Energy Policy 107 (2017) 403–412

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol

Understanding the motivations behind the Myanmar-China energy MARK

pipeline: Multiple streams and energy politics in China
⁎
Dawei Liua, , Kensuke Yamaguchib, Hisashi Yoshikawac
a
Center for Chinese Public Administration Research; School of Government, Sun Yat-sen University, No. 135, Xingang Xi Road, Guangzhou 510275, PR
China
b
Policy Alternatives Research Institute, The University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
c
Graduate School of Public Policy, The University of Tokyo, 7-3-1, Hongo, Bunkyo-Ku, Tokyo 113-0033, Japan

A R T I C L E I N F O A BS T RAC T

Keywords: Why exactly did China decide to construct the Myanmar-China energy pipeline? While important for China's
Myanmar-China energy pipeline long-term energy strategy, very few studies have yet analyzed the project from the standpoint of China's
Multiple streams framework domestic policy process. This paper fills the gap by illuminating the broader historical context and presenting
Energy politics how this pipeline fits into energy politics in China. The policy-making process is fleshed out by using the
multiple streams framework (MSF). Analysis of this case using MSF shows that, first, local governments and
scholars played a key role in facilitating the project, especially in raising the proposal to the government agenda.
Second, a “policy window” remains an important element in China's energy policy decisions, in light of the
China-Myanmar pipeline idea was not taken seriously in the 1990s when it was first proposed. Third, although
this cross-border energy project is part of a national strategy of energy security, domestic political
considerations such as promoting investment in China's underdeveloped southwest were also at work. These
conclusions are useful for understanding not only the motivations behind such transboundary pipeline projects
but also China's energy decisions at large.

1. Introduction
In July 2013, test operation of the Myanmar-China gas pipeline
began. This is China's fourth strategic energy route after the Kazakhstan-
China crude oil pipeline, the Central Asia-China gas pipeline, and the
Russia-China crude oil and natural gas pipelines. The Myanmar-China
pipeline is important because it could help change the energy consump-
tion mode of Southwest China and even facilitate the integration of
China's energy market.
Scholars have studied the Myanmar-China energy pipeline from
various perspectives. Some viewed the pipeline as part of China's larger
national energy security strategy to avoid relying on the passage of
cargo through the Malacca Strait (Cheng, 2004; Li, 2004; Lin, 2005;
Wang, 2009; Wang, 2013); others saw it as a footnote to the Myanmar-
China relationship, which was not only facilitated by but also rein-
forced the bilateral relationship (Kolås, 2007; Zhao, 2011; Cook, 2012);
and, finally, some other scholars noted its potential geopolitical impact
on regional energy politics (Kulkarni and Nathan, 2016; Dai and Qin,
2015; Lin, 2012; Li, 2010; Sinha, 2009; Kolås, 2007; Lim, 2010;
Odgaard and Delman, 2014).
Few researchers, however, have dug into the broader historical
context and analyzed how this pipeline fit into China's internal
energy politics when it was authorized. The aim of this paper,
therefore, is to flesh out the pipeline's complicated journey from
the perspective of policy process and examine the possible policy
implications.
By examining the domestic politics involved with the pipeline
projects, this study hopes to deepen our understanding of China's
energy policy decision-making process which has been undergoing a
transformation. For a long time, China's energy policy making
authority was considered to be fragmented at both the horizontal
and vertical levels. In the energy field specifically—though the same
might be said about other policy sectors as well—China's decision
making process has been described as protracted, disjointed, and

Abbreviations: bcm, billion cubic-meters; CASS, Chinese Academy of Social Sciences; CCP, the Chinese Communist Party; CNOOC, China National Offshore Oil Corporation; CNPC,
China National Petroleum Corporation; COCOM, the Coordinating Committee for Multilateral Export Controls; CPPCC, the Chinese People's Political Consultative Conference; ESPO,
East Siberia–Pacific Ocean; LNG, liquefied natural gas; MBI, Myanmar–Bangladesh–India; MSF, multiple streams framework; MT, million tons; NDRC, National Development and
Reform Commission; NOCs, national oil companies; NPC, National People's Congress; Sinopec, China Petroleum and Chemical Corporation; tcf, trillion cubic-feet
⁎
Corresponding author.
E-mail addresses: yoyopku@gmail.com (D. Liu), gucci.kensuke@gmail.com (K. Yamaguchi), yoshikawa@pp.u-tokyo.ac.jp (H. Yoshikawa).

http://dx.doi.org/10.1016/j.enpol.2017.05.005
Received 29 December 2016; Received in revised form 29 April 2017; Accepted 3 May 2017
Available online 12 May 2017
0301-4215/ © 2017 Elsevier Ltd. All rights reserved.
D. Liu et al.
incremental (Lieberthal and Oksenberg, 1988). China's reform and
opening up policy, and consequent pluralization, have made the
decision-making process more consultative and participatory, yet at
the same time more contentious, iterative, and lengthy as more
stakeholders are now incorporated into the process (Lampton,
2001). Contending a “leadership vacuum” when it came to energy
policy, Kong (2009) summarized some critical factors necessary for
an energy proposal to become a national policy; this included factors
such as, co-benefits for other issues, existence of strong proponents,
and the endorsement of central leaders. As will be demonstrated
later, some of these factors are also at work in the decision to
approve the Myanmar-China energy pipeline.
Although it is usually debated whether China's energy policy is
highly coordinated or just appears to be, the period after 2003 has seen
China endeavor to centralize its energy policy, mainly due to the
significant challenges it faced in energy shortages and environmental
pollution (Garrison, 2009). As such, the nation's energy issues are now
considered integrated with domestic economic growth and environ-
mental governance. Moreover, domestic energy policy has now become
more internationalized due to the inexorable rise of the nation's energy
imports. Recent studies have discerned and discussed such “integra-
tion” and “internationalization” characteristics (see, e.g., Cao and
Bluth, 2013; Odgaard and Delman, 2014; Tunsjø, 2013).
China is responding to such challenges. At the Central Leading
Group on Financial and Economic Affairs (Zhongyang caijing lingdao
xiaozu) in June 2014, President Xi Jinping showed strong determina-
tions to engage in a fundamental energy revolution in China which
will concentrate on five areas: demand (setting an energy consump-
tion cap), production (diversification of energy sources), clean
technology, reform in energy institution, and global markets. The
exclusive focus on energy was considered to be unusual as such a
group meeting typically deals with general macroeconomic issues
(Wang, 2014).
