Myanmar and China sign crude oil pipeline agreement

The signing of an agreement between Myanmar and China on crude oil pipeline transportation project was witnessed by leaders of the two countries on April 10, according to a press release by the Southeast Asia Crude Oil Pipeline (SEAOP), which is responsible for the operation of the pipeline.

Chinese President Xi Jinping (background Right) and Myanmar’s President Htin Kyaw (background L) watch a signing ceremony during a meeting at the Great Hall of People in Beijing, China, April 10. Photo - EPAChinese President Xi Jinping (background Right) and Myanmar’s President Htin Kyaw (background L) watch a signing ceremony during a meeting at the Great Hall of People in Beijing, China, April 10. Photo - EPA

The crude oil tanker named United Dynamic docked at Made Island in Rakhine State yesterday and started offloading crude oil, said the press release.

“Myanmar-China natural gas and crude oil pipelines projects are joint operation between Myanmar and China and also a part of China’s ‘One Belt, One Road’ initiative,” it said.

Myanmar President U Htin Kyaw met with Chinese President Xi Jinping in Beijing yesterday during his six-day visit to China.

The crude oil pipeline project is one of the controversial Chinese projects in Myanmar. A 771 km-long crude oil pipeline from Made Island in western Myanmar to China’s northwest province Yunan is constructed across the central part of Myanmar. The pipeline is in parallel to a natural gas pipeline which was fully operational in 2014.

China’s state-owned China National Petroleum Corporation (CNPC) and Myanmar government signed the agreement for the crude oil pipeline project in 2008 and construction of the project was completed in early 2015.

Myanmar will directly obtain a road right fee of US$13.81 million from both gas and oil pipeline projects annually, plus a transit fee of $1 per ton of crude oil under a 30-year concession agreement.

A trial operation of the crude oil pipeline was launched in January 2015 but full operations have been delayed as the two sides were unable to reach an agreement on commercial terms of the pipeline project, according to officials.

The total investment of the entire crude oil pipeline project is $2.45 billion and CNPC holds 50.9 percent, with the rest belonging to Myanmar.

The crude oil pipeline is designed to transmit 22 million tons of crude oil annually. The country’s first international oil unloading terminal in Made Island is a vast project site constructed with oil storage, dockyard, and seaport with a 38 km vessel route and 480 meter long oil loading terminal.

The facility also has a total of 12 crude oil tanks each with a storage capacity of 22 million gallons.

Meanwhile AFP reported that the two leaders also discussed the development of the controversial Myitsone dam, a $3.6 billion Beijing-backed project on hold since protests in 2011.  The two countries also signed nine cooperative agreements on areas spanning public health, sports and transportation.