China wants pipeline to Myanmar to secure oil supplies

China wants to reduce its vulnerability over imported oil shipped via the Malacca Strait by building a pipeline to a port in Myanmar. This will ensure that supplies will continue even when passage through the narrow and already very congested waterway is disrupted for whatever reasons.
According to sources, Chinese leaders discussed the project with Myanmar Prime Minister Khin Nyunt when he visited Beijing recently.

China estimates that by 2010 and 2020, its demand will reach 340 mm and 440 mm tons respectively, while domestic production will yield just 175 mm and 190 mm tons. The shortfall of about 165 mm and 250 mm tons will have to be met by imports, largely from the Middle East. These work out to a high dependency ratio of 50 % and 60 %, respectively.
Given that four-fifths of its oil imports now pass through the Malacca Strait and the fact that China does not have a blue-water navy to protect the route, Beijing is distinctly uneasy about the risk of blockage should fighting with theUnited States break out over Taiwan.

This issue was first raised by Chinese President Hu Jintao at a Central Economic Meeting on Nov 29 last year. He asked officials to come up with possible solutions. According to a source, the officials proposed four, with the first three centred on building a pipeline from the south-western province of Yunnan to Myanmar, from north-western Xinjiang province to Pakistan, or from Tibet to Bangladesh. The fourth solution entailed helping Thailand to build its Kra Canal.
The source said the Bangladesh option was ruled out almost immediately because it meant passing through Indian territory.

The Pakistani option is being considered in tandem with a railway line that China intends to build, linking up Kashi (Kashgar) in southern Xinjiang with the Pakistani port of Karachi in the Indian Ocean. But this route has to pass through rugged terrain with harsh climatic conditions, thus posing formidable technical difficulties. By comparison, the Myanmar option is more appealing, both politically and technically.
Historically, Myanmar has always been China's gateway to the Indian Ocean. During World War II, when the entire eastern part of China fell into Japanese hands, General Joseph Stilwell, commander of all American forces in the China-Burma-India theatre, built the famous Stilwell Highway to bring supplies from Indian Ocean ports to the Chinese resistance movement.

The Myanmar option was proposed by Yunnan University's Institute of South-east Asia. According to Dr Li Cheng Yang, its director, the proposed pipeline will run from Kunming, Yunnan's capital, to the Indian Ocean port of Sittwe (Akyab), a straight-line distance of about 1,250 km.
Compared with the current oil route via the Malacca Strait, this means a saving of about 2,000 km. Cost of construction is about $ 2 bn (S$ 3.4 bn). According to Dr Li, this pipeline is the preferred option because it also tallies with another strategic railway that China wants to build, the Kunming-Yangon line, which opens up an Indian Ocean outlet for its otherwise landlocked south-west provinces.

Meanwhile, Thailand is also canvassing for Chinese support for its Kra Canal project, estimated to cost about $ 28 bn. As an interim solution, Thai representatives at the Fifth Conference on Petroleum Trade in April proposed building a pipeline connecting both ends of the isthmus.
Although this pipeline is estimated to cost only $ 600 mm, using it means double-handling of oil -- once at each end -- and is therefore not economical in the long run. Sources added that Beijing was also rather hesitant about involving itself in any Kra Canal project as that would affect Singapore.