Myanmar Pipelines on Schedule Despite Attack

A deadly attack this week by Myanmar rebels won't delay the launch of two pipelines scheduled to begin pumping oil and natural gas into China later this year, a senior Myanmar government official said. 

Two Myanmar nationals working as subcontractors for China National Petroleum Corp. were killed on Monday after rebels opened fire at a compound near the Chinese border, said Htay Aung, head of office for the ministry of energy. 

"The incident will have no impact on the timeline," said Mr. Htay Aung. Construction is near completion, allowing for the first gas to be supplied in July, while no exact date has been set for first delivery of crude oil under the "flexible supply contract," he said. "We will try to deliver the first oil this year," he said. 

The pipelines are majority-owned by CNPC and stretch from the Bay of Bengal to China's Yunnan province. When completed, they will be able to supply up to 440,000 barrels of Middle Eastern and African crude oil a day and 12 billion cubic meters of natural gas a year from Myanmar offshore fields. 

However, following this week's deadly attack, analysts and human rights groups say escalating violence in Myanmar is threatening to delay the $2.5 billion project, which passes through the Shan state, and comes within 12 miles of the border with the Kachin state, where the heaviest fighting between minorities seeking greater independence and the government has taken place. 

"I think it is unavoidable," said Mr. Wong Aung, a spokesman for the Shwe Gas Movement, a human rights group. He estimates that because of the fighting, the launch of the pipelines "may take a few months longer." 

Ethnic minority groups in Myanmar have for decades fought the government, seeking greater independence. Myanmar's government, which took power in 2011 after five decades of military rule, has reached ceasefires with most groups. But fighting has picked up in recent months near the Chinese border. 


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Copyright (c) 2012 Dow Jones & Company, Inc.

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