Myanmar-China Pipeline: China the Winner, Myanmar Pays a Price

Myanmar-China Pipeline: China the Winner, Myanmar Pays a Price

Although a 770-km pipeline complex between the Kyaukpyu port in Myanmar to
Yunnan in western China has begun to deliver oil and gas across the country,
issues of compensation, environmental degradation, safety and adequate
compensation remain.

In many ways, the story of the pipeline illustrates the price countries pay
for participating in China's ambitious One Belt-One Road (OBOR) plan to
develop trade routes for railways, power grids, ports, roads and other
infrastructure across half the planet. The projects are designed in China to
benefit China. Benefits for the participating nations are secondary.

The US$1.5 billion pipelines, which started construction in 2009, are
designed to shift natural gas from Myanmar and crude oil from the Middle
East and Africa through the Bay of Bengal to terminals in Myanmar. The
pipelines then transfer the resources to Yunnan to feed refineries for the
world's second-biggest oil consumer, eliminating the 5,000-km shipping lanes
of the pirate-infested Strait of Malacca and across the South China Sea.

The pipelines inside Myanmar, owned and built by Beijing under the One Belt,
One Road policy, are designed to transfer 22 million tonnes of crude oil
annually (around 442,000 bbl/day) and carry nearly 6 percent of China's 2016
total energy imports. Today China is demanding up to 85 percent ownership of
the strategic Kyaukpyu port at the western terminus.

A joint venture of the China National Petroleum Co. (50.95 percent) and
Myanmar Oil and Gas Enterprise (MOGE, 49.1 percent), the pipelines almost
divide Myanmar in half, a country in desperate need of financial support.
The agreement gives Myanmar an annual road-right fee of US$13.81 million
along with a transit fee of US$1 per ton of crude under a 30-year agreement.
Myanmar is entitled to 2 million tonnes of crude annually for domestic
consumption.

The 793-km natural gas pipeline went operational in 2015 with a transmission
capacity of 12 billion cubic meters annually from the Shwe offshore field in
the Bay of Bengal. The oil pipeline, parallel to it, was delayed by
political differences and by public resistance. Activists claim that more
than 20,000 indigenous people lost their livelihoods through confiscation of
arable lands along the route.

Recently a Shan state lawmaker, Nang Kham Aye, demanded that benefits from
the pipeline should go to his impoverished provincial government, only to
have Myanmar Electric Power and Energy Minister Tun Naing claim that no such
revenue or profit has appeared yet.

The skimming of natural resources in Myanmar by Chinese interests has long
been contentious, from the exploitation of jade and other precious stone
mines along the border to the oil and gas pipeline. It brought a stop to the
Myitsone Dam, meant to be one of the world's largest, at the confluence of
the two streams that form the Irrawaddy, Myanmar's most fabled river, which
flows through the valley that is considered to be the birthplace of Burmese
civilization. The 139-meter-high dam would have produced electrical capacity
of 6,000 megawatts, 90 percent of which would have been sent back to China.
The catchment area was to be 1,300 meters long. The Chinese government is
still trying to restart it.

A recent visit by Myanmar President Htin Kyaw to Beijing has overcome the
political difficulties over the pipelines, however. Htin Kyaw is a trusted
ally of Aung Sun Suu Kyi, the de facto head of the National League for
Democracy (NLD) government. He signed the agreement in the presence of
Chinese President Xi Jinping on April 10, with both sides agreeing to get
the pipeline operating as soon as possible.

Contentious issues remain, however, including not just Myanmar being done
out of its share of the revenue but land compensation for the farmers who
were evicted, safety concerns from oil spills and ecological restoration at
the site of the pipeline construction, according to the US-based NGO Earth
Rights International NGO.

"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," Valentina Stackl,
communications manager for the US-based ERI, told Asia Sentinel.

The affected communities, she said, had no choice but to remain silent under
the previous military government. After the NLD came to power in 2010
elections, more communities have begun standing up for their rights, not
just on Chinese-originated projects, but those with potential delinquent
investors.

Lately the Myanmar-China Pipeline Watch Committee, an umbrella body of local
community-based organizations, urged the authority to adopt measures to
prevent oil spills, which could severely affect the ecosystem and harm the
livelihoods of thousands of residents.

Burmese farmers who handed over their lands have yet to receive
compensations, the committee charged. The pipelines run in parallel through
four provinces all the way across Myanmar before entering Chinese territory.

The CNPC claims the project paid careful attention to environmental
protection and land restoration and community development activities like
building of schools, hospitals, roads, bridges, power & water supply,
telecommunication arrangements.

Anti-Chinese sentiment has been strong in Myanmar for decades, including
riots in 1967 when the Burmese people targeted the Chinese embassy in
Yangon. Beijing objected to the regime, then led by General Ne Win. Later
when Myanmar fell under complete military rule, ties improved. AS the
international community turned on Myanmar following the so-called 08-08-88
uprising, which paved the way for the military takeover, China turned up as
one of the country's few friends.

Myanmar's dependence on China continued until a quasi-democratic government
took power in 2011. The former President Thein Sein, who suspended the
Myitsone hydropower project, tried to build closer ties with Europe and the
US. The relationship survived with the initiative of Myanmar's State
counsellor and foreign minister Suu Kyi.

But, amid the contradictions, China continues to take advantage of the
situation. The Beijing administration, ostensibly playing the role of peace
broker in Myanmar, maintains secret relationships with rebel groups
including the United Wa State Army, the Kachin Independence Army, the
Myanmar National Democratic Alliance Army, etc.

China also allegedly supports northeast India-based separatist armed groups
including the United Liberation Front of Asom (Independent), which is
running camps in China-Myanmar border areas adjacent to Ruili in Yunnan as a
card against New Delhi which has sheltered the Dalai Lama's on its soil for
decades.

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Link to Original Article:
https://www.asiasentinel.com/econ-business/myanmar-china-pipeline/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com