Against such a backdrop, this paper seeks to explain how the same
pipeline proposal that did not receive serious attention in the 1990s
when it was first proposed suddenly found itself on the national policy
agenda in 2004. To shed light on this question, this study proposes that
the opening of a “policy window” can play a decisive role in China's
energy decisions. When used in an analysis of the Multiple Streams
Framework (MSF), the “policy window,” or the window of opportunity,
as defined by Kingdon (1984), refers to those critical moments when
the multiple streams couple and a policy alternative can make it on to
the governmental agenda.
In this paper, borrowing the insights of MSF, we show how the
“policy window” opened for the Myanmar-China pipeline project amid
the flow of the multiple streams. Moreover, based on organization
theory which acknowledges the “organized anarchies” and the con-
comitant ambiguity of the policy process, the MSF also helps us to
understand the problem-solution matching process by indicating how
policy-makers’ attention is captured and how problems are framed in
China.
The materials analyzed for this paper are primarily research
papers and industry news reports. To complement these materials,
we also conducted several interviews with relevant researchers in
China and Myanmar from 2016 to 2017. Although we focus
primarily on China's perspective, the positions and attitudes of the
Myanmar side are also dealt with as necessary. The paper is
organized as follows. After this introduction, Kingdon's “Multiple
Streams Framework” is introduced in the second section. The next
section explores the developments within the multiple streams
related to the pipeline including the strategies of the relevant
parties. Section four shows how the pipeline issue got onto the
policy agenda by examining the “coupling” of the streams and the
opening of the policy window in 2004. Section five introduces some
technical information about the crude oil and natural gas pipeline.
The final section is a discussion and conclusion.
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Energy Policy 107 (2017) 403–412
2. Perspective: multiple streams framework
Agenda setting is the first stage in the policy process. Broadly, the
policy agenda can be interpreted as the policy issues or problems which
can receive serious attention from government officials or policy-
makers. To understand the mechanism of agenda setting, Kingdon
proposed the multiple streams framework (Kingdon, 1984). MSF
explains why a particular issue becomes part of the policy agenda.
Drawing upon the insights of the “Garbage Can” model of organiza-
tional theory, Kingdon extended the research field to policy making at
the national level and investigated how problems come to be policy
issues.
According to Kingdon, three streams flow through the policy
system: the problem stream, the policy stream and the political stream.
The Problem stream refers to the process an issue must go through
to receive attention from policy decision makers. Society has many
problems but not every problem makes it onto the policy agenda.
Attention from policy makers depends on the perceptual and inter-
pretive elements of the problem. Because policy makers’ attention is
limited, a problem must be defined and framed before it is brought to
them. So then, what kinds of problems tend to attract the attention of
policy makers?
First, a problem will be considered serious if it has systematic data
or reliable indicators to announce its presence. Second, focusing events
like disasters or crises can crystallize the need for policymakers to act.
Finally, media attention and feedback from the operations of existing
programs can serve to bring problems to the attention of policy makers.
The Policy stream refers to the selection and decision process
through which policy alternatives are generated, discussed, revised and
adopted. From the “policy stream” perspective, there are many policy
proposals, initiatives, and strategies floating around in the policy
“primeval soup.” Proposals that actually survive are generally: (1)
technically feasible, (2) compatible with the values of policy makers, (3)
financially reasonable, and (4) appealing to the public.
The Political stream plays a crucial part in setting the policy
agenda. Political factors can influence the policy agenda, examples
include: (1) national mood, or public opinion, (2) changes in govern-
ment or legislative institutions, and (3) the voices of advocacy groups.
For instance, government will sometimes implement a certain policy if
many interest groups voice their support for it.
Agenda-setting is primarily influenced by the political and problem
streams, while policy alternatives come from the policy stream. While
the three streams operate largely independently, they can also join
together at a critical moment—when a “policy window” opens. A policy
window generally opens when there is a change in the political stream
or a problem emerges. Policy windows tend to open occasionally, and
might not stay open very long. When these streams combine, the
possibility that an issue will receive serious attention from policy-
makers improves dramatically.
At the moment that the window opens or is seen to be about to
open, successful policy entrepreneurs will seize the opportunity quickly
and offer their solutions to receptive politicians. Policy entrepreneurs,
both inside and outside government, are defined as people who are
willing to invest resources of various kinds to promote their policy
preferences (Kingdon, 1984: 151).
Applying MSF to China
As a widely used model, the MSF has found its utilization in
countries other than traditional democratic societies. It has been
adapted to analyze policy cases in emerging countries such as China
(Zhu, 2008), Burkina Faso (Ridde, 2009), and other regions.
Previous analysis of Chinese case has observed that the basic
structure of MSF, namely, the coupling of the streams and the open
of the window, is suitable for analyzing China's decision making; yet
some modifications are necessary (Zhu, 2008; Zhang, 2016b).
Based on the characteristics of the Myanmar-China pipeline, this
paper made the following modifications to the framework to accom-
D. Liu et al.
modate the pipeline case. First, major adaptations were required in the
political stream. In Western democratic countries, such as the U.S.,
political activities are centered on elections, public opinion, changes in
government or legislative institutions; and, the pressure from advocacy
groups dominate the political stream.
In this paper, “public opinion” is not dealt with. This is not because
public opinion is inessential in contemporary China's policy process, but
because highly technical issues, like this pipeline, tend to go unnoticed by
the general public. Much like it would in Europe (Herweg, 2016).
That doesn’t mean public opinion is never a factor in China. With
the widespread adoption of the internet, public opinion has become a
force to be reckoned with. It may have even played a key role in quite
famous cases concerning the everyday lives of Chinese citizens such as
the Sun Zhigang Accident (Zhu, 2008), the paraxylene (PX) project in
Xiamen (Huang and Yip, 2012), etc. However, for this pipeline and in
this paper, public opinion does not present special importance.
