Launch imminent for crude oil pipeline

The crude oil pipeline that is to cross Myanmar from a terminal on the coast of Rakhine State to Yunnan province in China is due to be launched at the end of January, according to government officials.

An opening ceremony for the pipeline will be held on January 28 in Yangon and January 30 on Made island in Rahkine state – though regular operation of the pipeline likely won’t begin until mid-2015, said a senior Myanma Oil and Gas Enterprise (MOGE) official.

“This is the official opening of the pipeline. Crude tankers will arrive at Made island within two days, but operation of the pipeline won’t start until mid-2015,” said MOGE general manager U Kyaw Nyan Tun.

The South East Asia Crude Oil Pipeline Company (SEAOP) pipeline has attracted opposition from some residents and civil society groups. The 771-kilometre pipeline will run parallel with the Southeast Asia Gas Pipeline Company Limited pipeline that has been operating since last year.

State-owned China National Petroleum Corporation began the project in 2008. It envisions allowing oil tankers to offload up to 300,000 tonnes of crude at Made island for shipment to China.

Experts say that pipelines will allow gas and crude oil to be shipped from the Indian Ocean to China without a need to pass through the Malacca Straits near Singapore.

The already completed crude oil pipeline was initially scheduled to launch at the end of 2013, though neither Myanmar or Chinese officials have yet explained the delay.

“It is true the oil pipeline is going to be launched on these dates. But invitations to the media are in the hands of the Ministry of Energy,” said a SEAOP official requesting anonymity.

The Ministry of Energy has discussed the environmental and social impacts of the project during parliamentary sessions, as well as activities undertaken to limit spills in the Andaman Sea.

China National Petroleum Corporation holds a controlling stake in the pipeline, while MOGE owns the rest. Myanmar stands to benefit with an annual road right fee of US$13.81 million, as well as receive a transit fee of $1 a tonne of crude for the next 30 years.

The pipeline is estimated to cost $2.5 billion to construct, and designed for up to 2 million tonnes of crude a year.