CNPC Starts Myanmar-China Oil Pipe Trials to Cut Shipping Time

China National Petroleum Corp., the nation’s biggest oil and gas company, started trial operations at a crude pipeline in Myanmar that could shorten the time for shipments to reach refineries.

A very large crude carrier capable of hauling 300,000 metric tons discharged oil into tanks at Myanmar’s Ma-de island port, the pipeline’s starting point, CNPC, the operator of the facility, said in a newsletter on its website on Jan. 30. The line ends in southern China’s Yunnan province, according to the Commerce Ministry.

China is diversifying its sources of crude supply to bolster energy security as the share of imports needed to meet domestic demand is forecast by CNPC to surpass 60 percent this year for the first time ever. The Myanmar project will help PetroChina Co., CNPC’s listed unit, to take delivery of crude bought from the Middle East and Africa, according to ICIS-C1 Energy, a Shanghai-based consultant.

“After the pipeline starts operation, tankers can discharge in Myanmar instead of going via the Malacca Strait,” Li Li, a research and strategy director at ICIS-C1, said by phone from Guangzhou. “I don’t expect utilization of the pipeline to be high in the near term as the refinery designed to process crude transported through the line will only be ready in about two years.”

Construction of the 771 kilometer (479 mile) pipeline with a designed capacity of 22 million tons a year started in June 2010, according to the official Xinhua news agency. In Yunnan, PetroChina is building a refinery that can process 13 million a year, which will begin operations by the end of 2016.

China’s crude imports rose 9.5 percent to a record high last year as the collapse in global oil prices presented an opportunity to boost stockpiles, customs data showed. Net crude imports will climb 5.4 percent to 325 million tons in 2015, CNPC said in its annual research report on Jan. 28.

— With assistance by Jing Yang

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