And neither does the “changes in government” factor. In China's
current one-party dominated system, changes of personnel as well as
faction competition can also give rise to policy changes, as different
political leaders may be sensitive to different issues. The Hu-Wen (Hu
Jintao and Wen Jiabao) administration began in 2003 and is con-
sidered to be the turning point for a series of social policies that assist
marginalized groups in China (see, e.g., Wong and Lai, 2006). Yet, in
this paper, the influence of “changes in government” is not apparent
and is therefore excluded.
With respect to the “advocacy groups” factor, this paper examined
the appealing of local governments and large national oil companies
(NOCs). Therefore, within the political stream, this paper examined
three factors: (1) the lobbying of local governments, (2) the considera-
tions of NOCs, and (3) the relationship between China and Myanmar.
In terms of the policy stream, of the four factors (technical
feasibility, compatibility with policy makers’ values, financial reason-
ableness, and public appeal) required for the survival of a policy
alternative, “public appeal” is excluded because there is no evidence,
such as a public opinion poll, to suggest the public supported or
opposed the project. Therefore, the following factors are examined
below: technical feasibility, cost-benefit dispute, and compatibility with
the macro strategies of the central government. In the problem stream,
concern indicators and focusing events are examined.
3. Relevant developments for the pipeline project
3.1. Problem stream
3.1.1. Energy security: problem and indicator
Historically, China used to undergo the oil shortages of in the 1950s
shortly after the People's Republic of China was founded. An oil
embargo was imposed by the Coordinating Committee for
Multilateral Export Controls (COCOM) and in view of a domestic
crude oil output of only 0.12 million tons (MT) in 1949 (Tao and Li,
2007), China had to turn to the Soviet Union for help. But after the
Sino–Soviet rupture in the early 1960s, China was once again forced to
face the harsh reality of the sudden lack of oil. Fortunately, due to the
discovery of a series of large oilfields such as the Daqing Oilfield, China
realized self-sufficient in oil in 1963 (Chow, 1992). In recent decades,
however, China's energy security situation has changed (Yao and
Chang, 2014).
In 1993, internal debates on energy security surfaced again when
China became a net oil importer and the crude oil importing rate
remained at a level of about 9% in the 1990s (Lim, 2010: 9). Against
this backdrop, China transformed its energy self-sufficiency policy into
a two-handed energy policy strategy: strengthening exploration and
developing domestic resources while at the same time enhancing
international cooperation and promoting the diversification of energy
imports (Zweig and Bi, 2005). Since adopting this strategy, diversifying
its energy resources as well as reducing its overwhelming reliance on
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Energy Policy 107 (2017) 403–412
Table 1
A collection of Operational and planned oil and natural gas pipelines.
Sources: Paik (2012); Cheng (2004); Dai and Qin (2015).
Date put into Maximum/year
service
1 Kazakhstan-China crude oil pipeline July 2006 20 MT
2 Central Asia– Kazakhstan-China December 2009 about 55 bcm
China gas section
pipeline Turkmenistan-China December 2009
section
Uzbekistan-China August 2012
section
3 Russia-China crude oil pipeline 2011 (20years) 15 MT
4 Russia-China gas pipeline (east line) 2018 (30 years) 38 bcm
Russia-China gas pipeline (west line) postponed about 30 bcm
5 Myanmar-China crude oil pipeline 2017 estimated 12 MT
6 Myanmar-China gas pipeline July 2013 12 bcm
sea lanes through the Strait of Malacca have been priority issues for
China's policy makers.
It was under such circumstances that projects such as the
Kazakhstan-China oil pipeline (northwest route), the Central Asia-
China gas pipeline (northwest route), and the Russia-China oil and
natural gas pipeline (northeast route) began to appear on China's policy
agenda beginning in the late 1990s (Table 1). Although Russia began to
send oil to China through the East Siberia–Pacific Ocean (ESPO)
pipeline only in 2011, the two nations had signed the memorandum of
understanding for the oil pipeline project as far back as 1994. Russia
supplied oil to China by railroad before the ESPO pipelines were
finalized (see, e.g., Paik, 2012). The construction of the Kazakhstan-
China oil pipeline was officially agreed to in 1997 (Li, 2014).
In 2004, the energy security debate became more heated when
China became the world's third largest importer of oil after the United
States and Japan, only ten years after becoming a net importer in 1993.
While this would be unnerving enough for China's policy makers, it is
also projected that China's import dependency will rise to 60–80% by
2020––most of which will pass through the Malacca Strait (Downs,
2006).
A database search of Chinese periodicals reveals that only 41
articles dealt with “energy security” from 1994 to 1999, but the number
rose to 1150 from 2001 to 2005 (Leung, 2011). It is therefore not
surprising that the Myanmar-China energy pipeline (southwest route)
became part of the conversation in the 2000s.
3.1.2. Focusing events
3.1.2.1. Energy shortage crisis. Around 2004, a series of focusing events
highlighted China's energy shortage and energy security problems. After
China joined the WTO in 2001, China began to embark on a long period of
remarkable economic growth. In the meantime, energy shortages and
electrical outages become a “new normal” in China as the economy
expanded. China experienced three successive years of nationwide power
shortages in 2002, 2003 and 2004. More than 20 of China's 30 provinces
were forced to ration electrical power. As a result, daily life and factory
production in those provinces were heavily disrupted. Thousands of
factories were asked to suspend production or shift work schedule to
non-peak hours. This created a sense of crisis and highlighted the severity
of the nation's energy shortages.
3.1.2.2. The Second Iraq War. The Second Iraq War in 2003
intensified China's energy security concerns as approximately 60% of
China's crude oil was imported from the Middle East at that time (Wu,
2003). At the Central Economic Work Conference (zhongyang jingji
gongzuo huiyi) in November 2003, for the first time, Hu Jintao, the
D. Liu et al.
secretary general of the Central Committee of the Chinese Communist
Party (CCP) and president of China, defined finance and oil as the
nation's two key economic security issues (Chen and Xing, 2004). As a
response, China intensified its endeavors to diversify oil resources to
other regions such as Africa, Russia, Central Asia, and Latin America
(see, e.g., Campbell et al., 2008).
