Quarterly Business Magazine

Operation of Crude Oil Pipeline to China Hampered by Slow Progress in the Seaport

Posted :
Saturday, October 4, 2014

Nay Pyi Taw – Although the construction of Shwe crude oil pipeline is 80 percent finished, the unfinished building of a small deep sea port in Kyaukphyu to accommodate oil from the Middle East—and thus the connection between the port and the pipeline to China—is hampering the operation of the pipeline, according to the Ministry of Energy.

“The construction of the port is not completed yet. The crude oil pipeline is constructed alongside the natural gas pipeline, so it is almost finished,” said an official from the Ministry of Energy.

The construction of the port to unload ships transporting crude oil from the Middle East has started, and it will have no association with Kyaukphyu Special Economic Zone.

Shwe gas pipeline was installed in 2013, and it will begin exporting Myanmar’s natural gas to Yunnan Province in China at the end of 2014.

The pipelines’ operation will last thirty years, and each pipeline is expected to bring revenue of US$ 900 million annually. In addition, Myanmar will earn 16 percent of value added tax on crude oil.

At the end of October 2011, Myanmar Government announced that annual income from Shwe Pipeline (from distribution and gas sale) would be over US$ 1 billion. The distribution charges would generate US$ 13 million income.

12 billion cubic feet of natural gas extracted from Block A-1 and A-3 of Shwe Project will be exported to China via the pipeline. The government has officially announced that the two blocks have a total reserve of 50-9 trillion cubic feet.

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