Daewoo closes Burma-China gas deal

A Burma gas consortium led by South Korea’s Daewoo International has signed a 30-year agreement to sell natural gas to China, China’s Xinhua news agency reported.

Under the agreement, which cements a preliminary deal in June, China’s top state oil and gas outfit China National Petroleum Corporation, will buy gas from the Shwe field in Burma’s A-1 offshore block, which has reserves of between 4 trillion and 6 trillion cubic feet (113 billion to 170 billion cubic metres), Xinhua said yesterday. CNPC is the parent of listed PetroChina. Daewoo has 51% share in the consortium, while the other shareholders are India’s Oil and Natural Gas Corporation with 17%, India’s GAIL with 8.5%, Korea Gas Corporation with 8.5% and Myanmar Oil & Gas Enterprise with 15%. CNPC and Myanmar Oil & Gas Enterprise plan to build oil and gas pipelines through Burma and into China’s south-western Yunnan province, bypassing the long journey around the Malacca Strait for oil cargoes and solving the problem of getting the gas to market, Chinese media have reported. Burma will also be able to tap the pipeline running across its territory to promote economic development once the gas starts flowing, which is expected to happen in 2013, Xinhua said. Few western companies will invest in the country because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of US and European sanctions. China, typically wary of supporting or imposing sanctions and one of Burma’s few diplomatic allies, has shown no qualms about investing in its neighbour, eager for its natural gas, oil, minerals and timber to feed a booming economy. Daewoo said last year it had picked China as a preferred bidder for natural gas from a project in Burma, putting it at the front of a queue that also includes India and Thailand.

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