Sittwe: China and Burma have signed an agreement for the construction of a fuel pipeline from Burma's Arakan Coast to China's southwestern Yunnan Province.

Under the March 27 agreement, a US $1 billion gas pipeline will tap Burma's reserves in the Shwe gas fields, while a US $1.5 billion oil pipeline will carry crude from the Middle East and Africa to China.

The Shwe gas reserves off the Arakan Coast have attracted considerable attention following the discovery of deposits in block A-1, in Shwe and Shwepyu fields, in January 2004, and at block A-3 in Mya field in April 2005. It is estimated that the Shwe field holds a gas reserve of four to six trillion cubic feet, while the Shwepyu and Mya fields have a combined proven reserve of 5.7 to 10 trillion cubic feet. The find has triggered a rate race between India, China, South Korea, Thailand, and Singapore for gas.

The roughly 2,000 kilometre  pipeline to be constructed from Kyaukpru will carry this gas to Yunnan Province in China. Construction is set to begin soon and is expected to be complete by 2013. A gas terminal and a port for oil tankers will also be constructed on an island near Kyaukpru, and the entire cost of construction will be borne by China, the agreement states.

From 2013, Chinese oil tankers from the Middle East and Africa will be able to cross the Bay of Bengal to dock at both Arakan's Sittwe Port, which has been upgraded with support from India, and the Kyaukpru Port being constructed by China, from where their cargo will be transported through the pipelines to southwest China.

Arakan is rich in natural resources, including oil and gas, but exploitation by the Burmese military junta has resulted in extreme poverty to the Arakanese people. Moreover, the Arakanese people are very anxious about the monopoly of their management rights by India and China, said a political analyst.