Myanmar is China’s resource bonanza

Myanmar is China's resource bonanza
Pipeline Map

As the world media continues focusing on Rohingya refugee crisis in Myanmar, its giant neighbour China maintains its aloofness nonetheless full scale utilizing the fuel pipelines originating in the trouble torn Arakan (also known as Rakhine) province of western Burma (former name of Myanmar).

The China-Myanmar gas & crude oil pipelines, connecting Kyaukphyu port of Rakhine-lately in the media for the gory clashes between majority Buddhists and Rohingya Muslim settlers- with the Kunming city in south-western part of China started loading consignments since May 2017.

In Focus
The pipeline is designed to shift crude oil from the Middle East and Africa through Myanmar with an aim to feed the world’s second-biggest oil consuming nation. Now Beijing no longer needs to depend on the troublesome cargo shipments through South China Sea (around 5,000 km sailing) for its crude oil imports for the China National Petroleum Corporation (CNPC)-run refineries in Yunnan.

The 770 kilometre (480 mile) long China-Burma pipelines (inside Myanmar), owned and built by Beijing with the budget of USD 1.5 billion under its One Belt, One Road policy are expected to transfer around 22 million tons of crude oil annually (around 442,000 barrels a day). The pipeline is expected to shift nearly 6 per cent of China’s total imports (as per 2016 records).

Pipeline Map

A joint venture between China National Petroleum Corporation (CNPC) with 50.90 per cent stake and Myanmar Oil and Gas Enterprise (MOGE) with 49.1 per cent, the pipelines almost divide Myanmar. The country in desperate need of financial support can claim a road-right fee of US $13.81 million for both the pipelines annually along with a transit fee of $1 per ton of crude oil under a 30-year agreement. Moreover, Myanmar can take 2 million tons of crude oil annually from the line for its consumption.

The agreement between the two neighbouring countries to build the pipelines from the Bay of Bengal to China’s Yunnan province was signed in 2009 and subsequently the work started in the next year. The 793 km (493 mile) natural gas pipeline became operational in 2015 itself with the transmission capacity of 12 billion cubic meters annually from the Shwe offshore field.

The oil pipeline, parallel to it running across Myanmar was also scheduled to become operational in the same year, but got delayed due to political differences between the two countries and also public resistance to the project. The activists continue to protest claiming that over 20,000 indigenous people would lose their livelihoods because of acquisition of arable land for the project.

The early 2017 visit of Myanmar President Htin Kyaw to Beijing witnessed the signing of an operational agreement in presence of Chinese President Xi Jinping on 10 April. The most trusted ally of Daw Aung San Suu Kyi, one who runs the democratically elected National League for Democracy (NLD) government as a de-facto chief, committed to make the oil pipeline operational at the earliest.

The strategic relationship between China and Myanmar might look recent, but it may be noted that both the countries have enjoyed trustworthy mutual diplomatic relations since long back. The erstwhile semi-democratic government in Yangon (formerly Rangoon) was recognized by the People’s Republic of China in 1949 soon after the Chinese Communist Party led by Mao Zedong emerged victorious in all battle fronts. Later, both the countries established formal diplomatic relations in 1950.

This was followed by the anti-China uprising in 1967, when the agitating Burmese people targeted the Chinese embassy in Rangoon. The Communist government of China took a hard stand against General Ne Win-led Burmese regime. But later, when the southeast Asian country went under complete military rule by the 1980s, its ties with Beijing apparently improved.

After the 08-08-88 Burmese uprising that led to the ouster of Ne Win’s government paving the way for the military junta to rule the country. This is when China became friendlier with Burma as the international community started isolating the General Than Swe-led regime. The military dictators rejected the outcome of the 1990 general elections, where Suu Kyi’s NLD got a landslide victory. She was also placed under house arrest.

Slowly, Myanmar became more dependent on China and it continued until a quasi-democratic government came to power in Naypyitaw (Myanmar’s new capital) in 2011. The former Myanmar President Thein Sein, who took some strong decisions against China including the suspension of the Beijing-owned Myitsone hydropower project in Kachin province, tried to build closer ties with Europe and the United States. The relationship survived with the initiatives taken by Myanmar’s State counselor and foreign minister Suu Kyi again.

Meanwhile, oppositions to the project surfaced as the Myanmar-China Pipeline Watch Committee warned that oil spills could severely affect the land & coastal ecosystem harming the livelihood of thousands of Myanmar residents. The umbrella body of local community-based organizations urged the authority to adopt efficient measures to prevent oil spills along the pipeline.

The rights body also raised a voice for the Burmese farmers, who had handed over their arable lands to the project authority, but were yet to receive compensation. Both the pipelines are laid in parallel running through the under-developed country. Although the affected villagers were assured adequate compensation by the Chinese authority, it has not turned into reality, added the forum.

Of course, the CNPC claimed that the project was materialized keeping an eye on environment protection and land restoration. Moreover, emphasis was given on community development activities like building of schools, hospitals, roads, bridges, power & water supply, telecommunication arrangements etc for the benefit of affected families across Myanmar.

Earth Rights International (ERI), a nongovernmental & nonprofit organization combining the power of law & people in defense of environment & human rights expressed happiness that the Chinese investors had succeeded in operating the projects after some delays. However, it argued that ‘there are still some major issues waiting to be solved, such as land compensation to communities, safety concerns, and ecological restoration at the project site’.

“The CNPC as one of the main investors should keep their commitment to health, safety, and the environment and solve these problems with the effective consultation with local communities,” said Valentina Stackl, communications manager of USA based ERI while responding to Asia Sentinel’s queries.

She also added that when Myanmar was under the military government, the affected communities had no choice but to remain silent as even their legal rights were seriously violated. After the election of the NLD, more and more communities have started standing up for their rights, not just on projects with Chinese investors, but all potential delinquent investors, stated Valentina.

Lately, the justified demand for its own share of benefits started rising as a public representative of Myanmar’s Shan province came out by raising voice that the benefit (in terms of annual revenue) of the pipelines should go to his province’s government too. Shan lawmaker Nang Kham Aye, while reacting to Myanmar minister Tun Naing’s comment about the share of benefits out of the project, asserted that all stakeholders should get their dues.