Energy Tribune - China Continues Pursuing Myanmar Energy Projects Despite Human Rights Concern

Energy Tribune - China Continues Pursuing Myanmar Energy Projects Despite Human Rights Concern
By Lee Geng
Posted on Apr. 30, 2009

A group of unidentified ethnic Karen refugees gather to be photographed at an undisclosed jungle camp in Northern Karen State of Myanmar in 2005. Human Rights Watch contends that the Myanmar army continues to target civilians in its war against ethnic Karen insurgents, forcibly displacing large numbers of poor villagers and committing human rights abuses such as extrajudicial killings, sexual violence and forced labor. Photo by Free Burma Rangers: AP

Chinese energy companies are continuing their investments in Myanmar, a place few western investors are willing to go due to the country’s poor human rights record.
Last month, CNPC and Myanmar Oil and Gas Enterprise agreed to build two pipelines at a cost of some $2.5 billion. China views one of the pipelines as a strategic alternative that will provide an alternative route for oil imports from the Middle East and Africa, thereby easing worries about dependence on energy transportation through the congested and pirate-ridden Strait of Malacca.

The agreement calls for two lines, $1.5 billion for the oil pipeline, and $1 billion for a gas line. The 1,800 kilometer gas line will begin in Myanmar’s gas fields in the Bay of Bengal -- operated by South Korea’s Daewoo International – and will terminate in Kunming city, the capital of China’s Yunnan province. The crude line will roughly follow the same route and will have initial capacity of 400,000 barrels a day. CNPC will hold a 50.9% stake in the pipelines. Myanmar Oil and Gas will own the remainder.

Last year, Daewoo signed a memorandum of understanding with CNPC for the supply of gas from Myanmar’s offshore blocks A-1 and A-3. The Daewoo-led consortium has discovered three fields—Shwe, Shwe Phyu and Mya—in blocks A-1 and A-3, with total reserves of up to 7.74 trillion cubic feet. Daewoo is expected to produce 600,000 million cubic feet of gas per day of pipeline gas or 3.7 million tons per annum of liquefied natural gas for up to 25 years. The gas is expected to begin flowing next year.

In a related development, CNOOC’s engineering arm Offshore Oil Engineering Co. Ltd. will join a consortium with France´s Technip to bid for a contract to design and build a large production facility for the Shwe gas project. The third partner in the consortium is South Korean fabricator Samsung Heavy Industries.

Myanmar Oil and Gas Enterprise owns a 15% stake in the Shwe project, Daewoo owns a 51% share, India´s ONGC Videsh owns 17%, and Korea Gas Corporation and India´s Gail, both own 8.5%.

The close ties between China and Myanmar will continue to be a source of frustration for western human rights groups and for countries, including the US, that have increased sanctions against the military regime in Yangon. But just as it has done in Africa, China appears far more interested in obtaining energy supplies than in concerning itself with issues like human rights.