Weekly Business Roundup (July 18, 2009)

China Seeks Partners to Share Gas Pipeline Cost

Foreign developers of Burma’s biggest gas field are being invited by the China National Petroleum Corporation (CNPC) to take shares in the 1,000 kilometer pipeline from the Bay of Bengal to southwest China.

The pipeline will carry gas from the offshore Shwe field through Burma into China’s southwestern Yunnan province.

The consortium developing the Shwe field consists of South Korea’s Daewoo International, Korea Gas and India’s state-owned enterprises onGC Videsh and GAIL.

State-owned CNPC was originally slated to build and operate the US $1 billion pipeline itself, but energy industry reports says the Chinese now want to sell a 49.9 percent share to the Shwe consortium.

Human rights groups say the pipeline will inevitably lead to land confiscation and possibly forced labor recruitment along its route by the military.

Daewoo, the major Shwe investor and developer, is expected to pick up a 25 percent stake in the pipeline.

News of China’s move to dilute its pipeline costs comes as industry sources also suggest that the Shwe consortium will have to invest about US $3.7 billion to deliver the 200 billion cubic meters of gas confirmed in just two blocks of the field.

That cost includes construction of another pipeline to ship the gas from the offshore site, near the disputed sea boundaries with Bangladesh, to the shore in Arakan State.

China secured sole purchasing rights to the gas despite strong bids also from India and South Korea.

Burmese Rice Exports Forecast to Rise despite Nargis Damage

Despite the damage wreaked on paddy fields by Cyclone Nargis, Burmese producers say they expect to export as much as 1 million tons this year.

The Myanmar Rice and Paddy Traders' Association says this will be surplus to domestic needs and could fetch a record profit.

Only one year ago emergency food aid was being airlifted into the country to feed tens of thousands of people made homeless by the cyclone which struck the Irrawaddy delta.

This year, producers have already exported about 500,000 tons and this is forecast to double after the next harvest, later this year.

Rice exports of about 700,000 tons in the 2008-9 financial year ended March earned about US $200 million, according to the traders’ association.

“This is remarkable given the scale of paddy damage in May of 2008, but Burmese producers do tend to go for quantity rather than quality,” said commodities analyst Simon Inphet in Bangkok.

“Thailand can demand much higher prices for its rice because of the quality, and so Burma’s exports usually go to poorer countries like Bangladesh and West African states.”

In comparison, Thailand earned $5.6 billion from exporting 10 million tons last year.

China Advances to Leading Foreign Investor in Burma

China has emerged has the biggest foreign investor in Burma, accounting for the bulk of the US $985 million dollars of investment flowing into the country in the financial year ended March.

The Chinese spent $856 million, according to state figures just released.

China’s surge in spending is largely accounted for by investment in a major nickel development project by the state-owned China Metal Mining Group in partnership with Burma’s Ministry of Mines.

Rising investors with the Burmese military junta also include Russia and, more surprisingly, Vietnam. Both those countries pushed neighbor Thailand into fourth place for incoming investment, the Central Statistical Organization figures show.

Russia invested almost $100 million in the 2008-9 year, mostly in oil and gas exploration projects.

Although Thailand remains Burma’s biggest trading partner, because of the large volumes of gas its buys each year, China is also fast becoming a key overall trading partner for the junta generals as Western sanctions rule out many US and European Union countries.

India Hopes for More Trade with Burma Through Asean Deal

India is seeking to finally conclude a much-anticipated free trade agreement with the Association of Southeast Asian Nations (Asean) – a move which might give it more access to trade with neighbor Burma.

Senior New Delhi government officials were meeting Asean chiefs this week in Manila in an attempt to conclude an agreement.

An FTA deal would wipe out import taxes on about 4,000 products traded between India and Asean countries, ranging from textiles and electronic items to natural commodities such as crude oil and palm oil.