Wednesday, November 18, 2009

China's Burma Oil Bonanza

Ignoring protests, Beijing seeks energy from a pariah state. What will Obama do?

As expected, China has utterly ignored protests from Burmese protest groups to begin construction of a 980-km dual oil and gas pipeline that will cross the entire Burmese countryside from the offshore Shwe gas fields of Arakan state to China's southern Yunnan Province.

A protest group, Arakan Youth, has protested that as long ago as 2006, 500 people from villages on the India-Burma border had already been relocated and forced into uncompensated labor to clear the way for the US$2.5 billion pipeline, which is expected to go online in three years. That constitutes a dilemma for US President Barack Obama as he seeks to engage with the long-isolated country, one of the world's poorest and most brutal. It remains a question whether the United States, having applied the stick to Burma for more than two decades, will now get anything out of applying the carrot, as he famously attempted to do at meetings of the Asia-Pacific Economic Cooperation meetings in Singapore last week.

The countries contiguous to Burma appear nearly oblivious. In a lesson to Obama of just how little effect the sanctions have had on Burma, the Shwe field itself is being developed by companies from some of America's staunchest allies including South Korea's Daewoo International, Korea Gas and India's state-owned enterprises ONGC Videsh and GAIL. Daewoo is expected to take up a 25 percent stake in the pipeline, which will transport crude from tankers calling from Africa and the Middle East rather than making the time-consuming trip down through the pirate-invested Strait of Malacca and back up to China.

Nor are India and South Korea alone. According to a brochure put out by Total, the French energy company which is part of a consortium whose other partners are Unocal, a unit of the US-based Chevron, Thailand's PTTEP and Burma's own Myanmar Oil & Gas Enterprise are producing gas from the rich offshore Yadana field and exporting 85 percent of the gas to Thailand, where it supplies 20 percent of that country's power generation
facilities, with output averaging 20 million cubic meters of gas per day in 2008.
The remaining 15 percent is sold locally. But even though most of the cities in Burma are dependent on private generators for electricity, instead of using the natural gas for Burmese citizens, the military junta is selling the gas to its neighboring developing countries in exchange for foreign currency. China in particular has steadily increased its trade ties with Burma, one of the world's most reviled countries because of its human rights policies, and recently signed an agreement to become sole buying authority of the Shwe gas reserve. Under this agreement, Beijing took the responsibility to construct the US$2.5 billion trans-Burma (oil and gas) corridor to feed its voracious need for energy. The State-owned China National Petroleum Corporation holds 50.9 percent of the pipeline, with the capacity to pump nearly 12 million tons of oil and 12 billion cubic meters of gas annually, in partnership with the Myanmar Oil and Gas Enterprise. The Burmese government expects to receive $29 billion over 30 years from the deal.

Beijing has brushed aside demands by more than 120 organizations based in 20 countries to halt the construction of the pipeline project. Led by the Shwe Gas Movement, a Thailand based oil-gas watchdog and rights group, the movement endorsed a memorandum to the Chinese government on the Global Day of Action on October 28.

Burma's western coast, which is rich in oil and gas reserves, has become the battleground for Beijing and New Delhi in recent years. The western companies showed reluctance in investing in Burma, but both China and India continued their mission and battle over the Burmese oil and gas. The editorial added that at a time when China and India were exploiting the resources of Arakan to enhance their energy and economic security, over four million people living in the State were only facing human rights abuses and economic hardship. Asia Sentinel

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