Until recently, Maday Island on the coast of the Bay of Bengal in Burma's western Arakan State was a virtually unknown and unspoiled island possessing both natural beauty and resources that provided a simple living for about 2,400 residents. But that changed in 2009, when Burma's junta chief Snr-Gen Than Shwe and China's Vice President Xi Jinping inked an agreement to build a deep-sea port on the island that will be used by China to import crude oil from Africa and the Middle East and natural gas from Arakan State.

In August 2007, the Burmese regime announced that it will sell gas to China from blocks A-1 and A-3 of the offshore gas fields located off the Arakan Coast that were discovered in December 2003. In June 2008, a Memorandum of Understanding was signed between the China National Petroleum Corporation (CNPC), the regime and other partners for the sale and transport of gas to China. An export gas agreement was then signed on December 24 of that year under which Burma agreed to supply China with gas for at least 30 years.

According to the Shwe Gas Movement, which is made up of individuals and groups who are concerned about the overall impact of the extraction of natural gas in Burma, the sale of gas will provide the junta with an estimated US $1.2 billion annually.

Apart from the deep-sea port, Chinese companies and Korea's Daewoo International Company have begun construction of oil and natural gas reservoirs and gas refinery projects on Maday Island and in Kyaukpru (also known as Kyauk Phyu), the pleasant port city known as the “Second Singapore” among Arakanese people that is located about 13 kilometers from the island.

In addition, the IGE Company, owned by Nay Aung, the son of former Industry 1 Minister Aung Thaung, has been granted a contract for the construction of gas pipelines from Maday Island to China.

 According to Arakan Oil Watch (AOW), an independent non-governmental organization that is an active member of the Shwe Gas Movement, the $1.5 billion oil pipeline, carrying 12 million tons of crude oil per year, will travel the 1,100 kilometers from Maday Island to China's Kunming city through central Burma. The natural gas pipeline will run parallel to the oil pipeline and extend even further, from Kunming to Guizhou Province and the Guangxi Zhuang Autonomous Region, for a total of about 1,700 kilometers. It is expected to transport 12 billion cubic meters of natural gas to China every year.

CNPC is heading up the Maday Island deep-sea port construction project, with about 10 other Chinese companies involved under its management. In addition, The Htoo Group of Companies and Asia World, owned by Burmese business tycoons Tay Za and Tun Myint Naing, respectively, have reportedly been granted permission for the construction of some parts of the port.

According to Arakan Oil Watch, CNPC began construction of the deep-sea port and an oil reservoir on Maday Island in October 2010 and will finish the projects by 2013. The construction has already taken its toll on the island's mountainous environment and about 2,400 residents living in six villages.

Locals said farm lands are being confiscated on Maday Island in order to build the port and refinery and in Kyaukpru in order to build an international airport, hotels, golf courses and hospitals. In addition, about 500 acres of farmland near Gangawtaw Pagoda in Kyaukpru were confiscated for the construction of a gas refinery.

“Five mountains on Maday Island have already been demolished and many plots of garden land have already been confiscated and cleared. The confiscation of farmland continues as necessary,” said a resident of Ywarma Village on Maday Island.

“Farming and gardening are the main businesses for country folks like us. If we don't have land, we will have nothing to work on,” said another Maday Island villager whose land was confiscated.

U Ohn, one of Burma's most prominent environmentalists and the vice-chairman of the Forest Resource Environment Development and Conservation Association, told The Irrawaddy that the environment on Maday Island and in the surrounding Kyaukpru area will be severely affected by construction of the deep-sea port and related projects.

“What has been written in the book with regard to environmental conservation is really great. But there has been no implementation. We were not consulted on anything about the environmental impact of projects in Kyaukpru,” said U Ohn.

U Ohn said wastes and poisonous chemicals from gas extraction will not only affect the environment but also endanger aquatic animals as the amount of water pollution will be huge. In addition, the loss of mountains, mangrove forests and reefs along the coast will be inevitable, he said.

