China is to boost its economic ties to the Burmese military Government with a $5.6 billion (£3.4 billion) gas project in the Bay of Bengal, to be built by a South Korean and Indian consortium.
The Shwe gas project, led by Daewoo International, the South Korean conglomerate, will supply China National Petroleum Corporation (CNPC) with gas for 30 years, a deal that underscores the importance of China to the economy of Burma, the impoverished and isolated state on its southwestern border.
As well as Daewoo, which owns 51 per cent, the gas consortium includes ONGC, India’s state oil group; GAIL, India’s state gas company; Korea Gas; and MOGE, the Burmese state oil and gas unit.
The gas will come from the Shwe field offshore from Arakan state. The Shwe and Shwe Phyu gasfields, discovered in 2003, are thought to be among the largest in South-East Asia, representing up to six trillion cubic feet of gas, according to Daewoo.
The resource is estimated be worth $40 billion to Burma. The contract to buy Shwe’s output was fiercely contested by India, which, like China, suffers a severe energy deficit. Delhi made concerted efforts to improve relations with the generals in Rangoon, toning down its support for Aung San Suu Kyi, the opposition leader held under house arrest.
Daewoo said yesterday that it would invest $1.7 billion in its share of the project, including offshore platforms and an undersea pipeline. The consortium is waiting for the green light from the Burmese Government, which has a 15 per cent stake in the project, via MOGE.
The 870km pipe, costing almost $2 billion, will bring gas to the Burmese border with China’s Yunnan province.
China is in relentless pursuit of energy supplies and last week sealed a record gas deal with ExxonMobil for liquefied natural gas.