Myanmar, China poised to clinch pipeline deal in talks strained by 'big argument' over oil tanker

Myanmar, China poised to clinch pipeline deal in talks strained by 'big
argument' over oil tanker

Myanmar and China are understood to be close to finalising an agreement that
will see the first oil pumped through a US$1.5 billion pipeline on which
work was completed two years ago, Reuters reported.

Despite last-minute negotiating tensions, the two sides were nearing a deal
on the 770-kilometre (480-mile) pipeline linking Kyaukphyu in Rakhine State
and China's Yunnan Province, government and industry sources in Myanmar told
Reuters.

An agreement between state-run energy giant PetroChina and the Myanmar
government provides for the pipeline to supply a 260,000 barrels a day (bpd)
to a refinery in Yunnan.

The launch of the refinery has been delayed as the two sides negotiated
final terms for delivering the oil, Reuters said in the March 21 report.

It quoted U Aung Myat Soe, deputy director of planning at state-owned Myanma
Oil and Gas Enterprise as saying the project was awaiting a final sign-off
from the Minister of Electricity and Energy, U Pe Zin Tun.

A Myanmar-based source familiar with the negotiations who requested
anonymity told Reuters that the two sides had agreed on transport tariffs
and Myanmar's tax on the oil, but port fees were yet to be finalised.

The negotiations had become strained after Myanmar learned that an oil
tanker carrying one million barrels of crude was off southern India and
bound for Kyaukphyu.

Reuters quoted a Myanmar government official as saying there had been "a big
argument with the Chinese" over the move to ship the crude before the
contract was finalised.

The pipeline will have an eventual capacity of 400,000 bpd, about 5 percent
of China's daily import demand, the report said, adding that PetroChina
planned to start test production at refinery in June.

Reuters said prolonged squabbling over the pipeline, first proposed in 2004,
had soured Chinese enthusiasm for the project.

China invested in the oil pipeline, and a parallel natural gas pipeline
inaugurated in July 2013, as part of an energy security policy aimed at
reducing its reliance on supplies shipped through the narrow, congested
Strait of Malacca.

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Link to Original Article:
http://frontiermyanmar.net/en/myanmar-china-poised-to-clinch-pipeline-deal-i
n-talks-strained-by-big-argument-over-oil-tanker

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com