Forests still cover 47 percent of Myanmar’s total land area and until recently complete government control of the economic returns from forestry (through the Myanmar Timber Enterprise) gave little space or incentive for local people to manage and sell forest products and services.
China’s Myanmar oil pipeline is part of a global trading web
While the China National Petroleum Corporation prepares to use Myanmar as a conduit to feed Chinese oil demand, its stock market-listed subsidiary PetroChina is vacuuming up vast supplies which will never go near China.
PetroChina and other Chinese state oil businesses are spending huge sums of state money abroad to buy up crude oil and sell it on to third countries.
In recent years these firms have spent US$100 billion or more in oil-related financing around the world, a report by Reuters said.
The report spotlighted how China’s state oil companies have secured control of OPEC member Ecuador’s oil, but added: “They already control growing volumes of oil from Venezuela, where China has negotiated at least US$43 billion in loans; from Russia, where the tab may exceed $55 billion; and Brazil, with at least $10 billion. In Angola, the deals total around $13 billion.”
All this is happening while the Chinese are supposedly desperately trying to meet rising demand for oil within China.
The transhipment terminal on Myanmar’s coast at Kyaukphyu and a controversial US$1 billion pipeline through the country into China’s Yunnan Province is just one example of this effort to feed Chinese oil needs.
But it’s only part of the story of China’s rising global influence in oil and gas markets, bought with seemingly bottomless funding by China’s state-owned banks.
Today, the Chinese dominate trading of Ecuador’s 360,000 barrels per day (bpd) of oil exports since PetroChina put up US$1 billion in financial assistance to PetroEcuador in 2009, said Reuters.
In 2010, Chinese businesses took 33 percent of Ecuador’s oil exports. In 2011 it was 66 percent, and by the middle of this year “Chinese state-controlled firms were allocated 83 percent of Ecuador’s oil exports”.
The Chinese NOCs did this before with an economically small South American oil country. WikiLeaks reports cited a senior manager of Venezuelan state-owned Petroleos de Venezuela complaining that in 2010 the NOCs were buying his company’s crude cheaply under a deal with the late President Hugo Chavez, supposedly to supply China’s domestic needs but in fact “diverting the oil to third countries and selling it on the open market for a large profit”.
Ironically, much of this diverted oil is sold in the US while Washington’s relations with some South American oil countries remain sour.
PetroChina has an oil trading team based in Houston, Texas. Earlier this year, a Chinese trader who left the company told Reuters that the NOC’s Houston crude trading activity was between 10 million and 12 million tonnes per year. The Houston hub also handles trading of Canadian crude and refined products.
This trend has come about for several reasons, but chief among them are the NOCs access to large flows of Chinese state funds and a fundamental change in the global oil industry caused by shale gas and oil discoveries in the US.
“Many Chinese national companies enjoy secured monopoly status, i.e. stable incoming cash flow and very low interest rates from state-owned banks,” an energy research scientist with the Center on Global Change in the US, Chi-Jen Yang, told Mizzima Business Weekly.
“Chinese national oil companies will want to enter the business of oil trading. You can see similar behaviour in other national companies. For example, the State Grid Corporation of China has acquired electricity transmission lines in Brazil and the Philippines, which most certainly have nothing to do with China’s energy need.
“China Mobile has also acquired a cell phone company in Pakistan and [bid] for a license to operate in Myanmar.”
The emergence of China’s NOCs as major international oil traders is linked with the shale energy revolution in the US, says Erica Downs a China analyst at the Brookings Institution think tank in Washington.
“Ten years ago Chinese oil executives …felt disadvantaged by their relatively late arrival to cross-border M&As. As Fu Chengyu observed in 2004, when he was the CEO of China National Offshore Oil Corporation (CNOOC), ‘It’s actually not easy for us to find projects. The world oil industry has a one hundred year history. The good projects are already taken,’” Downs wrote in a November report.
Residents of forty-two villages in Kyaukphyu Township, Rakhine State, issued a list of mandates that need to be met before they will cease protesting the Special Economic Zone (SEZ) to be implemented in their area.
Zaw Aye Maung, the Yangon region Ethnic Rakhine Affairs Minister, said on August 18 that he would garner support to table the ‘Myanmar Natural Resources Allocation Bill’ in the Parliament. The bill seeks to allocate shares for ethnic people from production and proceeds of natural resources extracted in collaboration with foreign and domestic companies.
17 Aug Life Support
China’s fossil fuels delivery turned on
The pressing of a button, fireworks and cheers welcomed the turning on of a project that has dramatic significance for China.
The Myanmar section of the Myanmar-China natural gas pipeline, co-invested by six parties from four countries including China, Myanmar, South Korea and India, was inaugurated in Mandalay July 28 and started to deliver gas to China. At about 4 pm local time, Myanmar Vice President Nyan Tun, Energy Ministers Than Htay and Zeya Aung, Chinese Ambassador to Myanmar Yang Houlan and a South Korean representative jointly pressed the commissioning button. When torches flamed in the sky at Namkham Measuring Station of Myanmar-China Gas Pipeline, a storm of applause and cheers broke out on the ceremony site and Namkham Metering Station.
U Kyaw Nyein, the Chin State Minister of Forestry and Mines told Mizzima that a proposal seeking mining work permits in Chin State will be submitted to the Union Government.
The state government together with private companies have discovered the presence of metals in 9 townships of Chin State. Thereafter, a proposal for work permits were submitted to Union Government in early 2013. However, no response has been received till date. They will re-apply for the work permits.