China Hedges its Energy Bet with Move into Bangladesh By WILLIAM BOOT BANGKOK — The Chinese state oil giant that has a grip on Burma's biggest gas field is now venturing into neighboring Bangladesh—a move which may stifle long-running conflict over territorial waters in the Bay of Bengal. The China National Petroleum Corporation (CNPC) is reportedly about to sign an agreement with Bangladesh's government-controlled PetroBangla to search for oil and gas both on and off shore. The deal follows a visit by senior CNPC officials to Bangladesh earlier this year and Chinese government promises of a US $1 billion loan to the impoverished country. Chinese workers seal the pipeline along the 1,272-kilometer transnational natural gas pipeline in Luoyang in central China's Henan Province on Dec 11, 2008. China's demand for oil and gas has expanded rapidly in recently years to fuel its double-digit economic growth, as the country imported nearly 200 million tons of oil in 2007, up more than 10 percent from 2006. (Photo: AFP) Burma and Bangladesh have clashed over competing territorial claims to sections of the sea believed to hold gas and oil. Less than one year ago gunboats from the two countries' navies confronted one another around a drilling rig financed by industrial giant Daewoo. The South Korean company is the project leader and major investor in two sectors of the Shwe field just inside Burmese waters which has proven gas reserves of at least 200 billion cubic meters—all of which have recently been bought by CNPC. Analysts take the view that this development is another example of China hedging its bets in the region on the future of Burma, even though many feel that the military junta-run country has fallen into Beijing's political pocket. "Given recent events, it would be wise indeed for China to hedge its bets by exploring gas opportunities with Bangladesh," Australian economist and Burma expert Sean Turnell told The Irrawaddy this week. "That this is regardless of border sensibilities says much too about China's real regard to the feelings of its vassal [Burma]." The offshore border line between Burma and Bangladesh remains undefined under international demarcations defined by the UN's Law of the Sea boundaries. Both countries have stalled making submissions to the UN. Turnell, a professor at Sydney's Macquarie University and compiler of the Burma Economic Watch, has documented how China's economic and political grip over Burma has grown while Western countries have imposed sanctions against the regime. Beijing has not only secured large volumes of Burma's gas reserves but is using the impoverished country as a conduit to ship Middle East oil by building a port in an isolated part of Burma's Bay of Bengal coast to transship supplies via a 1,200-kilometer pipeline into China's southwest Yunnan Province. But Turnell believes even China remains wary of the stability of the Burmese junta. "The incidents on the [northern] border amply demonstrate the SPDC's own immunity to international opinion when it comes to the crunch—even that of their principal creditor and supporter," he says. Another Chinese state company, Shanghai Electric Group, has just won a US $101 million contract in Bangladesh to build a 150 megawatt gas-fuelled power plant. Burma and Bangladesh have discussed cooperation on mutually beneficial electricity generation a number of times but talks remained inconclusive. News of the Chinese moves in Bangladesh comes on the heels of other renewed activity in the Bay of Bengal by Burma's energy hungry neighbor. PetroBangla has awarded offshore exploration contracts to two Western companies— U.S.-based ConocoPhilllips and Ireland's Tullow Oil. The chairman of PetroBangla, Mohammad Muqtadir Ali, insists the companies will not be allowed to explore for oil and gas in disputed waters. Previous Bangladeshi efforts to attract foreign bidders for offshore drilling licenses were unsuccessful, seemingly because of the territorial disputes with both Burma and India. "Several factors have changed recently, including a more stable government in Bangladesh and Dhaka's resolve to submit formal sea territory claims to the United Nations," said Bangkok-based industry analyst-consultant Collin Reynolds."But the arrival of Chinese players on both sides of Burma's border is a bit of a conundrum, especially for the government of Burma." China has also recently expressed interest in co-funding a major crude oil transshipping and processing terminal on the west coast of Malaysia. That terminal also offers Beijing an alternative route for its Middle East imports should relations with Burma sour or a change of regime occurs there. http://www.irrawaddy.org/highlight.php?art_id=16706&page=1 |
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