Myanmar-China Pipeline Reduces Shipping Need

A crude oil pipeline between Myanmar and China’s Yunnan province opened for trials this week ahead of its official opening on Friday. 

The opening will see a 300,000dwt tanker delivering oil to the pipeline at Kyaukpyu Deep Sea Port (Madae Island) in Myanmar. 

The 771km (478 mile) pipeline has a transmission capacity of 22 million tons per year. It is designed to help reduce China’s dependence on transporting oil from the Middle East via ships sailing through the Straits of Malacca. The sea route sees tankers pass by the coasts of Malaysia, Vietnam and the Philippines which are currently involved in territorial disputes with China over parts of the South China Sea.

However, Reuters reports that around 80 percent of China’s overseas purchases will still have to travel the sea route. 

According to Business Monitor International, China’s total crude oil imports hit a new high of 308.36 million tons in 2014, about a nine percent year on year increase.

The pipeline has been under construction for five years and is estimated to cost $2.5 billion. It is a joint venture between the China National Petroleum Corporation (50.9 percent) and Myanmar’s state-run oil and gas firm (MOGE) (49.1 percent). The Myanmar government is anticipated to make $54 billion from the pipeline over a period of 30 years.

A parallel natural gas pipeline between the two countries started operation in July 2014, and it has already transported around four billion cbm of gas.