The Myanmar Times
Friday, 31 October 2014
The Myanmar Times
The Myanmar Times

Local partners named for offshore blocks

 

The Myanma Oil and Gas Enterprise (MOGE) last week announced the names of eight Myanmar companies that will work alongside the 13 international foreign firms who last month won the rights to explore 20 offshore blocks.

According to the terms of the licences, foreign firms are required to partner with a local company. The names of those firms, however, were omitted during the tender awarding ceremony on March 26.

“The international companies had to submit their partnership agreements with local firms at the final stage of the offshore bidding round, so their proposals already name the local partners,” said U Pe Zin Tun, director general of the Energy Planning Department (EPD) at the announcement ceremony last month.

In the tender announcement, UK-based BG Asia Pacific and Australia’s Woodside Energy were selected for shallow-water blocks A-4, A-7 and deep-water blocks AD-2 and AD-5. According to MOGE, they have partnered with Michael Moe Myint’s Myanmar Petroleum Exploration and Production (MPEP) company.

Four blocks is the largest segment to be assigned to a local company.

The MOGE also announced that US-based Chevron (Unocal Myanmar), who was selected for Block A-5, will work with a local service company, Royal Marine Engineering.

The shallow-water blocks A-4, A-5 and A-7 were handled by local and foreign companies in the past and were returned to the MOGE to be offered in the first offshore bidding round.

State-run Oil India, who was selected for the M-4 and YEB shallow-water blocks, will partner with Oil Star Management Services Co Ltd.

Prior to the announcement last month, the MOGE invited tenders for 30 offshore blocks, attracting interest from a total of 75 international oil and gas firms, but after the ministry released a pre-qualified list of 61 companies in July, only 30 produced proposals.

“It is good that Myanmar companies are in partnership with foreign firms, but the investment of local companies will be very limited,” said U Khin Maung Cho, a local energy consultant. “They don’t have the technical knowhow. They are included just for show in related services with the government.”

Australia-based ROC Oil, Transcontinental Group (TRG) and Dutch-based Berlanga Holding BV, who were selected for shallow-water blocks M-7, M-15 and M-8 will partner with Smart Group of Companies chair U Kyaw Kyaw Hlaing’s Smart E&P, U Aung Kyaw Win’s Lin Win and construction business icon U Yan Win’s A1 Company.

Locally run United National Resources Development Services will partner with Reliance Industries, an Indian company that won blocks M-17 and M-18.

UK-based Ophir Energy, which won the AD-3 block, will partner with locally based Parami Energy Development even though the AD-3 block is the only deep-water block not to require a partnership with a local firm.

“Some experts predict that investments from the bidding round could be as big as [US]$60 billion over their exploration periods. That’s 100 percent of our GDP. The question is how local service companies and MOGE will

capture the value-added segment of the market. It’s time for local companies, including MOGE, to develop their capabilities through partnerships,” said U Pyi Wa Tun, CEO of

Parami.

A total of 162 local companies have registered with the Energy Planning Department as national oil companies to participate in the oil and gas industry.

According to officials, the government stands to earn a total of $226.1 million in signing bonuses from the winning firms, the highest such lump bonus in Myanmar’s recorded history.

Revenues from the offshore oil and gas industry reached just $1.5 billion in the 2013-14 financial year through February, according to government data, while industry experts claim annual revenues from the entire sector are around $4 billion.

Seven international oil and gas companies are already operating exploration and production projects in 18 of a total of 51 offshore blocks.