Posted: 15 May 2017

China via Myanmar pipeline - image credit - Bloomberg

China via Myanmar pipeline - image credit - Bloomberg

China and Myanmar are opening a cross-border pipeline into south-east China. The 1.5 billion USD oil pipeline has been sitting empty for two years, but transport tariffs have been agreed to allow the project to proceed.

The link will allow China to import crude oil from the Middle East and Africa, without having to ship through the Straits of Malacca, and into the South China Sea. This is part of President Xi Jinping’s ‘One Belt, One Road’ infrastructure and trade development plan, stretching across Asia to Africa and Europe.

Myanmar will obtain a road-right fee of 13.81 million USD from both gas and oil pipeline projects annually, and a transit fee of 1 USD per tonne of crude oil under a 30-year concession agreement.

“The completion of the gas portion of the pipeline opens a new energy corridor for China, which will now be able to access gas supplies from Myanmar’s offshore gas fields, and will soon be able to access oil shipments through a giant port on the coast.” Leslie Hook, Financial Times

The pipeline ends in China’s Yunnan province, where PetroChina (China National Petroleum Corp) has built an oil refinery with the capacity to process 13 million tons a year (about 261,000 barrels a day) of crude oil. Both the pipeline and refinery are operated by PetroChina.