Thursday, August 17, 2017

Myanmar offshore exploration continues despite low oil prices

The exploration activities of international oil companies in Myanmar offshore are continuing as normal despite crude oil prices falling over 60 percent globally since mid-2014.

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Myanmar authorities announced the latest offshore activities last week through state-run newspapers. International companies have now started surveys at almost half of all blocks awarded in the 2013 bidding round.

Meanwhile, production remains steady at Myanmar’s existing offshore gas fields – Yadana, Yetagun, Shwe and Zawtika – officials said.

France’s Total E&P Myanmar launched 2D seismic surveys in Yetagun West Block (YWB) on April 22, following approval from Myanma Oil and Gas Enterprise (MOGE).

“Companies need MOGE approval for offshore activities. Exploration activities are going on as usual. As the price of crude oil falls, service companies have also lowered their fees and oil companies are taking advantage of this,” said an official from the Ministry of Electricity and Energy.

Total is the operator of Myanmar’s largest offshore gas field, Yadana, and was awarded right to exploration and production in deepwater block YWB in 2013. Its seismic campaign will run from April 22 to May 23 according to the state media announcement.

PC Myanmar (Hong Kong) a subsidiary of Malaysian state-owned Petronas began a 3D acquisition survey in blocks M-11, M-12 and M-13 (Yetagun Project) on April 15, which will continue until May 31.

Petronas also drilled development wells in the Yetagun project in November 2015. But the Malaysian oil giant failed to start its planned exploration activities in late 2014 when international oil prices began to fall, drilling just one exploration well in the project though had planned two, according to MOGE.

An official from MOGE told The Myanmar Times late last year that Petronas would drill three development wells in the Yetagun project in 2016, M-12, M-13 and M-14, “to maintain its production level which is declining”.

Australia’s Woodside Energy has been conducting 2D seismic surveys in blocks AD-5 and AD-7 in Rakhine basin since the end of March. The company also led a 3D seismic campaign in the same blocks in November 2015 according a notice in state media. It announced two gas discoveries in blocks A-6 and AD-7 in January and February of this year.

Extensive 2D and 3D seismic surveys in blocks A-4, A-7, AD-2 and AD-5 started in late 2015 and will continue into the second quarter of 2016, according to the company’s first-quarter report published on April 20.

“We’re especially pleased with our recent exploration success in Myanmar where we have announced two gas discoveries over the last six months,” said Woodside chair Michael Chaney at the company’s annual general meeting on April 21. “The proximity of these wells to nearby infrastructure and our strong partnerships in Myanmar enhance commercialisation possibilities.”

Woodside has interests in a total of six offshore blocks in Myanmar covering a total of 47,000 square kilometres and is close to completing more than 30,000 square km in approved 3D seismic surveys, he said.

The government awarded 20 blocks in the 2013 offshore bidding round. A total of 13 international oil companies were awarded the rights to explore and operate the blocks. Signing of all production-sharing contracts with MOGE was completed by mid-2015.

London-based Ophir Energy was the first company to begin exploration after the bidding round, starting surveys in block AD-3 in late 2014.

BG Group, which has since been bought by Royal Dutch Shell, started 3D seismic surveys in blocks A-4 and AD-2 in November last year.

Unocal Myanmar Offshore, a subsidiary of US-based Chevron, also started exploration activities in block A-5 in Rakhine offshore in October last year. The US oil company was awarded block A-5 in 2013 and signed a production-sharing contract in early 2015.

Last week reports emerged that Chevron plans to sell its US$1.3 billion Myanmar oil and gas assets, with Woodside Petroleum, Thailand’s state-owned PTT and companies from Japan and China expected to be among possible buyers, according to Reuters.

Another major international oil giant, Shell, has started conducting 3D seismic surveys in blocks AD-9 and AD-11 in Rakhine offshore.

Shell was awarded deepwater blocks AD-9 and AD-11 in the Rakhine basin and MD-5 in the Tanintharyi basin in the first 2013 offshore bidding round.

Shell and Japanese oil firm MOECO signed production-sharing contract for the blocks with MOGE in February 2016.

MOGE officials have said the coming years, in particular 2016 and 2017, will be the busiest period yet for Myanmar’s offshore petroleum industry, as companies in existing projects and newly awarded blocks carry out exploration activities.