A photograph taken at the signing ceremony in Nay Pyi Taw for the sale and transport of natural gas from A-1 and A-3 offshore blocks. Pic: Daewoo

A CONSORTIUM led by South Korean firm Daewoo International Corp signed a Memorandum of Understanding (MoU) with Myanmar’s government on June 20 on the future sale of natural gas from the Shwe project in the Bay of Bengal.

The gas, which will be pumped from the A-1 and A-3 offshore blocks, will be piped to southwestern China under terms agreed to by Daewoo, Myanma Oil and Gas Enterprise (MOGE), India’s ONGC Videsh Ltd, the Gas Authority of India Ltd (GAIL), Korea Gas Corporation, and China National Petroleum Corporation (CNPC).

Daewoo has a 51 percent stake in the consortium, followed by India’s Oil and Natural Gas Corp with 17pc; Myanmar Oil and Gas Enterprise with 15pc; GAIL has 8.5pc; and South Korea’s Korea Gas Corp also has 8.5pc.

A spokesperson for Daewoo International Corporation in Yangon said the gas from the Shwe project, which includes the Shwe, Shwepyu and Mya gasfields, will be transported to the southwest of China via pipeline.

“This project is a milestone in establishing a concrete partnership between Myanmar, South Korea, China and India in an environment where energy prices are rising without a ceiling.

“The project will give a tremendous contribution to Myanmar economy and eventually the people of Myanmar,” the spokesperson said.

He said that it is assumed the construction of the pipeline will take three to four years and the investment to develop the gasfields and build the pipeline is expected to be at least US$4 billion.

A Daewoo statement shows that the company expect profits to exceed $10 billion in the 25 years after 2012, when the production of natural gas from the Shwe project is expected to begin.

Daewoo signed a production sharing contracts for the A-1 and A-3 blocks with MOGE in August 2000 and February 2004 respectively.

Gas in “significant” quantities was discovered at the company’s first exploration well, the Shwe field, in the A-1 block in January 2004; this was followed up by finds at the Shwe Phyu site (A-1) in 2005; and the Mya site in A-3 block in 2006.

The certified recoverable reserves of the Shwe project are 4.5 trillion cubic feet, although the true figure could be much higher than this.

Natural gas topped Myanmar’s exports in the 2007-08 fiscal year, which ended in March, coming in at US$2.594 billion, according to Customs Department statistics.