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Myanmar's gas riches entice Asian investors

From Reuters
Thursday February 17, 12:29 PM to this article.

SINGAPORE, Feb 17 (Reuters) - Politically and economically isolated for more than a decade, Myanmar is being thrown a lifeline by its Asian neighbours, which are jostling to spend billions of dollars to tap the country's energy resources.

Slightly smaller then the U.S. oil state Texas and bordering the Andaman Sea and the Bay of Bengal, little explored Myanmar is estimated to hold 13-15 trillion cubic feet (tcf) of natural gas, 7 percent of total proven reserves in Southeast Asia.

Aggressive state companies from China, India, Thailand, Malaysia and South Korea, undaunted by U.S. and European sanctions, are looking to invest their big cash piles to develop Myanmar's gas fields and build pipelines and hydropower dams.

"Non-western majors are now able to take significant positions than they might have a decade or more ago as they become more professional and have more financial muscle," said Andrew Symmons, research fellow at the Institute of Southeast Asian Studies in Singapore.

The influx of Asian players picked up steam in 2004 and threatens to eclipse long-standing investments by a handful of Western companies, predominantly France's Total SA and U.S. independent Unocal Corp .

Few Western firms have the stomach to invest in the country formerly known as Burma, worried by government and shareholder pressure to steer clear of the military-ruled nation shunned for its human rights record and suppression of political opponents.

Asian firms have no such qualms.

"Myanmar is cocooned by the support of regional powers that actually protect it from the sanctions the U.S. wants to apply," Derek Tonkin, former British ambassador to Thailand, Laos and Vietnam told Reuters.

Oil and gas is a key source of revenue and one of the few growth areas for Myanmar's economy. Decades of poor policies and more recently Western sanctions have left the once wealthy former British colony far behind prospering neighbours such as Thailand.

Myanmar supplies a quarter of Thailand's gas consumption with exports worth roughly $1 billion, or about 12 percent of gross domestic product.

"Growth is likely to come from the oil and gas sector as the global demand for energy increases. Additional gas reserves were found early in the year (2004), raising prospects for exports and increased foreign direct investment," the Asian Development Bank said in its 2004 Asia Economic Monitor.


Official data from Yangon shows that Myanmar pumped 349.8 billion cubic feet of gas and 20,000 barrels per day of oil and condensate in the April 2003-March 2004 fiscal year.

Last year, Myanmar awarded six licenses to Chinese and Thai firms to explore for oil and gas, the highest number of awards since 1997. It also agreed with Bangkok to study a $15 billion hydropower project on the Salween River to supply Thailand.

"If the hydro project is feasible, funding is not a problem. We want to develop it as fast as we can," said Songpope Polachan, director of strategy and policy coordination at the Thai Energy Ministry.

China's No.2 state oil giant, Sinopec Group, and offshore specialist CNOOC Ltd. were awarded four exploration blocks in 2004, tracking the footsteps of China National Petroleum Corp. (CNPC), which entered Myanmar a decade ago to help improve recovery rates at ageing oilfields.

India's ONGC Videsh Ltd. has teamed up with South Korea's Daewoo International to jointly explore for hydrocarbons. Both countries are heavily reliant on imported oil and gas to feed their economies.

ONGC Videsh and Daewoo International are also partners with Indian gas transport company, GAIL Ltd. , and Korea Gas Corp. , in Block A-1, one of Myanmar's biggest gas finds holding up to 6 tcf.

"We find Myanmar very exciting. We will bid for more blocks if we find them attractive," said R.S. Butola, ONGC Videsh managing director.

Yangon is hoping to build a $3 billion LNG export terminal by 2007, and last month, oil ministers from New Delhi, Yangon and Dhaka agreed to build a $1 billion gas line running from Myanmar to India via Bangladesh.

If the project goes ahead, it would be the first international pipeline for India, which imports 70 percent of its crude oil needs and has started taking delivery of liquefied natural gas. (Additional reporting by Park Sung-woo in Seoul and Himangshu Watts in Dehli)


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