Peeking at China’s Back-Door Natural Gas Supply
One of the most critical changes in global energy flows we’ve seen for years happened this week. China inaugurated one of its boldest pipeline projects in recent memory. A 2,500 kilometer pipe to carry natural gas and oil from the Indian Ocean across Myanmar in southeast Asia and into southwest Yunnan province.
The gas portion of the line became fully operational this week, according to China National Petroleum Corp. The line is expected to carry over 1 billion cubic feet of gas per day into China. The twin oil line is expected to follow. This massive development has several key implications for the global energy balance. For one, it means that Myanmar’s significant offshore natural gas reserves (and growing production) now have a “go-to” market.
This could mean less natgas supply for other consumers in the region. Possibly the reason why fellow Myanmar gas user Thailand said this week that it wants to make coal its official fuel of choice going forward, moving away from natural gas. It also shows that China is committed to diversifying its natural gas import base. As one of the highest payers for LNG imports on the planet, China needs all the gas it can get. And “back door” supply options like the Burmese pipeline are going to be a focus.