China Signs Burmese Gas Deal for 30-year Supply

The China National Petroleum Corporation (CNPC) has concluded a 30-year deal to buy natural gas from Burma, the Chinese Corp announced on Friday.

CNPC said in a press release that it signed an agreement with Myanmar Oil and Gas Enterprise, South Korea's Daewoo International, India’s Oil & Natural Gas Corp Videsh Limited and Gail (India) Limited in Rangoon on December 24.

The signing guarantees that energy-hungry China can fill a portion of its energy demand for nature gas from Burma’s offshore Blocks A-1 and A-3 in the Bay of Bengal for at least 30 years.

In the two offshore fields, South Korea’s Daewoo International Corp owns a 51 percent share; Myamar Oil & Gas Enterprise, 15 percent; India’s Oil & Natural Gas Corp, 17 percent; Gail, 8.5 percent; and Korea Gas, 8.5 percent.

At the end of 2007, Burma had an estimated 21.19 trillion cubic feet of nature gas reserves.

“Under the agreement, which cements a preliminary deal reached in June, pipelines will be constructed to export natural gas from Myanmar [Burma] to China's Southwest provinces,” CNPC said.

“Myanmar [Burma] will also be able to tap the pipeline running across its territory to promote economic development once the gas starts flowing, which is expected to happen in 2013.”

Analysts note that China had been competing with India, Thailand, South Korea and Japan for Burma’s nature gas.

Meanwhile, Burma’s state-run The New Light of Myanmar reported on Friday that Maj-Gen Htay Oo, the Burmese Minister for Agriculture and Irrigation, met with the new chairman of Daewoo International Corp, Jae Yong Kin, in Rangoon on December 25. Htay Oo is also secretary-general of the Burmese junta’s mass organization Union Solidarity and Development Association.

In early 2009, China is scheduled to build oil and gas pipelines from Kyaukpyu, a port on the Bay of Bengal, to its southwest Yunnan Province. China and Burma agreed to the US $2.5 billion pipeline project in November.

“The long-awaited China-Myanmar [Burma] pipeline is expected to provide an alternative route for China's crude imports from the Middle East and Africa and ease the country's worries of its over-dependence on energy transportation through the Strait of Malacca,” China Daily reported on November 19.

Analysts say China’s oil and gas pipelines through Burma to Yunnan Province and the up- grading of the Kyaukpyu Port is part of China’s two-ocean strategy in geopolitics, involving the extension of its influence in both the Pacific and India oceans.

“An outlet on the Indian Ocean would add a new dimension to China’s spatial relations with the world,” said Voon Phin Keong, director of the Centre for Malaysian Chinese Studies, in a working paper in April. “It would enable China to overcome its ‘single-ocean strategy’ and to realize what would constitute a highly significant plan for a ‘two-ocean strategy’.”

The move reduces China’s dependence on the Straits of Malacca and its exposure to potential risks, the scholar added.

Apart from China, Thailand is also a major buyer of Burma’s nature gas, purchasing at least US $2.7 billion in 2007.