Nov 3, 2009 (DVB), Construction has begun on a crude oil port on Burma's western coast that will eventually pump Burma's vast offshore gas reserves to southern China, news sources in China reported.

The port is being built by the China National Petroleum Company (CNPC) on Maday Island, off the coast of Burma's western Arakan state, the China Petroleum Daily reported today.

It will form part of China's trans-Burma oil and gas pipeline project, connecting Yunnan province with the Bay of Bengal.

It will create an important shortcut for the 75 percent of China's oil that comes from the Middle East and Africa, bypassing out the strategically sensitive and congested Malacca Strait.

The project, including the 771-kilometre pipeline which is set to pump 240,000 barrels per day to China, has come under heavy criticism from a number of environmental and activist groups.

"This is very significant project for both the governments," said Wong Aung, from the Shwe Gas Movement. "But the project will be of great benefit to multinational corporations as well, and have virtually no benefit to the people of Burma".

Last week activists petitioned Chinese embassies around the world, urging the country to review its involvement in Burmese gas and its dealings with the military government.

The project has also been dogged by claims that it will be environmentally destructive, and that the Burmese junta lacks suitable environmental legislation. "We are really concerned about spillage and the construction of the seaport," said Wong Aung.

Chinese influence in Burma has increased as Beijing's power of veto in the UN security council has curried favour with the junta, enabling the awarding of discount gas concessions in the face of stiff international competition from the likes of India.

Earlier in the year, India lost in the bidding for gas fields in the Bay of Bengal, despite offering bidding higher than China.

But China's presence in Burma is also viewed as heavily strategic, with access through Burma holding great potential for the relatively underdeveloped western regions of China, which lack the transport facilities of the more developed east.

Reporting by Joseph Allchin