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Pipeline delays

Petroleum Review; 04/05/2017

Myanmar is understood to be delaying the operational start-up of a pipeline to transfer up to 240,000 b/d of crude oil through the country to China, according to China Oil Monitor. The 770-km long pipeline built by China National Petroleum Corporation (CNPC) in a joint venture with state-owned Myanmar Oil & Gas Enterprise (MOGE), has been ready for two years but a change in Myanmar’s government and hard renegotiations over terms of use have prevented shipments.

New demands for higher oil transit fees by the Naypyidaw government, which assumed power in March 2016, have left a very large crude carrier (VLCC) carrying the first oil from Azerbaijan for the pipeline stranded off the coast of Sri Lanka awaiting port docking permission, reports Reuters. The government is also demanding higher port transit fees.

As a result, a purpose-built transit terminal on the central Myanmar coast, which includes 12 storage tanks with a capacity of 600,000 barrels and was officially opened in February 2015, remains empty, notes China Oil Monitor. The delays are also holding up the commercial opening of a new 260,000 b/d refinery built by PetroChina near the capital of Yunnan Province, Kunming, where the pipeline ends, according to Reuters.

News Item details

Journal title: Petroleum Review

Countries: Myanmar -

Subjects: Policy and Governance, Pipeline, Oil supply