Thursday, August 17, 2017

Four years left for plateau production in Yadana: Total

Total has started production from LCP-Badamyar project (Low Compression Platform), the new wellhead platform on May 2.

The inauguration of LCP-Badamyar. Total has started production from LCP-Badamyar project on May 2. Aung Shin / The Myanmar TimesThe inauguration of LCP-Badamyar. Total has started production from LCP-Badamyar project on May 2. Aung Shin / The Myanmar Times

It is an extension of Yadana gas field, an offshore gas field in the Andaman Sea, which is the biggest gas production field in Myanmar. French oil and gas giant Total is the operator of Yadana project with 31.2 percent interest, while partners own the rest: US Chevron-Unocal is holding 28.3pc, Thai firm PTTEP with 25.5pc and state-owned Myanma Oil and Gas Enterprise (MOGE) with 15pc.

The Myanmar Times conducted an exclusive interview with Xavier Preel, the general manager of Total E&P Myanmar in Yangon on May 2, following inauguration of LCP-Badamyar project. Mr Preel joined Total E&P Myanmar as General Manager in July 2014 and has worked for Total since 1980.

Yadana gas field is the biggest and the oldest one in Myanmar. What do you feel about it?

Yadana project has been developing a long time ago since 1995, more than 20 years ago. Production started in 1998 and is still producing with plateau production of 8 billion cubic metres per year. We are quite happy today about the development of additional gas field, Badamyar. It means that we are able to maintain plateau production beyond 2020.

Even crude price was falling since 2014 globally, but Total has decided to launch this remarkable project. Why did you decide to launch this project?

We launched LCP-Badamyar project in 2014 during the time when the oil price was decreasing. We have done this because we are committed to supply clean, reliable and affordable energy to customers because we are supplying 15 percent of gas consumption in Myanmar, and we are also exporting to Thailand. So it’s a strong commitment. That’s why we are able to launch this important project which is now completely done.

Another concern among the public is the domestic gas supply. People are still asking about more gas even though domestic gas consumption is still quite low. So with new extension of LCP-Badamyar, how much gas could you supply more for domestic use?

We can supply more gas. But when supplying more gas, we want to be sure that the gas is actually used. You can increase production but if you don’t have power plants to use the gas, you can’t use [generate] electricity. So it is not the question of more production. It is the question of plan. We are seeing that it is becoming the priority of the government today.

Could you tell us how much gas the Yadana project can supply?

We can supply a little bit more. Today we are supplying 230 million cubic feet per day. We can produce a little bit more. But we are also aware that production is expected to decline a lot by 2021. And then we have to discuss about it. It is not easy because we need to act and plan with the ministry [the Ministry of Electricity and Energy]. The ministry decides how much gas can be used from Yadana and how much gas from the other production fields.

So are there only four years left for plateau production of Yadana gas field?

Yes, that’s why the government is working hard. We have four years until production starts to decline. It will be finished by 2021 though production will go on quite a long time.

Xavier Preel, general manager of Total E&P Myanmar. Nyan Zay Htet / The Myanmar TimesXavier Preel, general manager of Total E&P Myanmar. Nyan Zay Htet / The Myanmar Times

What about the natural gas price at the moment? Crude oil price is still falling. Is the operation still profitable economically?

Today, operation of Yadana is still profitable. We are not losing money. It is true that oil price is more or less still stabilised at around US$50 per barrel. We are having less revenue. That is also a concern for the state [Myanmar]. But it is really difficult to predict what oil price would be. What we need to do is lower the cost for production. That is quite important. In that regard, we are quite happy that LCP-Badamyar project is was done well with more than 20 percent below the original budget. That’s a great achievement. That’s the money of everyone and all the partners, particularly the state.

In recent years, Total has been acquiring more interests in other offshore blocks. What is Total doing in other blocks?

We are very committed to Myanmar to supply energy. We are the first foreign company to invest in Myanmar and invest in the development of Yadana project. Part of the commitment is to look for additional gas reserve. We think Myanmar contains a lot of gas reserve but it is to be approved. We have taken exploration farming in the blocks.

Today we have taken a significant participation in seven blocks which are all offshore. We are partner of new discovery of A-6. We have 40 percent interest together with Woodside and local company MPRL. We have announced gas discovery in 2016. It is in 2000-metre depth – really deep water. We shall conduct appraisal wells starting from mid-2017. And we plan to start two or three wells. We will be able to confirm this discovery and start to think about potential development. We are doing exploration activities on all these seven blocks. But I want to stress that exploration doesn’t mean that gas is being discovered. There is still a long way until discovery and before any potential developments.

Total has been in Myanmar 25 years, and you have worked with the previous administration as well as the current one. What do you think of the NLD-led government?

I want to say that energy is quite important for economic development of the country. I see that the government is doing a lot of work establishing a proper energy policy. That’s quite good. I think decision will be made shortly to have a clear vision of what kind of energy plan will be implemented. We can be optimistic about the potential of Myanmar. Myanmar has been blessed by its low-CO2 energy which is quite an issue for Myanmar because it is one of the countries which are most affected by global warming.

This interview has been edited for length and clarity.