Myanmar: Gas & Geopolitics

Myanmar is a rather mysterious place given the political scenario and history. Nautilus.org has this fine analysis of what the Gas reserves are likely to do to Sino-Indian conflicts. The salient aspects from the review.
The illegitimate and oppressive nature of the current Burmese regime has been a key concern in European and American policymaking on Burma, and has also represented a problem for Burma's fellow member-states in the Association of Southeast Asian Nations (ASEAN). Several of the ASEAN countries, as well as India and China, have sought to downplay or even ignore this problem so as not to undermine their national interests in maintaining close relations with the Burmese power-holders.

The energy-security concerns of Thailand, India and China are key factors in the relations of all three countries with Burma. In principle, India and China have pledged to cooperate in the field of energy security in order to avoid costly rivalries. In practice, however, commentators expect that the two oil-importing giants will find it more or less impossible to avoid such rivalries. In relation to Burma, this seems difficult indeed. The immediate issue is competition between India and China over gas from Shwe, a newly discovered gas field off the coast of Arakan. An underlying Indian concern is China's naval presence and intelligence-monitoring both in the Bay of Bengal and the Andaman Sea, where the Indian navy has been used to operating without interference, and in the Strait of Malacca.

For fear of losing influence with the Burmese regime, both India and Thailand have chosen a 'pragmatic' approach to the country's State Peace and Development Council (SPDC), whereas China tends to support Burma's rulers whenever they come under external pressure to undertake reforms. All three of Burma's neighbours are set to maintain a strong strategic interest in Burma, but the importance of Burma to the Chinese security agenda deserves particular attention. China relies on its bases on Burmese territory to monitor the Indian Ocean and the entrance to the Strait of Malacca, a waterway of crucial importance for the provision of oil and other necessities to China, Taiwan, South Korea and Japan. The strategic importance of the Malacca Strait has become even greater over the last decade, with China's growing dependence on imported oil. About 80% of all oil supplies to China are currently shipped by tankers through the Malacca Strait. Military planners in China fear an embargo in the event of war or an acute crisis in their relationship with the United States. Chinese assistance to port development in Burma is linked closely to China's objective to reduce its dependence on tanker transports through the Malacca Strait and South China Sea. The current Sino-Indian rivalry over Burmese natural gas from the Shwe field may give rise to further competition to assist the Burmese regime in building deep-sea ports and maritime facilities, as well as connecting infrastructure such as roads and airstrips, and of course gas pipelines. Calls by the Burmese pro-democracy movement for a tightening of the current EU and US sanctions regimes are premised on the assumption that it would be difficult for the Burmese military regime to remain in power without foreign trade and investments. That may be so, but the likelihood that Burma could be economically isolated is currently growing ever more remote. Burma's single most valuable export commodity is natural gas, which is becoming increasingly important to Burma's neighbours and key trading partners. Thailand has already invested heavily in Burmese natural gas and is currently entering into new energy deals with the Burmese regime. China plays a key role as a trading partner. Its trade with Burma reached $1.2 billion in 2005, of a total Burma trade of $5 billion. [2] China will further consolidate its economic ties with Burma with the building of two new pipelines through the country, one for oil and the other for gas. India is set to become a third major partner to the Burmese regime if its new gas pipeline plans are realized. Considering the vital significance of Burmese natural gas, both as a major source of revenue for the military regime and as an important aspect of the current energy security strategies of the neighbouring states, the present report takes a comprehensive look at the geopolitics of Burmese gas. It describes the history of oil and gas exploitation in Burma, the political context and the main stakeholders involved, with a focus on the emerging rivalry between India and China over Burmese gas. In conclusion, the report outlines some basic policy implications of the analysis, suggesting issues to consider in a much-needed re-examination of how to 'constructively engage' the Burmese junta.