China says accord reached at last with Myanmar on oil pipeline

Chinese President Xi Jinping (right) with Myanmar President Htin Kyaw at a meeting in Beijing. PHOTO: EPA/KYODO NEWS POOL

BEIJING (REUTERS) - China and Myanmar have reached an agreement on an oil pipeline between the neighbouring countries after almost a decade of talks, with the project due to start "very quickly", Chinese vice-foreign minister Liu Zhenmin said on Monday (April 10).

The new oil gateway fits with China's "One Belt, One Road"ambitions, linking it with central Asia and Europe, and will provide a more direct alternative route to sending Middle Eastern oil via the crowded Malacca Straits and Singapore.

Liu's remarks, at the end of a visit by Myanmar President Htin Kyaw, mark the official launch of the 770km pipeline, which Beijing regards as essential to securing its oil needs.

Dogged by sensitive relations between Naypyitaw and Beijing, the US$1.5 billion (S$2.1 billion) pipeline has been sitting empty for two years.

The first tanker carrying oil to Myanmar for delivery to China was expected on April 8, however a Myanmar government official told Reuters the ship may not have the official go-ahead to enter Myanmar.

It was unclear whether the ship had delivered its cargo. "The oil pipeline will very quickly begin operation," said Liu.

An agreement between China's PetroChina and Myanmar's government will allow the state energy giant to import overseas oil via the Bay of Bengal and pump it through the pipeline to supply a new 260,000-barrels-per-day (bpd) refinery in landlocked Yunnan province.

The announcement wraps up Myanmar President Htin Kyaw's six-day state visit to China, the first since he was elected, where he met President Xi Jinping and Prime Minister Li Keqiang, as well as visited a number of Chinese cities including Shanghai and south-western Chengdu.

When asked if the two sides also discussed the Myitsone dam, work on which has been suspended since 2011, Liu said that China and Myanmar had basically reached an agreement. "(We should) move towards an appropriate solution that is advantageous for the development of bilateral relations and realises win-win benefits for both sides," he said.

China has shifted its position in the dispute over the building of the US$3.6 billion dam, sources told Reuters earlier, signalling its willingness to abandon the project in exchange for other economic and strategic opportunities in Myanmar.

The two sides also agreed to work together to better manage security in northern Myanmar, saying that the conflict was an issue for both countries.

Fighting last month in Myanmar pushed thousands of people into China to seek refuge, prompting Beijing to call for a ceasefire between ethnic militias and the security forces.

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