People on Maday Island said that apart from economic hardships they will encounter due to the confiscation of their farm and garden lands, they are anxiously worried about being left unprotected if they face another natural disaster. They said that although they were affected by Cyclone Giri in October 2010, they survived because they were protected by the surrounding mountains which have now been demolished one by one because of the deep-sea port project.

“These mountains protect us from natural disasters such as storms and floods. We can face catastrophe any time if there are no mountains around us,” said a Maday Island resident.

The regime, however, insists that despite the environmental impact and hardships faced by locals, the deep-sea port project is worthwhile because the Kyaukpru area will be developed as a result.

“I accept the fact that our area will be developed under these projects but there will be more disadvantages than benefits,” said a Kyaukpru lawyer. “China will extract natural resources from our area for about 30 years, so after the completion of those projects we will be left with nothing but empty buildings.”

The lawyer said if the regime really wants to focus on local development it should build up the skills of young people in the area and let them be involved in the projects. The opposite, however, seems to be occurring, as locals are reportedly precluded from working on the deep-sea port project.

The CNPC and its subsidiaries reportedly do not allow local people to work on their projects and have appointed Chinese to many positions. Kyaukpru residents said there are an estimated 2,000 Chinese currently working in their area.

“Our farm lands were confiscated but we can't work on those projects. We are not even allowed to catch fish and move around freely in nearby areas,” said a Maday Island resident.

He said those who lost their farmland were compensated only 200,000-700,000 kyat [$230-805] per acre, compared to the minimum market value of at least one million kyat per acre.

“We only received about one third of the compensation given by foreign companies because local authorities took some,” confirmed a villager from Kyauk Tan Village on Maday Island.

They said that even though locals are not allowed to work on the deep-sea port construction, they can take hard-labor jobs on the gas refinery project.

“I earn 1,500 kyat [$ 1.70] for my work from 6 a.m. to 6 p.m.,” said a worker.

He said that although his daily wages are too small to meet the current commodity prices, people have no choice because they don't have any other job options. Female workers are given only 1,000 kyat [$ 1.15] a day, he said.

In addition to the Chinese, people from other parts of Burma will be coming to the Kyaukpru area to work on the projects. Restaurants, entertainment businesses, bars and brothels are consequently emerging in the area to meet the needs of those employees.

“We now can see people take sex workers with cars and motorcycles. But we can't stop them because authorities have allowed such business,” said a Kyaukpru resident.

He said Chinese companies neither follow local regulations nor pay respect to religion. Some company staff even drink alcohol inside monasteries, he said.

Among the other hardships they have to endure, Kyaukpru residents face the bitter irony of having little access to electricity even though their area is rich in natural gas and oil. Instead, they use wood and charcoal fires for heating and cooking.

“It costs 600 kyat [$ 0.7] for a unit of electricity. An average monthly electricity bill is more than 20,000 kyat per household. For those who have businesses, they have to pay more than 100,000 kyat,” said a Kyaukpru resident.

People in Sittwe, the capital of Arakan State, said they only have access to electricity about three hours a day.

Four hydro-power plant projects are being implemented in Arakan State, but the regime has already signed deals with China, India and Bangladesh to sell them the electricity from these power plants.

With Maday Island and Kyaukpru residents apparently enduring all of the hardships related to the deep-sea port and related projects while the Burmese regime, the Chinese and other outside parties reap the benefits, legal experts and politicians in the area said they will try their best to protect locals from repression and human rights abuses.

“We will raise this issue in the national parliament if we can. Otherwise, we will discuss it in the state parliament. If the parliaments do not agree with us we will speak out against the projects,” said Ba Shin, a Kyaukpru resident and member of the Pyithu Hluttaw [People's Assembly] from the Rakhine Nationalities Development Party.

“I don't see any significant benefit for local people following the completion of those projects. So, we will only discuss issues beneficial for our people,” he said.