Moreover, also around this time, China was more anxious about the
“Malacca dilemma.” This was partly due to the piracy in that area and
partly due to the complicated geopolitical situation of the region,
especially in view of the interest of the U.S. in playing a larger role in
providing security (Vavro, 2008). More than 80% of the imported oil
was transported to China through the Strait of Malacca (Shi, 2004;
Vavro, 2008). Although the presence of the U.S. Navy in this area
guaranteed the maritime security of the Strait, for Chinese policy-
makers this was also proof of energy vulnerability; it gave the U.S. a
potential weapon with which to contain China in possible future
conflicts, e.g., a conflict over Taiwan (Blank, 2006; Salameh, 2010).
At the same Central Economic Work Conference in November
2003, Hu Jintao also declared that “certain major powers” had been
trying to control the Malacca Strait, and called for new adoptions from
a strategic level to mitigate the perceived vulnerability (Shi, 2004; Chen
and Xing, 2004). Hu's concerns were interpreted as a signal that
China's central government was anxious to tackle the “Malacca
dilemma.” Thereafter, the idea of the Kra Canal was proposed by
Thailand in 2004, which gave rise to heated discussions in China (Chen
and Xing, 2004). The Myanmar-China energy pipeline was thus in
accord with the spirit of those discussion as it provided another point of
access for energy resources that would bypass the Malacca Strait.
3.1.2.3. The discovery of the Shwe Gas Field: Myanmar becomes an
option. Myanmar has rich energy resources, especially natural gas and
hydropower. Its proven natural gas reserve is estimated to be 11.8
trillion cubic-feet (tcf) (ADB, 2012), making it 40th in the world in
terms of proven reserves (BP, 2013). So far, offshore gas has been
Myanmar's most important source of export revenues. In light of its
good relations with Myanmar, making use of Myanmar's geographical
advantage and its energy resources became a spontaneous option for
China to realize its goal of energy security, both in energy resources and
in transport routes.
Moreover, in 2004, after Korean companies discovered the huge
Shwe gas field in the Bay of Bengal, Myanmar hoped to sell the gas and
turned to China. The Shwe field is reported to have a gas reserve of
113.2-170 billion cubic-meters (bcm) (Xinhua, 2008). This facilitated
the decision to construct the Myanmar-China energy pipeline. For
China, this additional gas pipeline would make the southwestern
energy route more cost-effective.
3.2. Policy stream
3.2.1. An old idea
China has long been convinced of the importance of a Myanmar-
China supply route. During World War II, the Yunnan-Burma Road
played a key role in providing China with necessary strategic resources
such as oil when China's Pacific route was cut off by the Japanese army.
China and the U.S. set up an oil pipeline along the Yunnan-Burma
Road which started in India and passed through the north of Myanmar
then went into China through Wanting City before terminating in
Kunming, Yunnan province.
Furthermore, beginning with the Cold War, China's maritime
access is still seen as strategically blocked in by the so-called “First
Island Chain.” In China's view, it has no direct route to the Pacific. As a
way to defend itself in case of any potential future conflict with the
United States, China had been seeking port access agreements with
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Energy Policy 107 (2017) 403–412
littoral countries such as Myanmar, Sri Lanka, and Bangladesh to
consolidate its access to the Indian Ocean (Kaplan, 2009).
Through interviews with knowledgeable officials, we learned that in
the early 1990s Myanmar had even proposed the idea of intensifying
freight transportation by water-land routes so that China could gain
access to the Indian Ocean. Meanwhile, some Chinese scholars began
to discuss the idea of a Myanmar-China oil pipeline and, based on these
discussions, the Chinese Academy of Social Sciences (CASS)—the
leading “think tank” of the CCP—proposed the idea formally in 1994
after China became a net oil importer in 1993 (Li, 2004). During that
time, however, oil prices were low and China was not so anxious about
its energy security. The proposal did not receive much attention.
3.2.2. The revival of the old idea
Instability in the Persian Gulf and maritime energy security remain
constant concerns for Beijing since it became a net oil importer in
1993. The long maritime expanse between Africa, the Persian Gulf and
China's eastern seaboard can be disrupted by terrorism, pirates, and
political instability.
As this was going on, some scholars in Yunnan University (famous
for its Myanmar studies) including Wu Lei, began to research the
possibility of a new oil channel through southwest China. In the early
2000s, Wu wrote several papers on China's energy security as well as
the influence of the Iraq War in 2003 (see, e.g., Wu, 2002, 2003). These
policy papers were noticed by the central government (Institute of
International Studies, 2013).
In 2004, before Myanmar Premier Khin Nyunt's visit to China in
July, three scholars—Li Chenyang, Wu Lei and Qu Jianwen from
Yunnan University—proposed building a southwest energy supply
route through Myanmar as a means of increasing China's energy
security in light of the slow pace of construction of the Northeast and
Northwest energy pipeline routes. The proposal was submitted to the
Yunnan provincial government and then to the central government.
On July 15, 2004, Oriental Outlook (Liaowang Dongfang
Zhoukan)––a magazine whose readership includes many of China's
officials at all levels––first publicly published the three scholars’ ideas
(Xu, 2004). It created quite a stir. Then on August 5, 2004, their
research was published in Reference News (Cankao Xiaoxi)––another
very influential magazine in China––under the title “The China Scheme
of Solving the Malacca Predicament.” The paper analyzed and com-
pared the proposed Myanmar-China oil pipeline and the Kra Canal
project in Thailand (Li et al., 2004). It received serious attention from
the central government. For instance, Li Lianzhong, the Economy
Bureau Chief of the Policy Research Office of the CCP central
committee considered the proposal to be “persuasive and of realistic
significance” (Yunnan University news, 2009).
3.2.3. Evaluation of the pipeline
3.2.3.1. Technical feasibility. At the same time, in addition to the
Myanmar-China pipeline, several policy alternatives had also been
proposed which included the Pakistan-China pipeline (from Karachi to
Xinjiang), the China-Bangladesh pipeline (from the port of Chittagong
to Tibet) and the opening up of the Kra Canal by cutting across the Thai
Isthmus.
Many of these projects had severe challenges. The Pakistan-China
pipeline would tend to break due to the region's bad weather. The
China-Bangladesh pipeline had to traverse too many mountains,
thereby driving up the costs. Furthermore, it had to pass through
India, which remained a big challenge for China. With respect to the
Kra Canal, construction would take a very long time and cost too much
money. Furthermore, a new canal in that place would probably so
aggravate the region's minorities that they would once again try to
secede (Chen and Xing, 2004; Li et al., 2004). In contrast, the
D. Liu et al.
Myanmar-China pipeline had no such political problems.
