On June 14, the same day that the Ministry Energy received letters of intent from energy firms for exploration of 30 offshore blocks, the US Department of State announced that it had formed a partnership with Nay Pyi Taw to achieve greater transparency and good governance in Myanmar’s extractive industries.
Washington will provide political support and technical assistance
for the “implementation of international best practices in oil, gas, and
mining sector management and oversight, financial accountability, and
safety and environmental stewardship”, it said in a press release.
The
State Department added that the partnership will reinforce
international support for Myanmar’s implementation of the Extractive
Industries Transparency Initiative, a global standard that promotes
revenue transparency and accountability in the mining and oil and gas
industries.
This will also ease the way for global energy firms eager to enter the market.
Minister
of Energy U Than Htay has said that Exxon Mobil, Woodside Petroleum and
Oil India are among 59 global energy companies lining up for a share of
Myanmar’s estimated US$75 billion bounty of the fuel. While oil and gas
have been pumped for decades, investment largely dried up during almost
five decades of military rule that ended in 2012.
The country’s
opening to foreign investment has been compared to the fall of the
Berlin Wall and the start of an economic growth story to emulate
Vietnam’s. How those views pan out will be largely decided by natural
gas.
Myanmar needs more investment to explore its gas potential.
Energy and industries such as agriculture need a combined $320 billion
through 2030 for its economy to achieve 8 percent growth, according to a
report released early this month by McKinsey Global Institute.
France’s
largest oil producer Total, Italy’s biggest oil company Eni and India’s
leading explorer Oil & Natural Gas Corp have qualified to explore
onshore fields.
“A lot of low-hanging fruit hasn’t been caught,”
Olivia Boyd, a Beijing-based energy analyst at IHS Global Insight, said.
“A lot of prospective areas are unexplored.”
Korea Gas Corp, the
world’s biggest LNG buyer, PTT Exploration & Production, Thailand’s
biggest publicly traded exploration company, and Malaysia’s Petroliam
Nasional have also qualified to bid for the onshore blocks, according to
the Ministry of Energy.
Woodside, Australia’s second- largest
oil and gas producer, is evaluating bids on offshore blocks after
reaching two exploration deals last year in the country, chief executive
officer Peter Coleman said.
Myanmar’s reserves are “quite
modest”, Mr Coleman said. “This is all about potential. We are talking
about potential in deep waters offshore of Myanmar. It’s a story about
the future of Myanmar. It’s not a story about what Myanmar has done.”
Oil
India, that nation’s second-biggest state explorer, plans to bid for
onshore fields in Myanmar, while PTT, the parent company of PTTEP, is
“planning a lot more” exploration, CEO Pailin Chuchottaworn said.
“There’s a lot of energy demand in this country given the energy
shortage problem here,” he added.
Myanmar has 7.8 trillion cubic feet of proven natural gas reserves, according to BP data, worth about $75 billion.
The
US Energy Information Administration estimates the country had 10
trillion cubic feet of proven reserves and produced 421 billion cubic
feet of the fuel in 2011. The reserves are 1.9pc of known deposits in
the Asia Pacific, it said.
“The potential gas reserves could be
much bigger than what is known,” Oil India finance director Ananth Kumar
said. “In the long-term, we need to be in Myanmar. It’s one of the last
Asian countries opening up.”
Sanctions, a lack of technical
capacity, opaque regulatory policy and insufficient investment by
foreign firms have significantly impeded the country’s efforts to
realise its oil and gas production potential, the EIA said.
Myanmar
has 16 foreign companies working on 17 onshore exploration blocks and
15 exploring or producing in 20 offshore blocks, all in partnership with
the state-owned Myanma Oil and Gas Enterprise.
The
fourth-biggest contributor to Myanmar’s gross domestic product is energy
and mining, with agriculture being the largest at $21.2 billion,
according to McKinsey.
Australian explorer Roc Oil Co, which
qualified for the onshore bidding round in Myanmar, said in February
that it believes the country has “the potential for significant
discoveries and transformational growth”.
source: Myanmar Times
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