China Hedges its Energy Bet with Move into Bangladesh

[Al-Zakir]

By WILLIAM BOOT
Wednesday, September 2, 2009



BANGKOK — The Chinese state oil giant that has a grip on Burma's biggest gas field is now venturing into neighboring Bangladesh—a move which may stifle long-running conflict over territorial waters in the Bay of Bengal.

The China National Petroleum Corporation (CNPC) is reportedly about to sign an agreement with Bangladesh's government-controlled PetroBangla to search for oil and gas both on and off shore. The deal follows a visit by senior CNPC officials to Bangladesh earlier this year and Chinese government promises of a US $1 billion loan to the impoverished country.
Chinese workers seal the pipeline along the 1,272-kilometer transnational natural gas pipeline in Luoyang in central China’s Henan Province on Dec 11, 2008. China’s demand for oil and gas has expanded rapidly in recently years to fuel its double-digit economic growth, as the country imported nearly 200 million tons of oil in 2007, up more than 10 percent from 2006. (Photo: AFP)

Burma and Bangladesh have clashed over competing territorial claims to sections of the sea believed to hold gas and oil.

Less than one year ago gunboats from the two countries' navies confronted one another around a drilling rig financed by industrial giant Daewoo. The South Korean company is the project leader and major investor in two sectors of the Shwe field just inside Burmese waters which has proven gas reserves of at least 200 billion cubic meters—all of which have recently been bought by CNPC.

Analysts take the view that this development is another example of China hedging its bets in the region on the future of Burma, even though many feel that the military junta-run country has fallen into Beijing's political pocket.

"Given recent events, it would be wise indeed for China to hedge its bets by exploring gas opportunities with Bangladesh," Australian economist and Burma expert Sean Turnell told The Irrawaddy this week. "That this is regardless of border sensibilities says much too about China's real regard to the feelings of its vassal [Burma]."

The offshore border line between Burma and Bangladesh remains undefined under international demarcations defined by the UN's Law of the Sea boundaries. Both countries have stalled making submissions to the UN.

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