OREANDA-NEWS. June 04, 2013. An hour's drive outside the Yunnan provincial capital Kunming, at a vast construction site, building work is nearing completion on a Dh7.35 billion pipeline that will ship oil and gas from Myanmar to energy-hungry China.

With a capacity of 440,000 barrels of crude a day and 12 billion cubic metres of natural gas, the pipelines, which will run from this construction site in south-western China all the way to the Indian Ocean at the Bay of Bengal in Myanmar, are central to Chinese efforts to improve energy security as its economy continues to expand.

"The pipeline will not only be a big boost to the Yunnan economy but also to the whole Chinese economy," Gao Shuxun, the vice-governor of Yunnan province, told local media recently.

"We all know that China is a huge energy-importing country and that Yunnan is a big energy-importing province.

"Therefore, as far as the shortage of energy and resources goes, the situation will ease through the completion of China-Myanmar pipeline," said Mr Gao.

"Oil is the lifeblood of the economy. If we have one more vein, the vigour of our economy will hugely increase."

The oil pipeline will be nearly 800km long, while the natural gas pipeline will extend further to meet the gas needs of cities including Kunming, Guizhou and Guangxi in south-western China.

Running from Myanmar's west coast through the centre of the country, the pipelines will reach China at the border crossing of Ruili in the west of Yunnan. A crude-oil terminal will also be built on the west coast of Myanmar in Kyaukryu.

The project is being built jointly by China National Petroleum Corporation and Myanmar Oil and Gas Enterprise.

There are varying estimates of when the project will be fully completed, although construction is expected to be finished within the next couple of weeks.

Previously, it had been expected that gas would start flowing next month followed by oil in September but government sources have said regional security concerns could cause a delay.

Recent clashes between Myanmar government forces and ethnic militia fighters in the country's Shan State, as well as fierce fighting with the Kachin Independence Army in Kachin State in the north that borders China, could delay the start of operations.

There was a stark reminder of how delicately balanced the situation is earlier this month when Shan State guerrillas in Myanmar attacked an energy company compound, killing two people and wounding three.

The pipelines also have a broader geopolitical significance as they are a central plank in China's efforts to reduce its dependence on the Strait of Malacca for its imported oil needs, a problem energy security experts call China's "Malacca Dilemma".

Most of China's oil is currently shipped from the Middle East and Africa through the Straits of Malacca, one of the world's busiest shipping lanes. The strait is seen as a major threat to secure energy supplies by large Asian economies dependent on crude shipments from the Middle East and Africa.

The strait, which ends near Singapore on the the southern end, is described as the second largest "global choke point", after the Strait of Hormuz, and the US navy has a powerful presence here. Crude from the Middle East and Africa that travels through the waterway accounts for 75 per cent of the oil consumed by Japan, South Korea and Taiwan.

China produces more than four million barrels a day domestically, but about 37 per cent of its total oil used came through the strait last year. That percentage is expected to fall to about 30 per cent once the Myanmar pipeline comes on stream.

Lin Boqiang, the director of the China centre for energy economics research at Xiamen University, says the completion of the China-Myanmar pipeline would reduce the over-reliance on the Malacca Strait.

It is beneficial to improve the multiple ways regarding the safe supply and import of energy.