New shipment route is part of experiment to find alternatives to Strait
of
Malacca

BEIJING - CHINA will begin shipping processed oil along the Mekong
River next month as part of an experiment to find alternatives to the
congested Strait of Malacca - a vital shipping lane which is also a
major source of energy insecurity for Beijing.

Citing a new 'landmark agreement' between China, Myanmar, Thailand and
Laos, the official Xinhua news agency said China will be allowed to
ship a monthly maximum of 1,200 tonnes of oil along the river from May
to December.

The oil - a drop in the bucket compared to the 127 million tonnes of
crude oil China imported last year - will reach ports in the
south-western Chinese province of Yunnan before being transported
inland.

But the modest volume of oil involved, environmental concerns, as well
as the physical limitations of the Mekong River mean that the new route
would only ease, but not solve, Beijing's anxieties over the Strait of
Malacca.

Energy-hungry China has been a net importer of oil since 1993, with
more than half of its crude oil imports now coming from the Middle
East.

The bulk of this Middle Eastern oil passes through the Strait of
Malacca which, apart from piracy and terrorism concerns, is viewed by
Beijing as a potential choke point where rivals can shut down its
access to oil and raw materials.

Chinese leaders have been increasingly concerned about their country's
energy security in recent years, stepping up their efforts to secure
supplies from Central Asia, Africa and Latin America. But few, if any,
realistic solutions have surfaced to tackle what is known here as the
'Malacca Predicament'.

Analysts say the Mekong experiment, if successful, will help China
diversify its oil shipment routes. But it is unlikely that it will
replace or become a major alternative to the Strait of Malacca.

'It is one more shipment route, but (the Mekong experiment) will not
and cannot help China break the 'Malacca Predicament',' said Mr Han
Xiaoping, who consults for Chinese and international energy companies
at Beijing-based Falcon Pioneer Technology Co.

Physical limits and environmental considerations would also constrain
how much oil China can move up the Mekong River, Dr Elspeth Thomson of
the National University of Singapore pointed out.

She added: 'If the oil tankers monopolise the river, what about the
other river functions, such as drinking water, irrigation, hydropower
and other water shipments?

'I find it hard to believe that these other functions would not be
obliterated.'

Xinhua said China and Thailand will set up a joint emergency response
team to 'ensure safety on the river' during the oil shipments, but did
not elaborate on what other safeguards might be in place.

Mr Mokhzani Zubir, a researcher with the Maritime Institute of
Malaysia's Centre for Maritime Security and Diplomacy, said he saw the
Mekong route as more of a 'contingency plan' for China.

He added: 'China cannot avoid the Strait of Malacca unless they erect
an oil pipeline in Myanmar, where crude oil can be unloaded and then
reloaded for transport up the Mekong River. But that will be very
expensive.'

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