Friday, June 8, 2012

Chinese Energy Infrastructure in Myanmar


Update 6.19.12: I recently found a good article titled: "Chinese Military Bases in Burma: The explosion of a myth."  Written by Published in 2007 by Australia's Griffith Asia Institute, the article throws serious cold water on the idea that China has covert military bases in Myanmar (China's PLA has no overt foreign bases).  It thoroughly  traces how this notion went from media speculation in the 1990's to accepted truth, without any real basis in fact, except for at times quotes from unnamed "Indian Defense Sources," who had a political bias that increased suspicion.  And then, in 2005, the Indian intelligence agencies officially stated that China has no military bases in Myanmar.  Regardless, I still suspect that China's patronage has bought them quite a lot of military influence in the country.

China has also spent heavily in Myanmar developing offshore oil and gas fields in the Bay of Bengal, as well as connecting pipelines to China.  This was part of a larger overall investment in Myanmar’s security, transportation, and industrial development, a project that begun shortly after the U.S. invasion of Iraq.  Myanmar, with its long, tentacled coastline and large natural resource base, served as a Chinese counterpoint to the U.S. presence in Iraq.  As it was put by F. William Engdahl:
Beijing poured billions of dollars of military assistance into Myanmar, including fighter and transport aircraft, tanks and armored personnel carriers, naval vessels and surface to air missiles.  China built up Myanmar’s railroads and roads, and won permission to station its troops in Myanmar.  China, according to Indian Defense sources, also built a large electronic surveillance facility on Myanmar’s Coco Island and was building Naval bases for access to the Indian Ocean.[1]
While the U.S. had just doubled down on its thirty-year old project to militarily control the Persian Gulf, China was building a similar security bastion across the Indian Ocean in Myanmar.

The Chinese government, through state owned companies like the Chinese National Petroleuam Company (CNPC), also made significant investments into Myanmar’s energy resources, namely the Shwe offshore gas field, discovered in 2004.  China and India had been in competition to develop and export this field, and in 2007 the Chinese National Petroleum Company won, signing a 30 year agreement with the Myanmar.  China’s project was actually a tri-project: a large deep-sea port at Maday Island, off the Arakan coast, and a set of duel 2,300 km oil and gas pipelines from this port to China’s Yunnan Province.[2]  China also set out to build a major oil refinery in Kunming, the capital of Yunnan, and from there distribute the Myanmar oil and gas to the rest of Southwestern China.  The final details of the pipelines, estimated to cost $1.5 billion for the oil line and $1.04 billion for the gas line, were agreed to in November of 2008, and construction is still ongoing today, at a feverish pace, with aim to complete the projects by April 2013.[3]  A recent New York Times article on the subject describes “trucks laden with pipes,” that “trundle through villages around the clock,” and bulldozers that “dig trenches 12 hours a day.”[4] Altogether 240,000 barrels per day of crude oil are expected to be shipped to China, netting the Myanmar government $1 billion a year.
China is also constructing a high-speed railway, which follows the same route as the pipeline.  It runs from Ruili in Southwestern Yunnan Province and Kyaukpyu Port along the Irrawaddy River.  Construction, which begun in 2011, is already half complete, with tracks running north having reached Myanmar’s second city of Mandalay.  The 810km line is set to open in 2013.[5]  Spurs off of this main line are planned to Myanmar’s largest city of Yangon, as well as northeast towards Thailand and Cambodia, eventually creating an entire Southeast Asia trade system.[6]

However, there is a large amount of controversy associated with the pipelines, and Chinese projects in Myanmar altogether. Land seizures and displacements along the pipeline route have caused anger, as has the entire concept of exporting Myanmar’s energy resources, as many of its citizens go without daily electricity.  In its northern reaches, the pipelines cut through the Shan state, home to a multitude of ethnic separatist movements and paramilitaries that wage a simmering conflict with the (Burmese) government.  These areas can flare up when the Myanmar military, known as the Tatwada Army, conducts operations, as paramilitary opposition forces like the United We Stand Army (UWSA) and the Kachin Independence Army (KIA) number 30,000 and 10,000 respectively, making them more than capable of causing trouble for government security and energy operations. [7]  A pipeline is an easy target to disrupt with big political value, and the Myanmar government will be reaping a windfall in taxes from the gush of oil flowing north to China every day.

One major Chinese project, the Myitsone mega dam at the northern head of the Irawaddy River, was already suspended by the Myanmar government in September 2011, after a large bout of popular protest opposed to the dam’s construction.  In the face of this action and other Myanmar opposition, China has pledged $6 million in aid and $1.2 for school construction in areas affected by Chinese projects.

Just as with the High-Speed Rail corridors, China’s goal in building these gas pipelines is to decrease their reliance on Indian ocean shipping, and specifically the chokepoint of the Straits of Malacca.  As of 2010, 82% of Chinese oil imports traveled through the Straits, virtually all oil imported from the Persian Gulf, Africa, or the Americas.  By developing energy infrastructure in Central Asia and Myanmar, China is able to cut down on its usage of this southern shipping route, which after the Straits of Malacca includes the contentious South China Sea.  While China will certainly not abandon shipping oil from areas like Africa, where they have made significant investments in the Sudan and Angola, the overland routes from neighboring states are of vital worth, as they provide diversity if one of the world’s shipping chokepoints (Straits of Hormuz, Straits of Malacca) were to be closed due to conflict.  The Chinese dreams is for their reliance on energy shipped through the Straits of Malacca to be  reduced to zero, with the Myanmar port and pipeline handling all cargo.



[1] F. William Engdahl, Full Spectrum Dominance: Totalitarian Democracy in the New World Order (Baton Rouge: Third Millenium Press, 2009), p. 94.
[2] Ibid., p. 95.
[3] “China, Myanmar to Build $2.5 billion Pipelines, Nikkei Says,” Bloomberg News, 11/17/08. (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7TZ0v82ODSA)
[4] “Myanmar Reforms Set U.S. and China in Race for Sway,” New York Times, 3/31/12. (http://www.nytimes.com/2012/03/31/world/asia/myanmar-reforms-set-us-and-china-in-race-for-sway.html?pagewanted=all)
[5] “China’s Pipelines in Myanmar,” Shivananda H, Institute for Defense Studies and Analyses (India), 1/10/12. (http://www.idsa.in/idsacomments/ChinasPipelinesinMyanmar_shivananda_100112#.T9Inv679WMU)
[6] “China outward bound through Myanmar,” Bryan McCarten, Asia Times, 1/8/11. (http://www.atimes.com/atimes/Southeast_Asia/MA08Ae01.html)
[7] [7] “China’s Pipelines in Myanmar,” Shivananda H.

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