Qingdao Port gets foreign foothold

Updated: 2011-01-12 14:15

(China Daily)

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BEIJING - Qingdao Port Co will operate a crude oil port in Myanmar adjacent to the Sino-Myanmar crude-oil pipeline, according to an announcement posted on the State-owned Assets Supervision and Administration Commission's website on Tuesday.

This will set another successful example of domestic companies expanding operations in foreign ports, analysts said.

An agreement was signed between Qingdao Port and China National Petroleum Corporation (CNPC) to cooperate in operating a Myanmar crude-oil port, the announcement said.

The Sino-Myanmar crude-oil pipeline begins near Sittwe, a western port city in Myanmar, and runs to Kunming, the capital city of China's Yunnan province. It is projected to have a capacity of 22 million tons of crude oil annually.

Once operational, it will diversify China's crude oil import routes from the Middle East and Africa, and avoid traffic through the Strait of Malacca.

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Whether Qingdao Port will invest in the Myanmar crude oil terminal is still unclear, but according to a statement on the CNPC website, the agreement "will promote port construction and management, and provide both companies with business expansion in their respective fields".

"This agreement is very important for Qingdao Port because this is the first time the port will extend its management expertise overseas," said Zhang Hongbo, an industry analyst with CITIC Securities.

"It is hard to tell how much Qingdao Port will profit from the agreement now, but it certainly gains great opportunities for future development through the cooperation," he said.

In recent years, Chinese companies have increasingly sought to expand their business in overseas ports, especially since China Ocean Shipping (Group) Company (COSCO), the nation's largest shipping company and a world leader, obtained in 2009 the right to operate in Piraeus, Greece's largest port and the top container port in the eastern Mediterranean.

But most companies' attempts have been thwarted by "strict requirements and regulations that sometime verge on local protectionism", Zhang said.

"The Chinese companies still have long way to go. If Qingdao Port has managed to expand abroad now, its prospects will be very bright," he added.

The port of Qingdao is the ninth biggest in the world. In November, Qingdao Port Co announced plans to triple its annual investment to 10 billion yuan ($1.5 billion) in 2011 from more than 3 billion yuan in 2010.


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