Technically, the construction of the Myanmar-China energy pipe-
line was a very big challenge and is considered to be one of the most
difficult pipelines undertaken by the Chinese companies. Although the
Myanmar-China energy pipeline traverses regions with mild climates,
it has to cross very complicated terrain including high mountains, the
Lancang River, a considerable amount of mud, and vast expanses of
jungle; it is also at risk of geological hazards such as landslides. Yet
investor of the project, namely, China National Petroleum Corporation
(CNPC) considered these difficulties manageable, especially with its
experience constructing the Kazakhstan-China oil pipeline.
Moreover, as mammoth oil tankers need a deepwater harbor with a
capacity of over 150 thousand tons, Sittwe Port which has a capacity of
200 thousand tons is considered to be a suitable starting point for the
pipeline (Li, 2005; Li et al., 2004). Oil transported from the Middle
East can be unloaded there and then piped to Yunnan province.
3.2.3.2. The cost-benefit dispute. Much of China's imported crude oil
is shipped from the Persian Gulf or Africa through the Malacca Strait
by tanker to refineries in Maoming, Guangdong province. It is refined
there and the refined products are transported by pipeline or rail to
Kunming in Yunnan.
At the time the Myanmar-China pipeline was under consideration,
its proposed route of unloading crude oil in Sittwe Port and then
pumping the oil to Kunming would reduce the total transport distance
by about 1200–1800 sea miles. However, the costs would be similar to
the then-current practice. Economically, the Myanmar-China oil pipe-
line made sense. At that time, the oil pipeline was estimated to cost
about 2 billion U.S. dollars in 2004 (Li et al., 2004). After Korean
companies discovered the Shwe gas field in the Bay of Bengal, an
additional gas pipeline was expected to make the energy route more
cost-effective and thereby more attractive.
Although the Myanmar-China energy pipeline could reduce China's
energy security anxieties about the Malacca Strait (Cao and Bluth,
2013) and save transport distances, some opposing views challenged
those benefits.
The first challenge was economic. The cost of the Myanmar-China
energy pipeline has not yet been revealed by CNPC or other official
institutions. The total cost was generally reported to be around 2.54
billion U.S. dollars, of which the oil pipeline cost 1.5 billion and the gas
pipeline 1.04 billion (Li et al., 2013). Yet, according reports in the
Myanmar media, the crude oil pipeline itself cost 2.45 billion (Shin,
2017). Therefore, some consider the total cost to be about 5 billion U.S.
dollars which includes the construction of new deepwater jetties for oil
import and related facilities in Sittwe as well as CNPC's investment in
Yunnan (Li et al., 2013). Moreover, as a transit nation, Myanmar
charges an annual transit fee of 13.6 million dollars in addition to the
one dollar it collects for every ton of oil transported; this financial
burden also hampers CNPC’s ability to recover its investment (Li et al.,
2013). As some observers noted previously, it is reasonable to suspect
that the central government may have subsidized the project or taken
other measures to reward CNPC (Erickson and Collins, 2010).
Notwithstanding the huge investment, the Myanmar-China oil pipe-
line was also criticized for doing little to ease the so-called “Malacca
dilemma”; the amount imported through the pipeline is relatively small
compared with China's total import volume (Yi, 2013; Li et al., 2013).
According to Odgaard and Delman (2014), by 2030, oil imported through
pipelines from Russia, Central-Asia and Myanmar will make up about
10% of China's imports, of which the Myanmar-China oil pipeline will
contribute only about 3.5% of total imports. And, in terms of natural gas,
the number is about 5%, which is also very limited.
Moreover, from the perspective of security, many Chinese experts
have argued that Myanmar's domestic situation is very complicated;
these uncertainties may pose great challenges for the management of
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Energy Policy 107 (2017) 403–412
the pipeline in the future (Li et al., 2013; Yi, 2013).
3.2.3.3. Compatibility with the strategies of central government.
Although the economical cost-benefit calculations were uncertain and
disputable, the Myanmar-China energy pipeline was in accord with
some overarching values that Chinese policy-makers have sought to
advance since the late 1990's.
First, as another reliable transport route, the pipeline dovetailed
with the Chinese policy-makers’ principle of “diversifying the energy
import resources and route,” in that it shifted some of the oil transit
away from the Malacca Strait (Cao and Bluth, 2013). Second, it
advanced China's “going out” policy in that it made China's NOCs
direct investors and shareholders in Myanmar's oil and gas assets in
order to secure long-term and fixed energy contracts. Third, the
pipeline project also reinforced China's efforts, beginning in the early
2000's, to strengthen cooperation with the Greater Mekong Subregion,
especially with Myanmar. Generally, China's strategy goal toward
Myanmar is described as to establish a strategic route which starts
from Yunnan province, passing through Myanmar and finally reach the
Indian Ocean. This comprehensive strategic route is still being devel-
oped and in addition to the oil and gas pipelines, means of transporta-
tion including road, rail, and airlines are also expected (Li, 2010).
Finally, but not least importantly, and added to these more general
national values, what helped enable this project was the central
government's need to further invest in the underdeveloped southwest
region of China. Such domestic political considerations can also be
found in the Kazakhstan-China oil pipeline and the Central Asia-China
gas pipeline.
For instance, in the case of Central Asia-China gas pipeline, piping
the natural gas from Central Asia to the Xinjiang Autonomous Region
would not make sense unless the natural gas could then be shipped to
China's more developed middle and eastern regions. Therefore, the
decision to construct the West-East Gas Pipeline project (Fig. 1), which
was a very important component of the “developing the West” strategy
proposed in 2000, brought hope to the Central Asia-China gas pipeline
(Garrison, 2009; Paik, 2012). In other words, the realization of the
Central Asia-China gas pipeline largely depended on China's domestic
“developing the West” strategy which aimed to provide economic
opportunities for the nation's underdeveloped Western regions such
as Xinjiang (Xu, 2006; Zhang, 2016a).
Taking advantage of the pipeline projects, Xinjiang was expected to
develop its refining and chemical manufacturing, oil storage, and
engineering and technology services. These economic endeavors were
expected to stabilize the Xinjiang which borders Central Asia and
where riots have occurred frequently since the 1990s. From this point
of view, projects such as the Kazakhstan-China oil pipelines and
Central Asia-China gas pipeline were therefore needed not only to
secure energy supplies, but also to isolate Xinjiang from separatism
and terrorism (Blank, 2006).
