China opens pipeline to bring gas from Myanmar

PUBLISHED : Monday, 29 July, 2013, 3:06pm
UPDATED : Tuesday, 30 July, 2013, 2:47am

China has switched on a new pipeline bringing natural gas from Myanmar, a state company said on Monday, in a project that has raised concerns in Myanmar’s nascent civil society about whether its giant neighbour’s resource grabs will benefit local people.

The 793-kilometre pipeline connects the Bay of Bengal with southwest China’s Yunnan province and is expected to transfer 12 billion cubic metres of natural gas to China annually, according to a news release on the website of China National Petroleum Corporation (CNPC). A parallel 771-kilometre pipeline that will carry Middle East oil – shipped via the Indian Ocean – is still under construction.

China’s investments, largely in energy and mining, have generated controversy in Myanmar because they have done little to relieve that country’s chronic power shortages. In response, last year the Myanmar government abruptly suspended construction of the China-backed Myitsone dam, which would displace thousands and flood the spiritual heartland of Myanmar’s Kachin ethnic minority.

While the pipelines are only expected to provide a small proportion of China’s oil and gas consumption, they are strategically important to Beijing. The gas pipeline that began operating on Sunday offers a nearby source of gas, and the oil pipeline would eliminate the need for tankers from the Middle East to pass through the crowded Malacca Strait between Malaysia and Indonesia.

The two joint ventures are between state-owned CNPC and Myanmar’s national petroleum company Myanmar Oil and Gas Enterprise. Four other companies from India and South Korea also have stakes in the project, according to CNPC.

For years, China was the closest ally of Myanmar’s military regime, which was shunned by the West because of its poor human rights record and failure to hand power to a democratically elected government. Since 2011, when an elected, though still military-backed, government took office, Myanmar has seen a series of political and economic reforms and has courted investment from the West.

The reforms have brought heightened activity from nongovernment and civil society groups in Myanmar, said Tony Nash, Singapore-based managing director of economics and risk consulting for IHS, an independent economic consultant. This, together with growing competition from Western companies in Myanmar, will push Chinese companies to be more transparent about how their investments will affect the local population, he said.

In April, hundreds of people protested in western Rakhine state against the pipeline, saying they had to give up their land for too little compensation and that salaries offered for local pipeline workers were too low.

“Some of the responses to that protest back in April were really specific to looking at community needs and responding with corporate social responsibility at the local level,” said Nash. Chinese companies are increasingly “saying ‘we hear you and we want to make a commitment for corporate social responsibility,’ you are seeing Chinese companies becoming a bit more savvy in that respect,” he said.

Even on the Chinese side of the border, opposition to the pipeline project has been strong. In May, more than 2,000 people worried about air and water pollution protested in Kunming against a planned petroleum refinery connected to the project.