Total to develop LNG project, continue offshore production work in Myanmar

Myanmar is planning to double the supply of electricity in the country over the next two years with power generated by liquefied natural gas (LNG) to meet an expected domestic shortfall.

Last month, the Ministry of Electricity and Energy issued a “Notice to Proceed” to investors in four gas projects, which will collectively add 3,000 megawatts of power to the national grid by 2020.

Three projects, one each in Kan Pauk in Tanintharyi Region, Mee Laung Gaing in Ayeyarwady Region, and Ahlone in Yangon Region, will involve LNG imports, while the fourth, in Kyaukphyu, Rakhine State, will be for natural gas. It is the first time the government has allowed the importing of LNG into Myanmar.

To enable LNG imports, French oil company Total, together with German conglomerate Siemens, will build an LNG facility with 1,230MW of power capacity in Kan Pauk.

Total has been in Myanmar for 25 years and now operates the Yadanar offshore gas field in Myanmar, which exports the gas produced to Thailand.

Following the signing of a separate Road Safety Funding Program with US-based Suu Foundation in Yangon on Monday, Mr Romaric Roignan, general manager of Total E&P Myanmar spoke exclusively with The Myanmar Times about the French company’s plans for the country. Here is an excerpt of our interview:

What are your views on the prospects of the Myanmar oil and gas industry?

For years, Myanmar has been left behind in terms of economic and social development. Since the opening of the political system in 2015, there is an eagerness for growth in this society. We saw that in last week’s signing of the four power plant projects. Total is a part of this and we are involved the re-gasification project in Kan Pauk with our partner, Siemens.

Our priority is to continue producing gas safely in the Yadanar field but we must also prepare for the future. This involves continuing our activities at Yadanar but also delivering LNG to the Kan Pauk power plant by the end of 2021.

Now that you have signed the “Letter to Proceed” with the MOEE for the Kan Pauk LNG project, when will you sign a Power Purchasing Agreement (PPA) with them?

We are going start negotiations for the PPA. The “Letter to Proceed” is to continue in further states of the project, such as securing financing and advancing the necessary studies. We aim to sign the PPA within 2018.

How much LNG are you going to import through this project? Are there plans to re-export?

The project is for importing LNG which will be converted to gas to fuel the power plant. It is specifically designed to meet Myanmar’s energy demand. At a later stage, it can involve LNG exports.

How much have you invested in this project?

It is too early to say. We have an idea but at this stage it is too early to mention a figure.

How are operations at Total’s offshore blocks in Myanmar doing? Have there been any new developments at these blocks recently?

Total has partnerships in six offshore blocks. Currently we are conducting 3D seismic campaigns at Block YWB where we are the sole operator. 3D seismic data acquisitions have been done at Block MD-4 too. We hope the data enables us to move forward and continue our exploration activities in these blocks.

We are also a partner in block A-6, where two discoveries were made in 2016 and 2017. Our intention is to continue drilling more exploration and appraisal wells in 2018. We are in discussions with the MOEE to make this happen.

Has the fall in oil prices impacted the oil and gas industry of this country?

Yes it has. I think it has impacted the industry worldwide. The key challenge for the industry now is to continue producing oil and gas in a safe and profitable way. As oil prices are volatile, our biggest challenge is reducing our operating and development costs in this low oil price environment. We have been moving aggressively in that direction. Total is a pioneer in launching cost reduction initiatives since 2014.

Myanmar offshore activities have slowed and we know that some companies are pulling out. It is not only because of low oil prices. Some say that companies are no longer confident in the country because of the refugee crisis in Rakhine State. Do you think Rakhine has had impact on the Myanmar oil and gas industry?

Total is not present in Rakhine, so there is no direct impact on our operations. However, we are a responsible energy provider of this country. Obviously we have been paying attention to this situation. But we also want to play a part in the energy sector development of this country. We think our contribution providing energy in the country is positive for Myanmar. It is our intention to continue doing so. We have been in this country for 25 years. We are positive that we can continue.

Does Total have plans to get involved in the downstream industry in Myanmar such as operating petrol stations?

Our aim is to diversify our footprint in the country. We want to be in upstream power generation but also in downstream retailing. There is a possibility for us to be a downstream player here but we have to find the right time and the right partner. We are looking into it but there are no new developments to announce yet.

What is the purpose of this Road Safety Funding Program through Suu Foundation?

We are very happy to sign this agreement between Total E & P Myanmar and Suu Foundation to kick off our partnership on road safety. In this country, we have developed very visible and tangible Corporate Social Responsibility (CSR) programs for the local community in the areas surrounding our project.

It is also a nationwide program. We want to make a wider contribution to Myanmar society beyond the local community. Total decided to focus on CSR programs in the area of road safety a few years ago. Road safety has emerged as a major issue in the country and the number of injuries on the roads has doubled between 2008 and 2014. That’s around 11,000 injuries occurring on the road each year. It is very alarming.

Why did you choose to partner Suu Foundation for this program?

First, the chairman of the foundation is also US Special Envoy for Road Safety worldwide. Suu Foundation is also involved here in Myanmar in health and vocational training as well as programs dedicated to road safety.What are the activities that will be funded under the program?

It is a two-year funding program covering 2018 and 2019. The funding amount is $300,000 for the two years.

We will cover some capacity building activities to bring high-level experts in Myanmar to advice and to train decision makers on raising awareness of this issue. It will also finance some scholarships for Myanmar ministries for them able to follow relevant trainings to improve the way the issue is addressed in Myanmar.

We will also focus on safer road designs and better traffic centralisation systems adapted to UN regulations so that the roads safe for cars.

Source: Myanmar Times

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