The 770KM China-Myanmar oil pipeline has finally been opened for business, a move that could see China-bound oil bypassing Singapore’s strategic port altogether.
According to Bloomberg last month, the China-Myanmar pipeline handled its first tanker, with a capacity of over a million barrels of crude oil, at Myanmar’s Kyaukpyu port on 10 April. The oil will cut through Myanmar and head towards China through its southwestern border province of Yunnan.
If the oil pipeline operates at full swing, it can supply China with up to 6 percent of China’s crude imports. China has reportedly built an oil refinery in Yunnan with the capacity to process 13 milion tons a year or about 261,000 barrels a day. They are wooing Saudi Arabian Oil Co to invest in the plant, which opens next month.
According to The Financial Times, the move is seen as China’s attempt to bypass its energy chokepoint at the Straits of Malacca, which is controlled by Singapore, Malaysia and Indonesia. Strategically, China is afraid that if it gets into a conflict with the US, especially over Taiwan, the Americans could simply blockade its energy route in the Straits.
China is further unnerved by Singapore’s preference to allow Littoral Combat Ships in Changi and reconnaissance planes in Paya Lebar. This explains why China is investing heavily in ports and rail links in Malaysia, which they hope will alter trade routes in the region and divert billions worth of trade from Singapore. These Malaysian infrastructure projects are expected to be completed in 5 to 10 years.