Bangladesh and Myanmar in fuel spat By Andrew Symon
SINGAPORE - The search for offshore energy resources has triggered a border
dispute between Myanmar and Bangladesh that threatens to complicate China's
ambitious designs to pump fuel from the region to its landlocked southwest
Yunnan province through a yet-to-be-built 2,300 kilometer long pipeline.
The two sides squared off this month when Dhaka challenged the legitimacy of
offshore exploration by South Korea's Daewoo, which won the now contested
concession from Myanmar's military government. Tempers flared at the start of
November when Myanmar sent two warships as escorts for Daewoo's vessels and
rigs working in the Bay of Bengal in what Myanmar has designated as offshore
block AD-7.
The block lies in waters along Myanmar's far western border and
about 93 kilometers southwest of Bangladesh's St Martin's island. Dhaka has
formally protested to both the Myanmar government and Daewoo, and sent three
warships into the area, underscoring its demand for an immediate halt to
Daewoo's exploration.
Both sides temporarily mobilized their frontier forces, but tensions eased when
Daewoo on November 6 shifted its rig out of the contested waters. Myanmar's
state-run newspaper, The New Light of Myanmar, reported that the "necessary
survey was completed and the rig moved to the uncontested offshore block A-3
further to the east". Bilateral talks over the dispute held in Dhaka this week
were inconclusive, with the sides agreeing only to meet again.
The offshore border has been a contentious issue since the creation of
Bangladesh in 1971 after the civil war in Pakistan. The demarcation stakes have
risen with the recent discovery by Daewoo of large gas fields in the area.
These finds, until now in undisputed Myanmar waters, suggested that areas
further to the west and entering the disputed zone might also produce gas.
Daewoo discovered large gas stores in Myanmar's A-1 block, just offshore its
Rakhine state coast near Sittway and east of the contested maritime border
zone, in 2003. Daewoo estimated at the time the find contained 4-6 trillion
cubic feet of gas at an easy-to-tap depth of 150 meters, and had potential
prospects of 14-20 trillion cubic feet.
Daewoo has since 2001 operated the block in partnership with India's Oil and
Natural Gas Corporation (ONGC), GAIL India and the Korea Gas Corp. In early
2004, Daewoo also took up block A-3, immediately below block A1, and
subsequently the contested block AD-7 to the west, in February 2007.
The Shwe discovery in Block A-1 triggered a frenzy of new exploration in
Myanmar's offshore western areas. China's state-run CNOOC entered in 2004;
Essar, the private Indian company, in 2005; GAIL as an independent operator in
December 2006; China's Natural Petroleum Corporation (CNPC)/PetroChina in
January 2007; Malaysia's Rimbuan Petrogas in February 2007; and ONGC, taking up
three blocks, in September 2007.
Similar dynamics are at play in other potentially hydrocarbon-rich areas.
Contested claims between Vietnam and China in the South China Sea have come
into sharp relief over the past 18 months. Beijing has stridently declared that
exploration rights tendered by Hanoi off Vietnam's southeast coast in 2007 to
the UK's BP and India's ONGC and in mid-2008 to the US's ExxonMobil have been
conducted in Chinese waters.
There are also disputes brewing between Brunei and Malaysia over the maritime
border between the east Malaysian state of Sabah and Brunei, and between
Malaysia and Indonesia over an offshore area between the southeast corner of
Sabah and northeast Kalimantan.
These conflicts came to the fore respectively in 2003 and 2005, after
governments awarded exploration rights to international companies in areas
where maritime borders were still unsettled, and they are still unresolved.
Also at issue is the believed to be highly prospective Overlapping Claims Area
between Thailand and Cambodia.
The existence - or at least the possibility - of rich oil and gas stores in
contested maritime areas is making it harder for claimant states to reach
agreements. Analysts say tensions are being driven and negotiations stalled by
growing governmental anxieties over energy security, and none want to be
remembered as the one who gave away a potential sovereign prize.
"If it were a matter of fish, that is, if the stakes were just fishing rights,
negotiations would be a lot easier," one international lawyer says.
It's a problem not unique to Asia. According to geographers Victor Prescott and
Clive Schofield in their definitive Maritime Political Boundaries of the World,
less than half of some 427 potential maritime boundaries have been formally
agreed. In Southeast Asia, where boundaries were often determined by now
departed colonial rulers, conditions are especially prone to dispute.
Few parts of the world have as many states situated in and around such a
complex, oil and gas-rich archipelagic geography. There are nine Association of
Southeast Asian Nation (ASEAN) states, plus Timor Leste, along with China and
Taiwan, that have maritime coasts in the region. The 1982 United Nations Law of
the Sea, which allows states to claim exclusive economic zones 200 nautical
miles, or about 370 kilometers, from their coastlines has often sparked rather
than extinguished disputes.
These have often erupted into verbal slanging matches between governments,
centering generally on how potential petroleum spoils would be exploited and
divided. Sending out the gunboats, as seen this month with the
Bangladesh-Myanmar dispute, has been a common regional response.
As Alan Perry, a UK-based law partner at Edwards, Angell, Palmer & Dodge
and an expert on cross-border disputes, recently told a conference in
Singapore, "If you don't protest, you may waive your rights."
With the Bangladesh-Myanmar dispute, those rights represent potentially huge
revenues, considering China's and India's interest in piping fuel claimed by
Myanmar to their respective domestic markets.
So far, Beijing has won out and gas is scheduled as early as next decade to be
transported through a proposed 2,300 kilometer pipeline directly to its
southwest Yunnan province. China's success in securing the fuel, some say,
reflects Beijing's larger economic interests in Myanmar, as well as its
political and diplomatic support for the ruling military junta.
Piping gas to India's West Bengal would for efficient delivery require
negotiating transit rights through Bangladesh, which won't happen any time soon
in view of Myanmar's and Bangladesh's recent spat.
Analysts note there were already long-standing difficulties, steeped in a
history of mutual suspicion, between Dhaka and New Delhi over the idea of
building a pipeline to India. Private companies operating in Bangladesh,
including Chevron, Shell and Cairn Energy, as well as multilateral lenders like
the World Bank and the Asian Development Bank, have long argued the economic
case for pipeline-fed exports.
At the same time, the maritime dispute has only marginally complicated China's
energy designs for the area, but could have wider implications if tensions
resume and escalate.
When the situation threatened to spin out of control this month, China's
Foreign Ministry publicly called for cooler heads to prevail and for both sides
to settle the dispute "through equal and friendly negotiations".
Andrew Symon is a Singapore based writer and analyst specializing in
energy and resources. He can be reached at andrew.symon@yahoo.com.sg
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