Even in the northeastern region, where there were no ethnic groups
seeking independence, similar considerations were at play. Specifically,
bringing new economic opportunities to the “old northeast industrial
bases” gradually became one of the motivations for promoting Russia-
China energy cooperation. In China's national strategy to renovate the
northeast industrial bases proposed officially in 2003 by the new Hu
Jintao and Wen Jiabao administration, the Russia-China oil pipeline
was expected to play the role of supplying energy resources to this
region (Mikheev, 2007: 37; Chinanews, 2016).
In sum, aside from the strategic goal of realizing energy security,
the central government's goal of using these pipelines as a means to
stabilize and develop remote and backward regions through increased
public spending cannot be overlooked. Such motivations can also be
found in the Myanmar-China energy pipeline which will be demon-
strated in the following section.
D. Liu et al.
Fig. 1. The Myanmar-China energy pipeline and West-East gas pipeline.
3.3. Political stream
3.3.1. The appeal of local governments
When the pipeline project was proposed again by scholars in 2004,
local governments sensed the opportunities within the project and
began to exert their influence. The project received especially powerful
support from Yunnan province, which borders Myanmar and whose
trade with Myanmar represented nearly 50% of its total trade in 2001
(Bi, 2008).
With a relatively backward economy, Yunnan province has in recent
years been seeking to take advantage of its close proximity to Southeast
Asian countries to expand its opportunities for economic development.
The Myanmar-China energy pipeline provided such an opportunity.
Through the construction of the energy pipeline as well as relevant oil
refinement projects, Yunnan province hoped to transform itself into an
oil refining base in Southwest China and therefore provide new means
for economic growth. Meanwhile, with the support of the Yunnan
government, CNPC planned to construct a series of refineries in
Yunnan, including an oil refinery of 10 MT per year and an ethylene
plant of 0.8MT per year (Wang, 2009).
Moreover, making full use of the imported oil and natural gas,
Yunnan also sought to optimize its energy structure which was
dominated by coal and hydropower. As shown in Table 2, oil and gas
were only about 14% of Yunnan's energy consumption structure in
2003, whereas the then average figure was about 25% in China (China
Energy Yearbook, 2004).
Before the pipeline project, Yunnan province was beset with chronic
“shortages of oil”. There were no big refineries in Southwest China
which includes the provinces of Yunnan, Guizhou, Sichuan, Tibet, and
Table 2
Energy consumption structure in Yunnan and that of the national average.
Source: China Energy Yearbook (2004): 354, 429
2003/% coal oil gas hydropower
Yunnan province 60.69 12.48 1.64 23.58
National average 67.64 22.74 2.64 6.07
Energy Policy 107 (2017) 403–412
Chongqing Municipality. This region has a population of roughly 200
million people and it remains economically underdeveloped relative to
the China's eastern provinces. In the past, the refined oil used in
Yunnan, Guizhou, and Sichuan had to be imported from other regions
in China such as Guangdong province. For instance, in 2012, all of the
9.5 MT of oil used in Yunnan was transported from other regions
(Quan and Wang, 2015). The transportation costs were huge as this
region is dominated by mountains and the famous Yunnan–Guizhou
Plateau.
As a result, the price of refined oil price within this region is the
highest in China. In 2013, the price of 90# gasoline in Kunming,
Yunnan province was 150 RMB higher per ton than that in Guangdong
province and 65 RMB higher than that in Guangxi province (Lu and
Yang, 2013). Against this backdrop, if the Myanmar-China oil pipeline
were to be constructed, in combination with a planned 10 MT refinery
project in Anning City, Yunnan province believed it would not only be
able to meet its own demands but could also send refined oil to
neighboring provinces such as Sichuan, Guizhou, and Guangxi (Quan
and Wang, 2015).
Aside from the oil, Yunnan, Guizhou and the Guangxi, had great
shortages of natural gas. In 2003, the population with access to gas
in Yunnan and Guizhou was only 45 thousand and 17 thousand,
respectively. The numbers in Tibet and Guangxi were zero. In contrast,
the average figure nationally was about 1.4 million (NBS, 2004: 410).
In light of these facts, Guangxi province strongly promoted itself as the
logical destination of the Myanmar-China gas pipeline.
In addition to Yunnan province, the Chongqing Municipality also
had a plan to become an oil refinery base in southwestern China and
thus requested that the pipeline be extended to it. For that purpose, in
March 2005, the Chongqing government and China Petroleum and
Chemical Corporation (Sinopec), another large NOC, jointly submitted
a proposal to the State Council, asking for the construction of a crude
oil pipeline passing through Myanmar and terminating in Chongqing
(Yu, 2007).
others
1.61
0.91 3.3.2. Strategies of major state-owned companies
In addition to local governments, large NOCs such as CNPC and
408
D. Liu et al.
Sinopec also showed their support for the project. CNPC and Sinopec
dominate the exploration and development of onshore oil and natural
gas resources in China. The two companies divided their spheres of
influence roughly by the Yangtze River, i.e., CNPC handled the North
and Sinopec the South.
Generally, CNPC did well in upstream oil resource exploration and
development, whereas Sinopec did well in oil refining. CNPC, which
grew out of the former Ministry of Oil, was a particularly prominent
player in China's energy policy. In addition to working a large majority
of China's oil fields, it manages approximately 70% of the crude oil
pipelines and 90% of the natural gas pipelines in China (Zhai, 2014).
Since the 2000s, CNPC had also promoted another one of China's super
energy projects: the West-East Gas Pipeline.
Although the market was split, the two companies nonetheless tried
to expand their markets into each other's territories. The goings-on
between the companies in Hubei province in Central China provide but
one example of the effects of such competition.
In 2010, Sinopec supplied approximately 70% of the refined oil in
Hubei province, traditionally a Sinopec territory. CNPC supplied the
remaining 30% but also provided approximately 80% of the natural gas
Hubei province needed. When natural gas supply shortages hit Hubei
province in 2009, CNPC was said to have used these circumstances to
put pressure on the Hubei government so that the same preferential
treatment granted to Sinopec in the oil market would also be granted to
it (Liu, 2010).
