China opens pipeline to bring gas from Myanmar

BEIJING (AFP) - Gas has started flowing to energy-hungry China through a pipeline from Myanmar, Beijing's official media reported, in a major project that highlights their economic links even as political ties come under pressure.

The 793-km pipeline runs from Kyaukpyu on resource-rich Myanmar's west coast, close to the offshore Shwe gasfields, and across the country. It enters south-west China at Ruili, near areas where heavy clashes between the rebel Kachin Independence Army and the Myanmar military were reported earlier this year.

As well as diversifying China's sources of fuel, by supplying energy to the vast and less developed west it could help Beijing's attempts to promote economic growth there.

It went into operation on Sunday at a ceremony in Mandalay, the official Xinhua news agency reported.

But the controversial project is the fruit of Beijing's long allegiance with the military junta that ruled Myanmar for decades, a bond that is weakening as the reforming government opens up to the West.

In an editorial on Monday, China's Global Times newspaper, affiliated with the ruling Communist Party, said: "This is another breakthrough in China's strategy of energy diversification and has obvious significance in reducing China's dependence on the Strait of Malacca for the import of oil and natural gas."

Construction began in June 2010, according to China National Petroleum Corporation (CNPC), the key investor. A parallel oil pipeline is also part of the project.

According to Xinhua, the gas pipeline will be able to carry 12 billion cubic metres annually, while the crude oil pipeline has a capacity of 22 million tonnes per year.

Under military rule, Myanmar was a pariah state largely isolated from the rest of the world and subject to heavy international sanctions, but it maintained close economic links with China, which for years was its major foreign influence.

Now, with Myanmar - which also includes tin and precious gems among its natural assets - opening up politically and economically, more countries are setting up operations and seeking deals that sanctions had previously prevented.

"Myanmar used to be sanctioned by the West and China was its only friend," the Global Times editorial acknowledged. "Nowadays, it has opened more to the West. This will reduce its passion in cooperating with China, but does not mean it will set itself against China."

But in a warning that Beijing expects its economic interests to be protected, the newspaper cautioned Myanmar that it must ensure agreements regarding the project are fulfilled, no matter who eventually leads the country, where democracy activist Aung San Suu Kyi has entered parliament.

"China should be determined to supervise Myanmar in doing so," the paper said. "Myanmar should hold a serious attitude toward China, and Chinese will take (the Myanmar) people's attitude toward the pipeline as a test of their stance on China."

Chinese nervousness about its investments in Myanmar comes after Naypyidaw said last week it had revised a controversial copper mine agreement with a Chinese company, after dozens of Buddhist monks and villagers were injured in a botched police raid.

Myanmar Minister of Mines Myint Aung told parliament that new terms gave the government 51 per cent of the revenue, replacing a previous deal that was a joint venture between the Chinese firm and a holding company owned by the Myanmar military.

In 2011, Myanmar President Thein Sein stopped construction on the China-backed US$3.6 billion (S$4.6 billion) Myitsone Dam on the Irrawaddy river amid public opposition to the project, a move that led Beijing to call for its companies' rights and interests

to be protected.

The Shwe Gas Movement, a campaign group, says the pipeline project has sparked protests over issues including demands for higher salaries for local workers, and concerns among farmers about its environmental impacts.

Myanmar plans to renegotiate billions of dollars of natural resource deals as it imposes tougher environmental standards and clamps down on corruption, the US-based Asia Society said in a report last month.