Against a background of strained historical relations between China and Myanmar as well as strong environmental opposition, the Myanmar-China crude oil pipeline has finally begun operations.

The $1.5 billion oil pipeline has been sitting empty for two years, but the two sides finally agreed on transport tariffs, allowing the project to proceed, said Myanmar-based government and industry sources.

The agreement between China’s PetroChina and Myanmar’s government will allow the state energy giant to import overseas oil via the Bay of Bengal and pump it through the pipeline to supply a new 260,000-barrels-per-day (bpd) refinery in landlocked Yunnan province. This solution avoids sending tankers through the Straits of Malacca and into the South China Sea.

It is part of President Xi Jinping’s "One Belt, One Road" infrastructure and trade development plan stretching across Asia to Africa and Europe.

Southeast Asia Crude Oil Pipeline (SEAOP) is responsible for the pipeline’s operation.

China National Petroleum Corporation (CNPC) and the Myanmar government signed an agreement for a crude oil pipeline project in 2008, and construction was completed in early 2015. Myanmar will directly obtain a road-right fee of US$13.81 million from both gas and oil pipeline projects annually and a transit fee of $1 per tonne of crude oil under a 30-year concession agreement.