.png)
.jpg)
The much hyped multibillion dollar pipeline connecting Shwe Gas fields at the Irrawaddy Delta to China’s Yunnan province was formally inaugurated on 29 July 2013 at Mandalay. This project which was inked in 2007 consists of two separate pipelines for crude oil and natural gas. While the 793 kilometre gas pipeline has been commissioned, the 771 kilometre oil pipeline is likely to be completed by September this year. The Project consisted of two joint ventures, South East Asia Oil Pipeline (SEAOP) and South East Asia Gas Pipeline (SEAGP). SEAOP is a joint venture between China National Petroleum Corporation (CNPC) and Myanmar Oil and Gas Enterpise (MOGE) and SEAGP is a joint venture between CNPC, Daewoo (South Korea), GAIL (India), MOGE and Korean Gas Corporation (KOGAS). The CNPC has 50.9% stake in the SEAGP, Daewoo and 25.04%, KOGAS 4.17%, GAIL 4.17% and ONGC 8.35% and MOGE 7.37 % stake.
This 793 km pipeline starts from Kuaykphyu in Myanmar and passes through the Rahkine state, Magway and Mandalay regions into the Shan State and enters China at Ruili in Yunnan Province. Enroute the pipeline has six pumping stations. The cost of this gas pipeline has been estimated at USD 2.01 billion. The gas pipeline has a pumping capacity of 12 billion cubic meters and the oil pipeline has capacity of 22 million tonnes of crude oil per year. Just by allowing the transit, Myanmar is going to have multifarious benefits. The annual transmission of 22 million tonnes of crude oil through the oil pipeline will bring $ 22 million as well as well as $ 13.6 million in transit fees. Exporting 12 billion cubic metres of gas will bring in $1.5 billion. This means a lot to the struggling economy of the nation. Myanmar also gets rights to use 2 billion cubic metres of natural gas for its domestic use. This is likely to be used by major cities along the pipeline to supply energy to the inland regions, boosting its economy. Over the next 30 years Myanmar is set to earn a whopping $ 30 billion from this project. As per an independent local news network in Myanmar, Mizzima.com, this project will create a huge amount of job opportunities for local people, hiring as many as over 6,000 for the construction work followed by maintenance work.
The huge investment by China in the pipeline project is understandable. An energy-starved China is looking at hedging its energy related risks for which it is ready to make any concessions. The Chinese company CNPC grabbed this vital project in 2007 right after the Chinese vetoed the US backed anti-Myanmar human rights violation resolution being framed by the UN Security Council. India too had submitted its proposal for a pipeline routed through the northeastern states but Myanmar’s regime which was deeply indebted to its northern neighbour, granted the project to them. As far as China is concerned, this is not its first pipeline project. The 4700 km long Russia-China oil pipeline linking the oil fields of Siberia was fully functional by 2011.1The second pipeline project, Kazakhstan–China oil pipeline runs from Kazakhstan's Caspian shore to Xinjiang in China. This was completed in 2007 and has a capacity of 20 million tonnes per year.2 For China energy security is of paramount importance as the growing economy of China has made it the second largest oil consumer in the world with a gigantic consumption of 9.4 million barrels per day (bpd) in Jun 2013.3 With almost 80 percent dependence on the US controlled Malacca Strait for its oil imports , it was a perennial paranoia, which China wants to overcome4.
If the recent reports in The Express Tribune and Gulf Times are to be believed, Nawaz Sharif is likely to offer China an oil pipeline linking Gwadar port to Xinjiang.5 There were earlier reports that after taking over the management of Gwadar Port. China is seriously considering extending the Karakoram highway till Gwadar and also creating a rail corridor to improve trade from its western province of Xinjiang.6 In case this oil pipeline is also constructed it will reach the doorstep of Persian Gulf and will not only save the Chinese oil tankers some 6000 kilometres of circuit but a future pipeline with Iran would not remain a distant dream anymore. Like Myanmar, the revenues from the pipeline would provide the dwindling economy of Pakistan a new lease for next 30-40 years. And if this materialises, some officials say, then it will end the ‘Perpetual Malacca Fear’ for China. However, the internal instability and proximity to highly ebullient Afghanistan may deter China from such huge investments at this juncture.
The moot question is that should India remain a mute spectator to what is happening in its eastern and western neighbourhoods? The visible over indulgence under the guise of economic overtones in India’s neighbourhood is likely to create a power imbalance in the South Asian Region in which India is a key player. It must be mentioned that the ASEAN countries have come under serious influence of China who is even planning a trans-Asian road and rail network to bolster its trade with them. All these are going to add billions of dollars to the economy of China at the same time making the smaller economies over dependent. Most of the smaller nations which are getting into such economic interdependence with China have ended up in a win-win situation. The trade imbalance between India and China has already become a cause of concern and was duly raised by our PM during the recent visit of the Chinese Premier this year. Both agreed that the need of the hour is that the mutual trade should grow to $100 bn by 2020. At this stage it would be prudent to think of creating a economic inter-dependence which could arise from an offer of a pipeline through Gujarat into Tibet via Nepal. A probable 2000 kilometre pipeline could not only create a lot of job opportunities but also add some billion dollars to our economy and also entail setting up of huge oil refineries by India. This could in the long run not only add revenue but also strengthen ties between two emerging Asian powers.
By Special Arrangement with The Centre For Land Warfare Studies (CLAWS) (http://www.claws.in)