Oil report

INTERVIEW-Myanmar-China pipelines yet to be approved-official

BEIJING, March 6 (Reuters) - China is still considering a plan to build gas and oil pipelines from army-ruled Myanmar to its southwestern province of Yunnan, a senior provincial official said on Thursday, defending economic ties with the former Burma.

“There is this idea, this suggestion, and each side is studying it,” said Yunnan’s Communist Party boss Bai Enpei who, in the Chinese hierarchy, outranks the provincial governor.

“But whether or not it will happen, when it will happen and how it will happen have yet to be finally confirmed,” Bai told Reuters in a rare interview.

The official Xinhua agency had reported that China’s top economic planner last April approved construction of a pipeline to carry crude from the port of Sittwe in Myanmar to Kunming, Yunnan’s provincial capital.

China is also expected to lay a pipeline to transport natural gas from Myanmar, after winning last year a deal to buy the output from two major blocks operated by South Korea’s Daewoo International Corp.

But Bai said that neither plan had been sealed.

“The building of both the oil and gas pipelines is still being considered,” Bai said on the sidelines of China’s annual meeting of parliament.

“What has been approved is a study on building the pipelines, rather than the building of them,” he added.

The oil pipeline would not, at least initially, carry Myanmar’s own output as it is currently a tiny crude producer.

Instead, oil shipped to Sittwe, probably from the Middle East, would be sent north, allowing China to bypass the packed and strategically sensitive Malacca Strait.

It would also provide cheaper crude for a possible new refinery in an area that currently has to ship in all its fuel.

“This is a very important project for Yunnan. We are proactively pushing it,” Bai said. “We have neither gas nor oil. It will be good for our economy. But there’s still a lot of work to be done before this project can happen.”

Lots of questions remained to be answered, he added, though talks were ongoing.

“Will there be enough gas? What demands will the Myanmar government make?” Bai said.

Few Western companies will invest in the former Burma because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of U.S. and European sanctions.

China, typically wary of supporting or imposing sanctions and is one of Myanmar’s few diplomatic allies, has shown no qualms about investing in its southwestern neighbour, coveting its natural gas, oil, minerals and timber.

China’s growing economic presence in Southeast Asia, particularly in poor and undeveloped Myanmar and Laos, as led to resentment and even violence in some cases, as Chinese migrants flood in.

Bai said China’s presence in Myanmar was a good thing, and that it helped the country develop.

“We have built a road to Myanmar. The people there support it, as does the government,” he said. “Of course, we ensure that Chinese companies operate legally in Myanmar.” (Editing by David Fogarty)