Govt calls for offshore block investment
By Moe Thu
Volume 32, No. 628
May 28 – June 3, 2012
MYANMAR recently announced that 23 offshore oil and gas blocks were available to international oil companies interested in working in the potentially lucrative sector.
The announcement was made by U Aung Kyaw Htoo, assistant director of the Ministry of Energy’s Energy Planning Department, during the 5th Myanmar Business Conference 2012, held in the second week of May.
U Aung Kyaw Htoo said the blocks were located in Rakhine, Mottama and Tanintharyi offshore areas and had not been exploited by multinational oil companies yet.
The conference, which was jointly organised by Singapore’s Foreign Recruitment Centre and FBC Services Co in Myanmar, was aimed at attracting foreign investment in the energy sector.
Myanmar’s oil and gas sector is mostly dominated by oil companies from China, Thailand, India and Malaysia. However, the easing of economic sanction by Western nations could encourage energy companies to attempt to tap into the country’s oil and gas reserves.
U Htin Aung, director general of the Energy Planning Department, told The Myanmar Times at an oil and gas conference in March that all new ventures would require foreign companies to work with at least one local partner when developing blocks.
The government’s call for foreign investment comes as relations with the United States have dramatically improved.
During a meeting with Foreign Minister U Wanna Maung Lwin on May 17, United States Secretary of State Hillary Clinton announced that US was encouraging business to invest in Myanmar.
“The United States will issue a general license that will enable American businesses to invest across the economy, allow citizens access to international credit markets and dollar-based transactions,” she said.
U Soe Myint, a retired director general from the Ministry of Energy was quoted in the Bangkok Post in April as saying that Western oil companies would lose out to Asian competitors if they did not act quickly.
“If you keep staying in wait-and-see mode, I can tell you that you will be too late [to invest],” U Soe Myint told the Bangkok Post.
US oil firms had a presence in Myanmar’s energy sector before the imposition of economic and investment sanction on Myanmar in 1997.
However, US oil giant Chevron was able to buy Unocal – and its Myanmar stakes – in 2005 through an exemption granted on existing assets.
In July 2011, Myanmar called for tenders for exploration of 18 onshore blocks, which resulted in seven companies being awarded nine onshore blocks.
The companies that won tenders included Thailand’s PTTEPI, Malaysia’s Petronas, Swiss firm GeoPetrol, CIS Nobel Oil from Russia, EPI Holding Ltd from Hong Kong and Jubilant Oil from India.
Meanwhile, U Aung Kyaw Htoo said the country could not meet its demand for crude oil because domestic consumption outweighed production.
Myanmar consumes about 60,000 barrels a day (bpd) but produces 20,000bpd, about 33 percent of the total crude oil consumption, an Energy Planning Department presentation at the summit showed.
U Aung Kyaw Htoo also called for help in building a new refinery capable of processing 56,000bpd, a new liquefied petroleum gas factory and liquefied natural gas facilities on Made Island in Rakhine State.
Despite Myanmar’s wealth of hydroelectric and hydrocarbon sources, many parts of the country are not connected to the national electricity grid, while even Yangon suffers frequent blackouts towards the end of the hot months when water levels of hydropower dams run low.
Recent blackouts in Yangon and Mandalay have sparked non-violent protests in those cities, with residents upset over the large-scale export of natural gas to Thailand that could instead be used to generate electricity for Myanmar.
Dr Thant Myint-U, a renowned writer and grandson of late UN Secretary General U Thant, said Myanmar needed investment in its power generating network.
In a post on Dr Thant Myint-U’s Facebook account on May 23, he said Myanmar needs massive investment in power generation to solve chronic power shortages.
“It’s not just a matter of selling or not selling natural gas to Thailand and China. All the natural gas in the world won’t make a difference if there is no investment in the infrastructure needed to get electricity to homes and businesses.
“And this sort of big investment is much less likely to come whilst sanctions are only ‘suspended’,” he wrote.
The Energy Planning Department showed that 61 percent of Myanmar’s natural gas supply is sent to gas turbines in Yangon for electricity generation.
