China and Burma have reached an agreement on an oil pipeline between the neighbouring countries after almost a decade of talks, with the project due to start “very quickly,” Chinese Vice Foreign Minister Liu Zhenmin said on Monday.
The new oil gateway fits with China’s “One Belt, One Road” ambitions, linking it with central Asia and Europe, and will provide a more direct alternative route to sending Middle Eastern oil via the crowded Malacca Strait and Singapore.
Liu’s remarks, at the end of a visit by Burmese President Htin Kyaw, mark the official launch of the 770-kilometre (480-mile) pipeline, which Beijing regards as essential to securing its oil needs.
Dogged by sensitive relations between Naypyidaw and Beijing, the $1.5 billion pipeline has been sitting empty for two years.
The first tanker carrying oil to Burma for delivery to China was expected on 8 April, but a Burmese government official told Reuters the ship may not have the official go-ahead to enter Burma.
It was unclear whether the ship had delivered its cargo.
“The oil pipeline will very quickly begin operation,” said Liu.
An agreement between China’s PetroChina and Burma’s government will allow the state energy giant to import overseas oil via the Bay of Bengal and pump it through the pipeline to supply a new 260,000-barrels-per-day (bpd) refinery in landlocked Yunnan province.
The announcement wraps up Htin Kyaw’s six-day state visit to China, the first since he was elected, where he met Chinese President Xi Jinping and Prime Minister Li Keqiang, as well as visiting a number of Chinese cities including Shanghai and southwestern Chengdu.
When asked if the two sides also discussed the Myitsone dam, work on which has been suspended since 2011, Liu said that China and Burma had basically reached an agreement.
“[We should] move toward an appropriate solution that is advantageous for the development of bilateral relations and realises win-win benefits for both sides,” he said.
China has shifted its position in the dispute over the building of the $3.6 billion dam, sources told Reuters earlier, signalling its willingness to abandon the project in exchange for other economic and strategic opportunities in Burma.
The two sides also agreed to work together to better manage security in northern Burma, saying that the conflict was an issue for both countries.
Fighting last month in Burma pushed thousands of people into China to seek refuge, prompting Beijing to call for a ceasefire between ethnic militias and the security forces.