China signs Myanmar pipeline deal to boost oil supply

China and Myanmar on Thursday signed a deal to begin construction on an oil and gas pipeline linking the two countries, and also reached an agreement to maintain stability along the border areas following tensions last year.

The oil and gas pipeline will give China much-needed access to an Indian Ocean oil port in Myanmar, part of Beijing’s larger plan to secure alternate energy routes to reduce its heavy dependence on the narrow Malacca Straits for most of its oil supplies.

In October, the State-run China National Petroleum Corporation (CNPC) signed a deal to build a crude oil part in Myanmar. Reports said Thursday’s deal gave the green light for the two countries to begin work on the pipeline project, though the Chinese government released little information on the specific nature of the new agreement.

Fourth route for oil imports

The project will give China a fourth route for its oil and natural gas imports, in addition to the Malacca Straits, and pipelines from Kazakhstan and Russia. The pipeline is expected to run from the Kyaukryu port on Myanmar’s west coast to Ruili in China’s south-western Yunnan province.

The 2,380 km pipeline will run to Kunming, Yunnan’s capital, and will have the capacity to transfer 20 million metric tons of crude oil to China, mainly from the Middle East and Africa. The natural gas pipeline will run beyond Kunming to inner Guizhou province, and will transport 12 billion cubic metres of gas annually.

On Thursday, Chinese Premier Wen Jiabao held talks with Senior General Than Shwe, the head of Myanmar’s military government. During his visit, the two countries also agreed a deal to ensure stability in border areas, following last year’s unrest in Myanmar’s northeastern border with China last year.

Last year, ethnic minorities from Myanmar flooded into the bordering Yunnan province in China in thousands, following clashes with the military. Elections scheduled for later this year have prompted fears of renewed unrest.

This week, China signed an agreement to continue supporting Myanmar with financial assistance. Deals were also signed for a hydropower project and to boost trade.