China-Myanmar Gas Pipeline Becomes

Fully Operational
2,520km pipeline to deliver 12 billion cubic metres of natural gas annually to southwest
China
Author: Kyaw Min | 28 October, 2013 12:32 pm
| Vol 1 Issue 39
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China Shwe gas pipeline (2).jpg

Soe Zeya Tun/Reuters

The China-Myanmar gas pipeline while it was being constructed. The pipeline went fully
operational on October 20, according to China National Petroleum Corp.
The China National Petroleum Corp (CNPC), Chinas state-run oil and gas firm, said last
week that the China-Myanmar gas pipeline has gone into full operation after it completed the
section connecting the cities of Lufeng and Guigang in southwest China.
The pipeline, also known as Shwe Gas Project, is Chinas fourth strategic energy supply
channel, following the Russia-China oil pipeline, the Central Asia gas pipeline and the sea
route through the Malacca Strait.

As well as diversifying the worlds second-largest economys fuel sources, the pipeline will
ease the energy-hungry nations gas owes during peak season, experts say.
Nomita Nair, partner at law firm Berwin Leighton Paisner, told Myanmar Business Today:
The pipeline is part of a strategic play for China to escape depending on the Straits of
Malacca and bolster its energy security.
By providing a direct access to energy via the Indian Ocean, China is also able to develop
further its Western provinces.
The 2,520-kilometre (km) pipeline starts at Kyaukpyu on Myanmars western coast, enters
China at Ruili in Yunnan province and ends at Guigang in the Guangxi Zhuang autonomous
region. It will provide natural gas to the southwestern provinces of Guangxi, Yunnan and
Guizhou. Some 793km of the trunk line are in Myanmar.
The three provinces have not had access to a natural gas pipeline until now, relying instead on
liquefied natural gas from Sichuan province. The benefits will include cheaper domestic
prices and greater energy supplies to the fuel industry.
By the end of 2014, industrial power consumption in Guangxi is expected to grow to around
100 times its current level, China National Radio reported. The average price of natural gas
for residential use, meanwhile, will drop by 13 percent, which means a cut of around 0.5 yuan
($0.08) for each cubic metre (cbm).
Yunnan has been short of oil and gas for years, hindering the provinces economic
development. The new pipeline is expected to change the energy structure of the province,
greatly improving the situation for industry.
Under the local government plan, by the end of 2015, Yunnans natural gas sales volume is
expected to reach 3 billion cbm, and the figure will grow to 7 billion cbm in 2020.
The pipelne send 12 billion cbm of natural gas annually to southwest China, which will
reduce coal consumption by 30.72 million tonnes per year, according to the CNPC.
Wu Hong, general manager of the CNPCs pipeline construction department, said the pipeline
will be linked with the pipeline that sends gas from Chinas remote northwest to the east
coast, increasing the reliability of supply to customers, particularly in case of emergency.
Construction of the gas pipeline began in 2010 and the Myanmar section of the gas pipeline
started to deliver gas to China in late July. An oil pipeline is also under construction alongside
the gas pipeline, and it will be completed by the end of the year, according to CNPC.
China is expected to import around 22 million tons of crude oil from the Myanmar channel
each year.
The pipeline will supply urban areas and industrial plants in Myanmar, boosting industry with
cheap fuel. In July, vice president U Nyan Tun said it will have a positive impact on
Myanmars long-term development.

Myanmar will draw 2 million metric tonnes of crude oil and 2 billion cbm of natural gas from
the pipelines annually.
However, the project was mired with allegations of land confiscation, displacement of local
communities and environmental risks. A number of protests in Myanmar and abroad took
place against the construction of the pipeline, which along with protests against the
Letpadaung copper mine and the Myitsone dam strained the China-Myanmar fraternal
relationship significantly.
The Myanmar-China relationship is quite an established and historical one and it will be
interesting to see how the Myanmar government balances that with relationships they are
cultivating with newer investors such as the Japanese, Nomita said.
The project is also part of a larger Chinese programme to lay a road connecting the countrys
Yunnan province to the Indian border through Myanmar although New Delhi has not yet
accepted the road connectivity plan. China also plans to transport crude oil across the
Myanmar border and complete an irrigation project in Myanmar which Nay Pyi Taw has
stalled.