China's risky gambit to diversify energy supply options

China's risky gambit to diversify energy supply options

SINGAPORE - China strategy to diversify supply routes for its rapidly rising energy imports took a major step forward last week.

Natural gas started to flow along a recently completed pipeline that stretches for 1,100 km from Myanmar's coast, through jungle and mountains, to Kunming in south-west China.

There it will feed into other gas lines supplying homes, industries and power plants generating electricity in the world's biggest energy user.

The gas from Myanmar, pumped from an offshore field in the Bay of Bengal, is not expected to reach China via the new pipeline until next month or September.

But at full capacity, it will deliver 12 billion cubic metres (bcm) each year. This is nearly 30 per cent of current annual imports and one-twelfth of the country's 2012 gas consumption.

A parallel oil pipeline, due to open by the end of the year, will be able to carry 22 million tonnes of crude oil from Africa and the Middle East. This amounts to about one-twelfth of China's oil use last year.

The official Xinhua news agency has described the pipelines as "China's new strategic energy channels". This is because they offer an alternative supply route for vital oil and gas imports in case the congested and relatively narrow Malacca and Singapore straits are blocked by piracy, terrorism, a shipping accident or conflict.

Since 2010, over 80 per cent of China's growing crude oil imports have come in tankers through these straits. This is the shortest sea route between the Middle East/Africa and China's east coast ports.

China's ruling Communist Party, as well as its armed forces, fear that this energy artery, which includes increasing quantities of gas from the Persian Gulf, could be cut in a confrontation between the United States and China over Taiwan.

It could also be interrupted in a clash with US mutual defence treaty ally Japan over the disputed Senkaku islands in the East China Sea. An altercation with the Philippines, another US ally, over conflicting territorial claims in the South China Sea could also produce a similar outcome.

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