Although similarly competitive in southwestern China, both CNPC
and Sinopec supported the energy pipeline project. This is because there
are no large refineries in southwestern China and refined oil thus has to
be imported with high transportation costs. While both companies
planned to construct large oil refineries in the southwest, no major
crude oil deposits have been found there. According to our interviews,
CNPC explored southwestern China for many years yet did not find any
large oilfields. An oil pipeline from Myanmar to Southwestern China
would therefore provide the necessary oil for refineries and thus serve
the interests of both companies. In fact, along with the pipeline, CNPC
and Sinopec are currently constructing refinery companies in Kunming
and Chongqing, respectively.
Finally, a gas pipeline from Myanmar would also have contributed
to the integration of China's domestic gas network. For instance, the
Myanmar-China gas pipeline will eventually be connected to the
Guangxi branch line of the West-East Gas Pipeline II project.
Moreover, to the north, CNPC is constructing a new pipeline from
Zhongwei of Ningxia to Guiyang of Guizhou province, with a total
length of 1613 km. This pipeline will also be connected to the
Myanmar-China gas pipeline network, as is shown in Fig. 1.
3.3.3. Myanmar's response
Construction of this cross-border energy pipeline had its own distinct
political features (Chen, 2011; Nathan et al., 2013), and Myanmar's
cooperation was indispensible. In fact, frequent communications and
visits between the top leaders of the two countries were said to have
facilitated the project. Although Myanmar still tries to operate a kind of
“equal-distance diplomacy” between ASEAN, China and India (Cook,
2012), China has forged a special relationship with Myanmar, especially
with its military government since it took power in 1988.
Adhering to the principle of noninterference in the internal affairs
of other countries, China maintains rather good bilateral relations with
the Myanmar military government. China provided Myanmar with
political and economic support when it was isolated by international
society. In return, China was granted some favorable measures in terms
of its investment in Myanmar (Bert, 2004). Since the 2000s, China's
three major oil companies, i.e., CNPC, Sinopec, and CNOOC (China
National Offshore Oil Corporation) had invested heavily in Myanmar's
oil and natural gas exploration and development (ERI, 2008).
Therefore, although there were opposing opinions in Myanmar, this
relationship facilitated the pipeline project.
409
Energy Policy 107 (2017) 403–412
That being stated, India also had and still has a great interest in
Myanmar's natural gas resources. It proposed the Myanmar–
Bangladesh–India (MBI) gas pipeline project back in 1997-98 and
can be seen as a potential competitor for China in this area (Kulkarni
and Nathan, 2016). However, in light of China's huge investments in
Myanmar as well as the good relations between the two countries, the
Myanmar government ultimately accepted China's plan and approved
the Myanmar-China energy pipeline project.
4. The opening of the policy window
Around 2004, the policy window for the Myanmar-China energy
pipeline proposal showed signs that it might open due to the mutually
reinforcing changes in the problem and political streams. The opening
of the policy window meant dealing with multi-level governance, in the
sense that the central government's decision relied heavily on its
perceptions of regional and international conditions.
In the problem stream, three successive years of nationwide
electricity cuts highlighted energy shortages as a severe challenge for
China's continuing economic growth. Moreover, China rapidly became
more dependent on foreign oil, most of which came from the Persian
Gulf and had to pass through the Malacca Strait. The Second Iraq War
in 2003 underscored the vulnerability of supplies from the Persian Gulf
and enabled the energy security issue to attain a high policy priority.
Given the potential risks beyond China's control, natural gas and crude
oil piped through from Myanmar are considered a means to ameliorate
such energy security situations.
Politically, in response to Beijing's strategy of “developing the
West,” local governments in southwestern regions were searching for
new growth points. With the aim of developing new refinery industries
as well as easing oil and gas shortages, Yunnan province actively
promoted the idea of the Myanmar-China energy pipeline proposed by
the Yunnan University scholars, in alignment with the CNPC. Realizing
the energy pipeline had a chance, on August 12, 2004, Bai Enpei, then
Party Secretary for Yunnan province commented on the proposal and
expressed that Yunnan province would actively promote the plan. On
August 14, 2004, Qin Guangrong, Yunnan's governor convened an in-
depth consultation of the relevant agencies and scholars.
Due to the endeavors of Yunnan province, the proposal was quickly
pushed to the central decision level. On August 15, 2004, Zeng Peiyan
(then member of the Politburo of the CCP and Vice premier in charge of
energy issues) commented on the proposal by scholars from Yunnan
University and instructed the National Development and Reform
Commission (NDRC)––the central planning agency that approves
major projects—to conduct research to investigate the feasibility of
the Myanmar-China oil pipeline and compare the project with China's
other offshore oil transportation routes (Institute of International
Studies, 2013). Therefore, under the instruction of the NDRC, CNPC
began to research the feasibility of the Myanmar-China energy pipeline
beginning in 2005 (CNPC, 2006: 584). This signaled that the energy
pipeline project was formally raised to China's policy agenda.
After that, in order to make sure this new policy would be approved,
between May 25 and May 30, 2005, a delegation from Yunnan lead by
Governor Qin Guangming visited the NDRC and made a special report
about the Myanmar-China oil pipeline. Later, during the “Lianghui
plenary sessions”––the National People's Congress (NPC) and the
Chinese People's Political Consultative Conference (CPPCC)––in
2006, 91 NPC representatives from Yunnan province jointly submitted
a proposal asking for the earlier approval of the pipeline project (Wang,
2009).
In the meantime, the idea of the Myanmar-China energy pipeline
also received an active response from the Myanmar side (Wang and
Wang, 2011). On July 12, 2004, Myanmar's Minister of Energy had a
meeting with CNPC's vice president Zhou Jiping, and exchanged
opinions for energy cooperation (CNPC, 2005: 623). In July 2005,
China's NDRC and Myanmar's Ministry of Energy signed a framework
D. Liu et al.
agreement on energy cooperation in Beijing (CNPC, 2010). Then,
Myanmar reiterated its willingness to accelerate energy cooperation
with China at the Leadership Conference of the Second Greater
Mekong Subregion Cooperation Conference (Wang, 2009). In
October 2006, the two countries reached a consensus on the coopera-
tion of oil and gas pipeline. After a long discussion of the project
details, in March 2009, both countries signed an agreement to
construct the crude oil and natural gas pipelines (CNPC, 2010).
