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China's Belt and Road Initiative not all good news for tankers

China's Belt and Road Initiative not all good news for tankers
China’s Belt and Road Initiative (BRI) is not all good news for the tanker market with brokers Poten in particular highlighting a Myanmar to China pipeline.

While China’s massive BRI programme has already generated $900bn infrastructure investments it is “not necessarily” good for the tanker market Poten said its weekly report.

“The most important project that has a direct impact on the tanker industry is the Myanmar to China crude oil pipeline, which was designed as an alternative route for China to receive crude oil from the Middle East and Africa, without having to ship it through the narrow Malacca Straits into the South China Sea,” Poten said its weekly tanker opinion.

The pipeline designed to hand 400,000 barrels per day (bpd) has been ready since 2015 but only started operations in April this year. It runs from Ma Day in Myanmar to Yunnan Province in China where Petrochina has a 250,000 bpd refinery. Monthly volumes by October reached 6m barrels or about 200,000 bpd.

Poten noted a shift from suezmaxes to VLCCs serving the pipeline.

In addition to the Myanmar – China pipeline there is the long talked about Kra Canal cutting across southern Thailand. However, despite resurfacing over the last two years, this project estimated to cost $28bn, remains on hold.

“The Myanmar-China pipeline reduces tanker demand, for example, due to the reduction in ton-miles. The Kra Isthmus canal will do the same, if it ever gets built,” Poten concluded.

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