China Starts Pipeline Construction Offshore Myanmar

China National Petroleum Corp. announced start of construction of a crude oil and a natural gas pipeline running from the Rakhine/Arakan coast offshore Myanmar to southwest China.

Work began June 3 and followed agreements on the Southeast Asia Oil Pipeline Co. and the Southeast Asia Gas Pipeline Co. The crude oil pipeline will help China reduce dependence on imports via the Strait of Malacca. The gas pipeline will help meet rapidly expanding demand in southern China.

Over the construction period to 2013, CNPC faces challenges including whether Myanmar Oil & Gas Enterprise can finance its stakes in the projects, reputational risks due to possible abuses in the pipeline corridor, and security risks to construction personnel and pipelines.