Beijing has an energy problem. The Chinese economy may have slowed down somewhat recently, but the country still has great need of energy imports to meet its growing energy demand. Those imports open China up to geopolitical risk, and that’s especially true for energy sources that are shipped in over water policed by the U.S. Navy. It’s not surprising, then, that Beijing has placed a high priority on securing new lines of supply for overland energy imports, which means building thousands of miles of pipelines. As the FT reports, China just reached a final agreement with neighbor Myanmar to open up an oil pipeline route:
The twin crude and gas pipelines on the route are key to China’s “two oceans” strategy to diversify energy supply away from the chokepoint of the Strait of Malacca and vulnerable shipping lanes through the disputed South China Sea. Once fully operational, the pipeline from Made island in Rakhine state can supply almost 6 per cent of China’s crude oil imports. The gas line is already in use.
China has been moving to secure more oil and gas pipelines elsewhere too, having worked to develop a pipeline connection with Russia to secure Gazprom hydrocarbons. The two countries inked a preliminary agreement for a 30-year supply deal reportedly worth $400 billion back in 2014, though Moscow has scaled that deal down due to falling global oil and gas prices and concerns over instability in the Chinese economy.
That said, China is still going to have to look abroad to meet its energy demands, and in Beijing’s eyes, the fewer of those supplies come by ship, the better. This new Myanmar oil pipeline is just one piece of that larger puzzle.