Singapore (Platts)--4Oct2011/212 am EDT/612 GMT

Construction of the $2.5 billion Sino-Myanmar oil and natural gas pipelines by China National Petroleum Corp is progressing according to plan and proceeding smoothly, the official Xinhua news agency reported on Tuesday, just days after Myanmar announced that it has suspended construction of a China-backed dam project.

"CNPC has attached great importance to Myanmar's public welfare and fulfilling its social responsibility. Whenever there is a cyclone or earthquake in Myanmar, CNPC has always provided aid in the form of cash donations or goods," Xinhua said.

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On Monday, CNPC donated $1.32 million to build eight schools in four regions and states along the route of the pipeline, which is part of a $6 million aid signed in April, said the report.

The signing ceremony was attended by officials from CNPC and the Burmese government.

"Construction of the fourth stage of the oil and gas pipeline [within Myanmar] commenced on October 1, which is being built by CNPC Chuanqing Drilling Engineering Co. The pipeline project will continue after the rainy season in Myanmar," Xinhua said.

The Xinhua report comes after Myanmar halted on Friday the construction of a $3.6 billion mega dam, to be built by China Power Investment Corp., due to public opposition to the project.

Myanmar President Thein Sein ordered work on the Myitsone Dam on the Irrawaddy River to stop -- a decision hailed by the US as a sign the military-backed leadership was listening to its people.

Beijing then issued a statement on Saturday, calling on Myanmar "to guarantee the lawful and legitimate rights and interests of Chinese companies."

"The Myitsone power plant is a joint venture between China and Myanmar," which has undergone "rigorous review" by both sides, Chinese foreign ministry spokesman Hong Lei said in a statement on Saturday.

"The process of project implementation should be properly handled through friendly consultation," said Hong.

Separately, the president of China Power Investment said in an interview with Xinhua that the company was shocked by the suspension of the project.

"I also learned about [the project suspension] through the media and I was totally astonished," the report quoted Lu Qizhou, president of CPI, as saying.

If the suspension leads to a complete halt in construction, "then it will lead to a series of legal issues," said Lu.

China is Myanmar's second-largest trading partner and biggest foreign investor, and the comments are a rare public display of discord between them.

--Calvin Lee, calvin_lee@platts.com

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