China National Petroleum Corp (CNPC), the country's largest oil and gas producer, commenced construction of an oil port in Myanmar on Oct 31, the company said yesterday on its website. This is part of a move to bypass the congested Malacca Straits and diversify China's oil import channels.
The port on Maday Island, Kyaukphyu township in Myanmar's Rakhine state, is the starting point for the 771-km pipeline that will go through Yunnan province.
In the first phase, the pipeline is expected to have a capacity of 12 million tons per year, the company said. The completed pipeline is expected to carry 22 million tons of crude oil annually, according to an earlier agreement between CNPC and Myanmar.
CNPC is also planning to construct a gas pipeline from Myanmar with a capacity of 12 billion cu m a year. This is scheduled to carry natural gas to southwestern China starting in 2012.
The southwest pipeline, along with other oil pipelines that go through China's northwest and northeast, respectively, is aimed at diversifying oil import routes and ensuring supply security.
A crude oil pipeline from Kazakhstan, with an initial capacity of 10 million tons, started supplying oil to China's northwest in 2006. A second transnational oil pipeline with a capacity of 15 million tons is under construction and expected to pump oil from Russia to northeastern China from late 2010.
"The three pipelines could account for 40 percent of oil imports after their completion, reducing the reliance on the Malacca Straits through which 80 percent of China's oil imports now pass," said Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University.
China is the world's second-largest oil user and imported close to 50 percent of its needs last year. Around three quarters of China's oil imports in 2008 were from the Middle East and Africa, and most cargo was shipped via the Malacca Straits.