Two Indian firms help China ship Myanmar gas over land

In the first year of the commissioning of the 800-km overland gas pipeline, 1.87 billion cubic metres of natural gas has been carried from Shwe offshore gas fields in Myanmar to Kunming in southwest China province Yunnan. When fully operational, it will carry 10-13 billion cubic metres of gas every year.

A parallel oil pipeline, which will transport 22 million tonnes of crude in a year, is expected to be commissioned soon. The two pipelines start from Kyaukphyu in the Rakhine state and run overland via Mandalay to enter China at Ruili in Yunnan. The gas pipeline will eventually run across Yunnan, Guizhou, Chongqing and Guangxi.

ONGC Videsh has 17 per cent participating interest in the A1 and A3 blocks of the Shwe gas fields. Daewoo has 51 per cent stake, MOGE 15 per cent, GAIL and KOGAS 8.5 per cent each.

For China, the Myanmar pipelines provide a secure alternate route, freeing it from the worries of shipping energy supplies from the Middle-East and Africa via the Strait of Malacca and South China Sea. Oil storage tanks in Myanmar and the overland pipelines are key to its energy strategy, skipping shipping lanes which, if ever blocked or disrupted, can pose a threat.

Working on its future energy needs, Beijing proposed construction of the pipelines in 2004. According to CNPC, a 30-year purchase and sale agreement was signed with Daewoo International in December 2008, allowing the import of natural gas from Myanmar offshore blocks A-1 and A-3. Under the agreement, Myanmar was also allowed to use the pipeline to meet local needs.