published date: 12 January 2021

China is planning to expand infrastructure links with the key oil and gas port of Kyaukpyu in Myanmar (Burma) as part of efforts to develop its Belt and Road (BRI) investments in the country.

The two governments signed an initial deal on 10 January to carry out a feasibility study into building a 650km railway linking the deepwater port in Myanmar’s Rakhine state with Mandalay, the country’s second-largest city. Studies into a rail link between Mandalay and the city of Muse, on the Chinese border, have already been completed.

The railway will largely follow the route of the Burma Road pipelines, which take oil and gas from Kyaukpyu on Myanmar’s Indian Ocean coast to China’s Yunnan province. The oil pipeline pumps crude to state-controlled PetroChina’s 260,000 b/d Anning refinery, cutting journey times from the Mideast Gulf by around 3,000km or over a week and enabling tankers to avoid the congested strait of Malacca.

The pipelines supplied 203,000 b/d of Middle East crude to Anning in 2020. The last vessel to reach Kyaukpyu, the very large crude carrier Yuan Yang Hu, arrived at the port yesterday carrying 2mn bl of Kuwait Export Crude, data from Vortexa show.

The natural gas pipelines took 3.8bn m³ (10.4mn m³/d) from offshore fields in the Bay of Bengal to southwest China during January-November last year, according to Chinese customs data.

The rail deal was signed ahead of a meeting between China’s foreign minister Wang Yi and Myanmar’s de facto leader Aung San Suu Kyi yesterday. China has strengthened its ties with Myanmar in recent years, after a brutal crackdown on the country’s Rohingya minority in Rakhine state led western governments to cut ties with Suu Kyi, who had previously been lauded as a democratic icon.

Wang’s visit came almost exactly a year after China’s President Xi Jinping agreed on a series of investments during the first trip to Myanmar by a Chinese leader in almost 20 years. The deals included a special economic zone at Kyaukpyu and plans to develop more road and rail links under the China-Myanmar Economic Corridor project, part of the BRI.

China’s state-controlled Citic owns a majority stake in Kyaukpyu port. The port and pipeline links have been largely unaffected by the Rohingya crackdown and other armed conflict in Rakhine.

China is also increasing oil product exports to its southern neighbour, sending 4,000 b/d of diesel and 1,600 b/d of gasoline to Myanmar during January-November, according to customs data.

By Kevin Foster