China recently announced the construction of oil and gas pipelines through Myanmar into its Southwestern Yunnan Province to start by September this year. What is the strategic importance of this energy project? Will this increase Chinese influence further, bolstering the notion that Myanmar is a “de facto Chinese client state”, “a virtual Chinese satellite”, and “a critical nexus in the India-China regional rivalry”. What are India’s options? What could New Delhi do?

Myanmar’s energy project is of great importance for China, as it will open the fourth route for Beijing’s oil and natural gas imports, after ocean shipping, the Sino-Kazakhstan crude oil and natural gas pipelines, and the Sino-Russian oil pipeline. It will further increase China's gas import, which is projected to exceed 100 billion cubic meters over the next few years.

Interestingly, India and China both have been extremely competitive regarding the energy stakes in Myanmar due to several strategic reasons. First, Myanmar is rich in oil and has Southeast Asia’s largest natural gas reserves. It has oil reserves of around 600 million barrels, and total gas reserves of 88 trillion cubic feet (tcf), only slightly less than Indonesia. New massive finds in three fields in the Gulf of Bengal namely Mya, Shwe, and Shwe Phyu, jointly known as the Shwe project which is estimated to hold 5.7-10tcf of gas, have sparked an intense bidding war between Bangkok, Beijing and New Delhi, making natural gas from the Shwe field a contentious issue in India-China relations, and an obstacle to Sino-Indian energy cooperation.

Second, Myanmar is part and parcel of China’s strategic design to develop its western region. It is critical to Yunnan and other landlocked provinces of China, for its geo-strategic position. In terms of transportation, Myanmar is the only passage for Yunnan to reach South Asia and an important access to Indian Ocean. In terms of resources, the region is rich in oil, gas, lumber, and gemstones. It plays a pivotal role even in terms of border security; counter-narcotic trafficking, money laundering and smuggling of arms which are important issues for both countries.

Third, the main reason for India’s policy shift towards Myanmar in the previous decade was the growing concern and uneasiness over the region’s abandonment of ‘strategic neutrality’ policy and strategic tilt toward China, and to remove Myanmar from China’s zone of influence. The Indian government was particularly worried about the China-Myanmar strategic links and the prospects of the Chinese Navy gaining a foothold in the Bay of Bengal. Myanmar’s location is central to strengthening India’s Look-East policy, energy security, and counterbalancing China’s growing influence in Southeast Asia. China’s involvement in Myanmar could mean that India would be surrounded on three sides by Beijing and its area of influence, leaving no buffer states.  India feels that it badly needs to improve its strategic relations with Myanmar so as to break down China’s encircling strategy.

Though the progress made by each country in building up LNG infrastructure currently seems to be at par, in reality China has made considerable headway on transnational pipelines while India is floundering. Unfortunately, scales tipped in China’s favour when it vetoed a draft resolution in the UN Security Council, on repression of political prisoners in Myanmar. China’s success in importing gas by transnational pipelines stems from its ability to aggressively sign deals based on a well thought out energy strategy. India has an integrated energy policy but the geopolitical strategy seems to be missing.

Even on the political front, India lags behind the emerging regional power in the trilateral arrangement. A comparison reveals how efficiently China has either resolved or shelved its border disputes; India is in active conflict with its neighbouring states. It is the ongoing violence in India’s northeast and its poor relations with Bangladesh that have prevented New Delhi from establishing a gas pipeline from Myanmar. In this regard, China has more political and economic advantages in seeking further influence and cooperation in Myanmar, and it would be imaginative to expect Beijing to displace the regime that is serving as a guarantor for China’s access to the Indian Ocean.

However, India’s current setback in the field of energy is unlikely to lead to a decrease in its attempts to compete with China in other fields, and win greater cooperation from Myanmar over counter-insurgency efforts. At the same time, Myanmar has been diversifying its foreign relations and expanding its diplomatic space, allowing itself to be courted by India, Russia and other big countries, so as to reduce its reliance on China. India will undoubtedly make more overt efforts to establish a stronger presence in Myanmar.

One can definitely feel the balance of power shifting towards the East, in terms of Myanmar’s energy stakes, yet a hope remains that India will improve its relations with the resource-rich Southeast Asian partner in the years to come. India must utilize these opportune openings to build its lost position in the country and dodge the dominance of China in the region.