunnan province, where PetroChina has built an oil refinery with the capacity to process 13 million tons a year (about 261,000 barrels a day) of crude.
PetroChina finished building the refinery in the provincial capital Kunming about six months ago and has been waiting for pipeline deliveries to start, according to Sivanandam. It will take about 12 million barrels of crude to fill the pipeline before deliveries can start, he said. MDT/Bloomberg
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