China studies Myanmar island for oil terminal

Aug 19, 2007, 12:55 GMT

Yangon - China is conducting a survey on the feasibility of using Myanmar's Yanbyai island as an oil terminal to supply a planned 1,440-kilometre pipeline from the Bay of Bengal to Yunnan province in southern China, news reports said Sunday.

'The state China National Petroleum Corporation ... is conducting a detailed assessment with the state Myanmar Oil and Gas Enterprise (MOGE) for a crude oil terminal on the Myanmar island of Yanbyai, off Myanmar's Rakhine coast, fringing the Bay of Bengal,' said the Myanmar Times, an English-language weekly.

An 800-kilometre pipeline would be needed to connect the island to the Chinese border and then another 640 kilometres through Yunnan to the provincial capital of Kunming, where a refinery is also planned, said the article.

The pipeline plan, still in its infancy, is part of China's ambition to devise a new petroleum passage for imported oil from the Middle East to China without needing to go through the Strait of Malacca, diplomatic sources in Yangon say.

Analysts suggest one oil pipeline across Myanmar might cost between 2 billion and 3 billion dollars and might eventually handle up to 40 million tons per year.

There has been speculation that the Chinese would use the existing Myanmar port of Sittwe, closer to Bangladesh and founded by the British in the 19th century.

'But there are two reasons why the Chinese prefer the tiny port town of Kyauk Phyu, about 112 kilometres farther south: security and isolation. The island is remote with virtually no transport infrastructure linked to it. The only way to get there is by ship or by plane using a small airstrip,' said the Myanmar Times.