Myanmar-China gas pipeline opens

After three years of construction, the Myanmar-China natural gas pipeline has started deliveries, a development that is expected to curtail the country's heavy dependence on importing energy through the narrow Strait of Malacca and help diversify its energy import channels.

The pipeline will benefit investors from all four of the countries involved in financing and building it, and it will help to improve Myanmar's own energy supply, which is crucial to that country's economic development, said Wang Dongjin, the new president of China National Petroleum Corp.

The 793-kilometer pipeline starts at Kyaukpyu on Myanmar's western coast and enters southwestern China at Ruili in Yunnan province. Deliveries officially began on Sunday.

The $2.5 billion pipeline was jointly financed and built by six companies: China National Petroleum Corp, Myanmar Oil and Gas Enterprise, Daewoo International Corp, Korea Gas Corp, Oil India Ltd and GAIL India Ltd.

Myanmar Vice-president U Nyan Tun said the pipeline will have positive significance for Myanmar's long-term development. He spoke at the official launch on Sunday.

According to CNPC, a parallel oil pipeline, expected to deliver oil by the end of this year, is 94 percent completed. Completion of both pipelines will bring 22 million metric tons of crude oil and 12 billion cubic meters of natural gas annually into China.

The oil pipeline will become China's fourth important import route, joining completed pipelines from Kazakhstan, Turkmenistan and Russia.

"After completion of both pipelines, around 2 million tons of crude oil and 20 percent of the designed volume of gas delivery will be off-loaded in Myanmar," said Jiang Changliang from South-East Asia Gas Pipeline Co Ltd, which is under CNPC.

"There are four natural gas loading points in Myanmar, including the origin of the pipeline at Kyaukpyu, which has loaded natural gas from the first day of the pipeline operation for power generation and industrial use," Jiang said.

"As the first natural gas pipeline from South Asia to China, its completion has strengthened China's natural gas imports and will help to stabilize natural gas prices in southern China," said Ma Ji, a natural gas industry analyst at JYD Online Corp, a bulk commodity consultancy based in Beijing.

He said China's natural gas supply in the southwestern region mainly depends on Central Asia gas pipelines and liquefied natural gas imports from the southeastern coast. The new Myanmar-China pipeline will greatly increase supplies in the region.

"It is possible that natural gas prices in Guangdong and Guangxi provinces' will be adjusted to a lower level because of the new supply," he said.

Nationally, the new pipeline will ease China's natural gas supply shortage during the busy season, and previous limits on the use of natural gas are not likely to happen in the future, he added.