Myanmar, Cambodia to push oil and gas business

The two Southeast Asian nations of Myanmar and Cambodia are expanding their hydrocarbon production in an effort to capitalise on ever-rising domestic and regional demand. The Myanmar government announced last week that it will let international investors bid for 15 additional offshore oil exploration blocks by the end of next year, a move that comes after the earlier release of 40 blocks that have already been awarded to big international players like Chevron, Shell, Eni, Statoil and Total.

All in all, Myanmar has about 80 oil and gas blocks to exploit on its territory.

Crude oil production in Myanmar is currently limited at around 21,000 bpd, which is insufficient to meet domestic demand, leaving the country in the role of a net oil importer. Output is supposed to increase significantly with the help of foreign investors, and Thailand’s Thai Oil has additionally expressed interest in building a large refinery that could improve Myanmar’s limited refining capacity.

Apart from crude oil, the country has sizeable offshore natural gas reserves and is currently producing more than 400bn cu ft per day, of which around 70% is exported to Thailand and most of the rest to China, while Myanmar itself relies on hydropower to meet domestic energy demand.

However, with the new explorations, Myanmar says it will first focus its policy on servicing the domestic market, rather than on export. Proceeds from oil and gas sales to foreign countries will be used for domestic development programmes, officials said.

“Our expectations are high to discover more oil and gas. So it will contribute a lot to the Myanmar people,” said Than Min, director of planning department of state-owned Myanma Oil and Gas Enterprise, the country’s national oil and gas company.

Myanmar has been liberalising its oil and gas industry starting from 2011 and began holding licensing rounds for international investors. Reforms of the foreign direct investment law provided greater revenue incentives for international company investments since 2012. The result was that the oil and gas sector grew to Myanmar’s second largest target of foreign direct investment behind manufacturing and ahead of the telecom and tourism industries. This year, investments in oil and gas exploration amounted to more than $15bn, or around 30% of Myanmar’ total foreign investments. Adding to that are infrastructure investments in oil terminals and pipelines as Myanmar also wants to position itself as an oil and gas trade hub between the Middle East and China.

Cambodia is also pushing oil production with a recent deal that saw Singapore-based oil explorer KrisEnergy take over a large offshore oil block in the Gulf of Thailand from Chevron which has been in limbo for years because Chevron failed to reach a deal with the Cambodian government over extraction.

KrisEnergy is now devoted to “launch Cambodia as an oil producing nation,” as its executive director Richard Lorentz put it. Apart from its offshore oil field, Cambodia also has 17 onshore oil blocks where Japanese and South Korean investors have shown interest in exploration.

Source: Gulf Times

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