In sum, from the perspective of multi-level governance (Bache and
Flinders, 2004), the decision to approve the pipeline project required
coordination between governments and NOCs at different levels. It was
the interactions among factors at different levels, namely, the Chinese
national government's anxiety on energy security, the plan of local
governments to develop economy, the ambition of large oil companies
to search for business chances, and Myanmar's consideration to
develop its natural resource, that put together contributed to the final
decision on this project.
5. Developments thereafter
The construction of the energy pipeline began in 2009. The oil and
natural gas pipelines begin in Maday Island and Kyaukpyu of Rakhine
State, respectively, reaching China through Ruili, Yunnan province, and
running alongside each other until Anshun in Guizhou province. At that
point, as Fig. 2 shows, the natural gas pipeline heads toward Guangxi by
way of Guizhou and the crude oil pipeline turns to the north and heads
for Chongqing. The length of the pipeline section in Myanmar is 771 km;
while the length of the crude oil and natural gas pipelines in China are
1631 km and 1727 km, respectively. The capacity of the gas line is 12
Fig. 2. The Myanmar-China energy pipeline.
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Energy Policy 107 (2017) 403–412
bcm per year, with the primary source of gas being the Shwe field. The
oil pipeline has a designed annual transmission capacity of 22 MT and
the transmission capacity at the first stage will be 12 MT.
The gas supply began in July 2013 and was fully operational in
2014. The trial operation of the oil pipeline began in January 2015 but
full operation has been delayed as an agreement on some commercial
terms, e.g., transit fees, for the project has yet been reached (Shin,
2017). The Oil pipeline is expected to begin operations following talks
between President Xi Jinping and Myanmese President Htin Kyaw,
who visited China in April 2017.
Since operations of the natural gas pipeline have begun, natural gas
is replacing liquefied natural gas (LNG) and firewood in the regions
along the pipeline. For instance, many places in Yunnan province are
ending their reliance on LNG and cities such as Qujing, Chuxiong,
Kunming, and Yuxi already have access to natural gas from Myanmar.
In combination with the Myanmar-China gas pipeline, Yunnan pro-
vince plans to construct 21 branch lines which will cover its 15 cities. In
March 2016 in Qujing City, six thousand inhabitants began using the
natural gas from Myanmar, and 90 thousand inhabitants had signed
agreements with the natural gas company. In addition, 350 taxi cars
and 113 buses began using the natural gas from Myanmar (Yi et al.,
2016). By 2020, the annual supply capacity of the natural gas network
in Yunnan is expected to reach about 7 bcm and the province's energy
structure will thus be improved (Lan, 2013; YNChinanews, 2013).
6. Concluding comments
Insights from the MSF and the “policy window” concept help to
explain why an energy proposal quickly became part of the formal
D. Liu et al.
policy agenda in 2004 rather than in the 1990s when it was first
proposed. From the perspective of MSF, this paper reveals that the
Myanmar-China energy pipeline made its way to the top of China's
policy agenda through the combination of good timing, prepared local
interests and the calculations of China's NOCs.
This study complements the current studies about energy politics in
China in highlighting the importance of “policy window” in the nation's
energy policy process. In the 1990s, no pressing changes occurred
within the problem and politics streams and the policy window for the
pipeline remained shut. Moreover, no strong and active advocates were
willing to take it up. In 2004, however, the problem stream surged due
to a series of focusing events. Simultaneously, key indicators such as
China's increasing reliance on imported energy, highlighted the
nation's precarious energy security and thereby helped facilitate the
opening of the problem window.
Moreover, local governments and scholars played a key role in
facilitating this strategic energy project. Within the politics stream,
looking for new industries, local governments stood up and actively
lobbied for the pipeline project, with the support of NOCs. Sensing the
opening of a policy window because of surges in the problem and
politics streams, policy entrepreneurs saw their opportunity and joined
forces to push the proposal onto the policy agenda.
Not only scholars from Yunnan University, but also leading political
figures from Yunnan province, played the role of policy entrepreneur.
Each group had a different role and a different purpose in championing
the project. Scholars proposed the project which gave it some social
credibility. With that, local governments moved in quickly to gather
support for the policy change with the help of the energy companies.
Naturally, an energy super-pipeline such as this will be challenged by
opposing views. The projected cost-benefit of such an undertaking will
always be disputed. Yet it seems that the project was driven by goals
broader than simple economic calculations. The implementation of this
project was largely contingent on it being in line with the central
government's long term strategies such as its “diversification of energy
supply and route” strategy, its “going out” strategy as well as its “developing
the West” strategy. It is noteworthy here that domestic political factors
worked behind the scene of this cross-border energy pipeline projects in
that it can reduce regional economic disparity by promoting the develop-
ment of the southwest region. Similar political considerations can also been
discerned in the decision making process behind the Kazakhstan-China
crude oil and Central Asia-China gas pipelines.
Moreover, the successful alignment of Yunnan province and CNPC
shows how closely local governments and industry can cooperate when
a mutually beneficial energy project has a chance to be promoted at the
national level. Intra-provincial competition can also been observed in
this study. These trends, together with the internationalization of
China's energy policy, may suggest it is necessary to manage such
transboundary cases using a multi-level governance framework which
takes local, national, and international conditions into consideration;
especially with respect to the practical management of such projects.
However, this is a topic for future research.
Acknowledgements
This research was supported by the National Social Science Fund of
China (No. 16CZZ034) and the Economic Research Institute for
ASEAN and East Asia (ERIA). We thank our colleagues from the Sun
Yat-sen University and Policy Alternatives Research Institute of The
University of Tokyo who provided insight and expertise that greatly
assisted our research. We also want to especially thank Professor
Hideaki Shiroyama from the Graduate School of Public Policy of the
University of Tokyo and Professor Yapeng Zhu from the School of
Government of Sun Yat-sen University. Finally, we sincerely thank this
paper's three anonymous reviewers; this paper benefited a lot from
their valuable comments and suggestions.
411
Energy Policy 107 (2017) 403–412
Appendix A. Supplementary material
Supplementary data associated with this article can be found in the
online version at http://dx.doi.org/10.1016/j.enpol.2017.05.005.
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