Government reveals plans to build first modern oil refinery in Myanmar

State-owned Myanma Petrochemical Enterprise (MPE) is planning to build a new oil refinery near an existing state-run facility in Magwe Region, Daw Yin Yin Aung, deputy director of MPE, told The Myanmar Times.

The government intends for the project to be implemented in cooperation with the private sector under a Public Private Partnership, in line with Myanmar’s economic policy.

The capacity of the new refinery will be 2 million tonnes per year. It will use crude oil feedstock from the South East Asia crude oil pipe line, which runs across Myanmar from a terminal on the coast of Rakhine State to Yunnan province in China. The pipeline, which began operations in 2015, was first developed by China National Petroleum Corporation in 2008.

The Chinese own a controlling stake in the pipeline, while the government holds the remaining stake.

Crude oil is transported via the $2.5 billion pipeline and exported to China. The Ministry of Electricity and Energy (MOEE) has granted approval for the new refinery to buy 2 million tonnes of oil from the South East Asia Crude Oil Pipeline Company, which controls the pipeline.

No capacity

Even though Myanmar is a producer of oil and gas, the country lacks the funding and capacity to process the fuels into energy that can be deployed for domestic consumption. As a result, the country exports most of the natural gas produced to Thailand and China. In 2017-18, Myanmar’s natural gas exports, totaling $3.1 billion, represented half the country’s export revenues, according to the Ministry of Commerce.

The country also imported well over $3 billion worth of petroleum over the same period. Myanmar imports 600,000 tonnes of oil monthly from Singapore, according to the Myanmar Petroleum Trade Association.

Yet, there are currently just two oil refineries in the country – in Thanlyin, Yangon and Chauk, Magwe – both of which are state-owned. The refineries were built in the 1950’s and 1960’s.

The Thanlyin refinery is currently non-operational, while the Chauk refinery is unable to produce fuels that are consistent in quality.

In addition, local residents are unable to afford fuels produced domestically.

As such, a new integrated refinery which produces high quality oil, together with a new energy strategy promoting the use of locally produced fuels, is required to raise demand and lower imports, according to the MPE.

In fact, the MOEE is already in the process of conducting the necessary environment and social impact assessments for the construction of the refinery. After the assessments are reviewed and approved, the ministry will hold the tender process with international companies.

Construction of the new refinery is expected to take between 3 and 5 years.

Source: Myanmar Times

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