Myanmar set for more than $1 billion of upstream investment

With Myanmar’s general elections in the rearview mirror, upstream development expenditure could more than double to over $1 billion by 2023 compared to this year’s spend.

Myanmar’s ruling National League for Democracy (NLD), led by Aung San Suu Kyi, a Nobel Peace laureate, scored a resounding victory in last month’s general election, the second since the military began to withdraw from civilian politics in 2011.

“The NLD victory generally means continuity in Myanmar’s upstream sector. While some personnel in government may change, overall approaches will continue to be broadly the same. This is good news for investors in oil and gas, who are approaching with long time horizons,” Jeremy Mullins, Myanmar country director of Vriens, government affairs and political risk consultancy, told Energy Voice.

“Negotiations regarding issues such as PSC’s will be able to continue relatively uninterrupted, and on a broader level, the successful execution of the election will instill further confidence in the country for potential investors,” Jordon Zele, country director of consultancy Frontier Myanmar Research, told Energy Voice.

As a result of the political continuity, upstream development spending could reach over $1.1 billion in 2023, nearly four times as much as estimated for 2021, data from Rystad, an energy consultancy shows.

However, this projection is largely dependent on Woodside Energy and Total sanctioning their multibillion-dollar A-6 project, Myanmar’s first ultra deep-water natural gas field. Other key projects expected to be underway in the mid-term are Posco International’s Shwe Phase 3 and PTTEP’s Aung Sinkha Block M3 development, Read Islam, an Asia upstream specialist at Rystad Energy, told Energy Voice. PTTEP’s ongoing development at Zawtika should also ensure some spending, he added.

New upstream developments will be crucial for Myanmar as mature legacy offshore fields are reaching the end of their life. The country’s attempts to expand it’s upstream – which holds some of Asia’s last frontier exploration acreage and was previously off-limits to most Western companies due to international sanctions – have not been a success as was expected when the country opened up the sector in 2013.

Nevertheless, the government has been working to revise its petroleum legislation and improve its fiscal terms before introducing a new licensing round. Indeed, a new upstream law and potential bidding round are two areas being closely watched, as they will be crucial to determining the future direction of the sector.

“We expect both eventually, but right now the focus is on the transition to the next government…parliament won’t get back to normal until mid-2021, so not much will happen till then,” said Mullins.

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Source: Energy Voice

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