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The pipeline and its discontents

Residents of Kyaukphyu are becoming restless as the controversial Shwe Gas and Oil Project nears completion. The township, traumatized by deadly violence between Buddhists and Muslims last year, is host to the offshore gas terminal (OGT) and deep-sea port soon to feed twin pipelines headed for China.

The two major construction sites on either side of Kyaukphyu town are part of a proposed Special Economic Zone (SEZ) that, if approved, will encompass nearly half of Ramree Island and all of Maday Island. The Kyaukphyu SEZ is awaiting legislation similar to the Dawei SEZ Law passed in January 2011.

A Preliminary Feasibility Study by China’s CITIC Group was obtained by Arakan Oil Watch, detailing the proposed location of the SEZ and projects slated for the area. Among them are the OGT and deep-sea port that are already underway, along with a petrochemical processing plant and a steel-manufacturing base. According to the study, the SEZ may require 350 sq km of land.

A visit to the area in mid-February confirmed that the port and terminal are now being built, and villagers in nearby Goneshein, Yer Ma and Maley Chwin are fearful that they will lose their remaining land to further developments.

“One third of the [Maday] Island has already been confiscated. In the future, our island will disappear,” stated Htun Kyi, a community leader in Yer Ma village of Maday, “Everyone dislikes this project.”

The SEZ Law, enacted in January 2011 as one of General Than Shwe’s final legislative acts, allows for the development of Special Economic Zones that offer tax breaks and other incentives for joint ventures and foreign investment. The law, drafted after Than Shwe’s 2010 visit to China’s Shenzen SEZ, regulates the governing structure of the zones and mandates that a bill be enacted for each zone’s financial rules, distinct from those of the nation at large.

This law has proved very convenient for a consortium working on the extractive project at Kyaukphyu since China National Petroleum Corporation (CNPC) secured exclusive purchasing rights for Arakan’s offshore gas in a 2008 agreement with state-owned Myanmar Oil and Gas Enterprise (MOGE).

The OGT is the starting point of 1100 km of onshore gas pipeline, joined by a crude oil pipeline in neighboring Maday Island, where the deep-sea port and oil storage facility are currently under construction. The oil pipeline will transport crude shipped from the Middle East and Africa, saving China millions of dollars in transport costs each year by avoiding the Strait of Malacca.

These two tracts of pipeline and a parallel train track will bisect Burma diagonally through Arakan state, Magwe division, Mandalay division and northern Shan state, traversing areas held by the Kachin Independence Organization, Ta’ang National Liberation Army and the Shan State Army-North. Wong Aung of Shwe Gas Movement claims that while the pipeline is said to be operational by June, long stretches are still unfinished due to clashes with insurgents near the Burma-China border.

“In some places there are holes. In others the pipe is not connected. They can’t go there,” says Wong Aung.

Such claims run counter to recent statements made by CNPC’s project manager Gao Jianguo. Xinua news reported on 21 January that Jianguo stated, “Barring insurmountable barriers, the oil and gas pipelines could begin operating in early June”, adding, “The main parts in Myanmar have been finished”.

Presently, neither the OGT (which processes the gas for transport) nor the deep-sea port is complete, leaving one to wonder what exactly these “main parts” could be.

The article stated that the pipes would undergo drying treatment and pressure testing in February, which has not yet happened on the Kyaukphyu portions of the pipeline. A safety manager at MGC, which is responsible for the OGT and the first stretch of gas pipeline, stated that they have been given a construction deadline by their contractor, Daewoo, after which site management will be transferred to the contractor, who will then conduct the testing.

While the question remains whether the pipelines are complete in Shan state, employees of sub-contractors Punj Lloyd and MGC asserted their confidence that their portions of the project will be completed by Daewoo’s deadline in late May, just before the onset of the monsoon season.Punj Lloyd and MGC are the main sub-contractors of the Kyaukphyu developments, and a recent visit to their worksites and the surrounding villages revealed much about their labour practices.

Punj Lloyd, an Indian company that saw strikes last October over the failure to pay workers for more than three months of labour, oversees the deep-sea port and 200 km of pipeline. A former employee affirmed that women receive between 50 and 70 percent of the wages paid to male labourers for the same work, which typically entails roadwork and hauling heavy materials on their heads. According to several day labourers, male wages are about 3-5,000 kyat per day.

The MGC-managed OGT site also offers no accommodation. One worker explained, “Every day I walk one hour from my village.” When asked if his village had electricity, or if he could explain to me what he was building, his reply to both questions was, “No.”

On 9 February the Financial Times’ Gwen Robinson cited Deputy Labor Minister U Myint Thein: “The plan could create about 250,000 jobs in the region,” later adding that, “Only about 400 of the 1,800 workers at the CNPC complex are from Myanmar.”

Both the Foreign Investment Law and the SEZ Law stipulate that 25 percent of jobs must be given to Burmese nationals, which has resulted in the placement of locals in day-labour positions that typically pay between 3-5,000 kyat per day and offer no training or job security, while a small percentage of skilled jobs are granted to Burman workers, mostly from Rangoon.

Kyaukphyu town is on the northernmost tip of the state’s largest island, Ramree, which was the site of the rape and murder of a Buddhist Arakanese woman last May triggering state-wide riots and mass displacement, mostly of Muslim Rohingya. Violence erupted in Kyaukphyu on 23 October 2012, at which point military forces relocated the entire Muslim population, according to local witnesses. The Muslim population of Kyaukphyu was largely Kaman, an ethnic minority that holds Burmese citizenship.

The witnesses estimated that approximately 500 of the city’s Muslims were transported in trucks to a nearby camp where they are still sequestered, living in tarpaulin tents and subsisting off of military rations. The rest were said to have fled to Rangoon and elsewhere, and within weeks trucks had leveled the waterside Muslim quarter, which now remains barren and vacant.

The remaining residents of this aggravated area have shown deep dissatisfaction with the project. Last December, authorities denied a permit for 300 villagers to protest at CNPC headquarters. Htun Kyi, who submitted the request, explained the grievances in a series of interviews, citing the three biggest problems to be land confiscation, destruction of fishing areas by purported illicit dumping, and the refusal of authorities to grant work permits to locals.

“If they cannot solve those problems, we will demonstrate,” said Htun Kyi.

-Frank Sullivan is a pseudonym for an analyst covering Burma.


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