Gas pains for China and Myanmar

[unhappycamper]

http://atimes.com/atimes/Southeast_Asia/SEA-01-141014.html



Gas pains for China and Myanmar
By Yun Sun
Oct 14, '14

Since the Sino-Myanmar natural gas pipeline commenced fuel deliveries in late July 2013, the 793-kilometer energy transportation route has operated well below its total capacity. The underutilization has resulted in an estimated annualized loss of 1.7 billion yuan (US$280 million) and raised pressing questions about the China National Petroleum Corporation (CNPC)-led joint venture's future commercial viability.

Data about the US$1 billion pipeline's first year of operations have become public in recent months. According to a CNPC report released in July, the pipeline transferred a total of 1.87 billion cubic meters of natural gas to southern China and 60 million cubic meters for local consumption in Myanmar during its first year of deliveries. The 2.47 billion transferred translates to around 20% of the pipeline's total capacity, which is designed to carry 12 billion cubic meters annually.

According to annual and bi-annual reports published by PetroChina, a CNPC subsidiary, the company imported and sold 409 million cubic meters of natural gas from Myanmar in 2013 at a total loss of 420 million yuan. During the first half of 2014, the company sold another 1.3 billion cubic meters of Myanmar's natural gas at a loss of 1.3 billion yuan. At those cost-price differentials, PetroChina loses on average 1 yuan for every cubic meter of natural gas imported from Myanmar.

Some Myanmar observers suspect that the state-owned CNPC has artificially kept shipment levels low to symbolically demonstrate Beijing's displeasure with Myanmar's recent perceived as anti-China policies. Some in China, on the other hand, have insinuated that the underutilization and financial losses have been deliberately caused by the Myanmar government to serve the United States' strategic interests vis-a-vis China, including the US's ability to block the majority of China's fuel imports at the Malacca Straits in any future conflict scenario.