Tuesday, June 27, 2017
The Myanmar Times
The Myanmar Times

Myanmar enters ‘transparency partnership’ with US

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.

 A drilling rig tests for natural gas at a block off Rakine State. Almost 60 global energy firms are eyeing Myanmar’s reserves. Photo: Supplied A drilling rig tests for natural gas at a block off Rakine State. Almost 60 global energy firms are eyeing Myanmar’s reserves. Photo: Supplied

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”.