China mulls oil pipelines in Myanmar,
Thailand By Phar Kim
Beng
Booming China, with its voracious appetite
for oil and urgent need for oil security, is considering
a China-Myanmar oil pipeline and one through Thailand.
These are among 10 recent proposals on alternative
strategies to secure China's energy supplies.
China first became an oil importing country in
1993. Its insatiable hunger for oil has since been an
important factor in driving up world oil prices. The
country's demand for oil is expected to grow by 8.1% or
510,000 barrel per day (bpd) by 2005, according to the
International Energy Agency (IEA).
The economy's
growth may be severely hindered if the energy needs are
not met. This summer saw the worst shortage in over 15
years despite the measures to reduce energy consumption.
Throughout China, thousands of factories were asked to
halt production for two days a week, shift work to
non-peak hours or take mandatory week-long holidays.
Given the fact that China must create some 24
million jobs a year to absorb fresh labor, it just
cannot afford such slowdowns. Indeed, with over 54% of
the economy reliant on manufacturing, most of which
remain energy-intensive, it's little wonder that China
is concerned with its energy security.
Figures
clearly demonstrate China's energy hunger. According to
British Petroleum (BP) statistics, in 2003 China's total
energy demand leaped by 13.8% following its GDP growth
of 9.1%. China alone accounted for 41% of the growth of
the total world oil demand, its oil imports rising 32%
to 2.6 million bpd.
These are scary statistics
as they show both the magnitude of China's energy
appetite and its contribution to environmental hazards
caused by excessive energy consumption. And Beijing is
quite aware of the problem. "Every increase in revenue
we gain at the expense of much higher energy consumption
and more serious environmental pollution," says Pan Yue,
vice-minister of the state environmental protection
administration. According to him, the amount of sulphur
dioxide - a major air pollutant - discharged per gross
domestic product (GDP) unit in the country is 68.7 times
that in Japan, 26.4 times that in Germany, and 60 times
that in the United States.
Though China could
theoretically avoid the double jeopardy of high energy
consumption and environmental degradation by making the
switch to high-technology industry, this transition
could only take place in the long term. For now, it
defines its energy security as gaining access to global
energy supplies at competitive prices any time.
Lately, however, echoes of an alternative
strategy to reinforce energy security needs are also
being heard. On July 30, Li Lianzhong, the vice-director
of the economic bureau of China's Central Policy
Research Center, listed 10 proposals to protect China's
energy safety at the National Energy Development and
Investment Forum. Of these, the most interesting one is
the construction of a Sino-Myanmar pipeline.
The
proposal stands out for two reasons. To begin with, it
seeks to reduce China's dependence on oil in Middle
East. In addition, China is aware that the US, India,
even Japan, are exerting undue weight on the Strait of
Malacca. Currently, 60% of China's oil imports are
transmitted through the Malacca Strait. Should it ever
be blocked, China would suffer enormously.
As
Professor Li Chengyang, co-author of the proposal said,
"Most of China's oil imports come from the Middle East
and Africa. Given the current situation in the Malacca
Strait, we feel we should come up with a suitable
alternative." The proposal suggested that China should
build an oil pipeline from Myanmar's western deep-water
port of Sittwe across the country to the city of
Kunming, the capital of Yunnan province in southwest
China.
Chinese Premier Wen Jiabao and Myanmar
Prime Minister Khin Nyunt discussed the plans for an oil
pipeline when they met on July 11 in Beijing. The
project would reduce the oil route by 1,820 sea miles
compared with the Malacca route, estimate experts.
But this is not the only option weighed by
China. Plans are afoot to build oil pipelines to China
from other Asian countries, including Thailand, Pakistan
and Bangladesh. Of these proposals, the one from
Thailand has gone the furthest and received enormous
support from the Thai government of Prime Minister
Thaksin Shinawatra.
Thailand's state energy
conglomerate PTT and China's giant oil major Sinopec
announced in June that they were looking into the
possibility of a new pipeline so that oil tankers from
the Middle East don't have to pass through the Malacca
Strait. The project was announced in Manila at the
business forum of the Association of Southeast Asian
Nations (ASEAN). The new pipeline would save as much as
a week of voyage time for crude oil shipments to China,
Japan, South Korea and the Philippines.
The PTT
study estimated that the new pipeline could cost up to
US$880 million. The project would include the oil
pipeline, tank storage and tanker terminals on both the
west and east coasts of Thailand's Kra Isthmus. The
project would need to transit a minimum of 1.5 million
barrels per day to be feasible. If built, the pipeline
would start north of Phuket Island on the west coast and
pump the oil across the peninsula to an eastern terminus
for trans-shipment to tankers sailing to China and
Japan, Asia's two largest oil consumers.
If the
Myanmar and Thai proposals do succeed, the one country
that would be severely affected would be Singapore.
China is one of Singapore's most important oil trading
clients, with a substantial proportion of China's oil
imports coming via Singapore. Alternative oil routes
would undermine that special relationship.
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