A CRUDE oil pipeline linking Kyaukphyu in Rakhine State with China’s Yunnan Province should be completed by the end of 2015, according to a Myanma Oil and Gas Enterprise (MOGE) official.

When completed, the pipeline, which is being built by CNPC Southeast Asia Pipeline Co Ltd, will be capable of transporting 400,000 barrels of oil a day (bpd), U Myint Oo, MOGE’s acting managing director, said at the ASEAN Council on Petroleum (ASCOPE) conference in Bangkok on November 18.

Construction work will begin in June 2010 and the pipeline will cross 781 kilometres of Myanmar territory, U Myint Oo said.

And, under a contract signed with CNPC in December 2008, Myanmar will have the option of purchasing 40,000bpd once it is completed.

This could help to reduce Myanmar’s dependence on refined oil imports, provided the country also invests in improving its refinery capacity, Mr Edito Barcelona, a consultant with the Asian Development Bank (ADB) told The Myanmar Times last week.

A recent ADB report – Energy Outlook for Asia and the Pacific – estimated demand for oil in Myanmar would grow at an average of 5.6 percent to 2030, “driven by the rapid increase in demand of the transport sector”.

“Myanmar will continue to be dependent on imports of refined oil products as long as the government keeps the refining capacity at current levels,” said Mr Barcelona, who worked as a consultant on the Myanmar section of the report.

“There is no sufficient information as to the plan of the government to increase its refining capacity at the moment,” he added.

However, the Ministry of Energy has previously proposed building a 50,000bpd-capacity refinery at a cost of US$250 million that would be “configured to refine crude oil from Middle East countries”, according to the ministry’s website.

Myanmar presently has three refineries with a combined capacity of 57,000bpd. “However, as these refineries have been in operation for many years, the present refining capacity is about one third of manufacturers’ name plate capacity,” the website says.

Additionally, only the 26,000bpd Thanlyin refinery is capable of refining crude oil into petrol and the country presently has no refinery capable of refining diesel.

This has created a dependence on refined oil imports, which in the 2008-2009 fiscal year cost the government $585.6 million, according to figures from the Central Statistical Organisation under the Ministry of Planning and Economic Development. In Myanmar, the fiscal year begins on April 1 and finishes on March 31.

According to figures from the American Energy Information Agency (EIA), Myanmar’s national oil consumption in 2008 was about 41,000bpd. Domestic crude oil production in the 2008-09 fiscal year dropped 9.6pc, to 6.89 million barrels, or 18,875bpd, Central Statistical Organisation figures show.

The combined cost of the oil pipeline and a natural gas pipeline that will also link Kyaukphyu with China will be $2.45 billion, U Myint Oo said. In October 2010, work will begin on the 40-inch diameter natural gas pipeline, which should be finished by February 2013.