A consortium of South Korean and Indian companies is to invest $5.6 billion in producing natural gas in Burma for export by pipeline to China, the Times reported on Tuesday.
The consortium, led by Daewoo International, has agreed to supply China National Petroleum Corporation (CNPC) with the output of a giant Burmese gasfield for 30 years, a deal that underlines the increasing influence and importance of China to the economy of Burma, the impoverished and isolated state on its southwestern border.
The consortium includes ONGC, India's state oil company, and GAIL, India's state gas company, as well as Korea Gas and MOGE, the Burmese state oil and gas company. Daewoo, which owns 51% of the consortium, is the biggest shareholder.
The gas will come from the giant Shwe field in the Bay of Bengal, offshore of Arakan state in Western Burma, the Times said.
Discovered in 2003, the Shwe and Shwe Phyu gasfields are thought to be among the largest in South-East Asia, together representing between 3 trillion and 6 trillion cubic feet of gas, according to Daewoo figures.
The resource is worth $40 billion at estimated gas sale prices.
The energy assets of its neighbor are highly attractive for China. China's consumption of gas is increasing as the country seeks to resolve myriad energy problems, including a domestic shortage of oil and gas and a need to reduce the air pollution caused by the burning of coal in power stations as well as carbon emissions.
The consortium, according to the Times, is waiting for the green light from the Burmese Government, although the military junta controls MOGE and its 15% stake in the enterprise.
In July CNPC offered the Daewoo consortium a 49.9% stake in an pipeline that the Chinese will build linking the Shew fields in the Bay of Bengal with China.
The 870-kilometre pipe, costing almost $2 billion, will bring gas to the Burmese border with Yunnan province.
China is pursuing energy deals and has courted its neighbors assiduously including Central Asia energy giants, such as Turkmenistan and Kazakhstan as well as liquefied natural gas exports from Australia.
Last week PetroChina and ExxonMobil agreed a record $41 billion contract to export LNG from the North West Shelf of Australia.