Tuesday, August 25, 2009

Daewoo invest $5.6 billion in Burma gas

(DVB)–South Korean company Daewoo International is waiting for the go-ahead from the Burmese government to invest nearly $US5.6 billion in Burma's gas fields, with the produce destined for China.

If approved, the deal will see Daewoo supplying the China National Petroleum Corp (CNPC) over the course of 30 years with around seven percent of the country's current gas consumption, although this is expected to grow rapidly.

Burma has huge offshore natural gas reserves in the Bay of Bengal which already cater for much of Thailand's energy needs.

Advocacy groups have complained that the vast majority of Burma's natural energy is being shipped out of the country, despite many of the major cities suffering frequent blackouts.

Daewoo will be leading a consortium of companies, which includes India's Oil and Natural Gas Corp and GAIL company, the Myanmar Oil & Gas Enterprise, and the Korea Gas Corp.

The project includes the construction of 2,800 kilometer oil and gas pipelines, known as the Shwe Gas Project, running from Burma's western Arakan state to China's southwestern Yunnan province.

Until now China has relied on the congested Strait of Malacca, between Singapore and Indonesia’s Sumatra peninsular, to transport oil from the Middle East to its energy-hungry population. According to Reuters, Burma will be able to tap the pipelines once they are in operation.

In June the Korean government rejected a complaint from two environmental advocacy groups, EarthRights International (ERI) and Shwe Gas Movement, that allegedly exposed human rights abuses surrounding the project.

China and Korea are two of only a handful of countries that still invest substantially in Burma, with China being its main trading partner and political ally.

Burma is subject to sanctions from a number of Western countries, including the United States and European Union, although these do not block investment in Burma's natural energy.

The EU recently ratcheted up its sanctions package on Burma, following the detention of opposition leader Aung San Suu Kyi earlier this month.

The United States is currently reviewing its policy towards Burma, following comments from some senior officials, including Secretary of State Hillary Clinton, that sanctions had failed.

Reporting by Francis Wade

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