Myanmar awards onshore oil, gas blocks

Construction News Myanmar

Myanmar awarded 10 onshore oil and gas blocks to eight firms in its biggest energy tender in years and is now offering nine offshore blocks, two Yangon-based sources with direct knowledge of the deals told Reuters on Friday.

The winning firms were mostly from Asia, including Malaysia’s Petronas PETR.UL and Thailand’s PTT Exploration and Production PTTE.BK, as western firms have shied away from the country.

Myanmar has been moving fast to implement political reforms and attract investment, drawing praise from western nations but no easing of sanctions that analysts say may see oil majors miss out on opportunities.

The political opening has gathered pace since the tender closed on August 23, and could see bids from further afield for the next round, with one of the sources saying Japanese firms had shown an interest.

Myanmar, whose gas reserves are a tenth of Australia’s, failed to strike deals on the remaining 8 blocks as these were not seen as lucrative, said the sources, who could not be identified as they are not authorised to speak to the media.

The Ministry of Energy and state owned Myanma Oil and Gas Enterprise are now offering nine offshore blocks, of which five are deepwater.

No details were available on the bidders for the offshore blocks.

“The Myanmar Ministry of Energy has asked for proposals. Some oil and gas companies have come for the data presentations. There has been a lot more interest in the deepwater blocks coming from the Japanese,” said the first source.

Japanese Trade Minister Yukio Edano visits Myanmar on January 12-14 with a business delegation that includes the president of Japan’s top refiner JX Nippon Oil & Energy and representatives of trading houses Marubeni (8002.T), Mitsui & Co (8031.T) and Itochu (8001.T), among others.

A trade ministry official said the trip would promote cooperation in the energy and mining field, including pushing for investment in oil and natural gas in Myanmar.

Myanmar’s proven gas reserves at 11.8 trillion cubic feet at end-2010, or 0.2 percent of the world’s total according to the BP Statistical review, have drawn interest from China and India where resilient economic growth is fueling energy demand.

Southeast Asian countries are also facing rising demand to use cleaner-burning gas for power generation.


Countries in Southeast Asia bagged the bulk of the awards, led by Petronas and PTT winning two blocks each.

Petronas officials were not immediately available for comment.

Little known Indonesian firm PT ITSTECH Resources Asia won the rights to explore one block.

Interest from major, state linked Chinese players was lukewarm, paving the way for lesser-known Tianjin New Highland and Hong Kong-listed EPI Holding (0689.HK) to secure a block each, the sources said.

With limited interest from the usually aggressive Chinese resource firms, India’s Jubilant Energy also bagged one production sharing block.

The sources said Switzerland-based Geopetrol International Holdings Inc secured the rights for a marginal oil field. Russian-linked CIS Nobel Oil Company also won a production sharing contract for one oil and gas field.


Myanmar’s aggressive oil and gas pitch to investors comes as western diplomats hold talks with pro-democracy leader Aung San Suu Kyi, whose political participation is now key for a civilian government hoping to end economic sanctions.

These trade embargoes were put in place over the past two decades due to the country’s poor human rights record under the military junta, leaving the resource rich country poverty stricken.

After Myanmar’s generals installed a new civilian government last year that initiated talks with Suu Kyi, released political prisoners and reached out to armed ethnic groups, hopes for an unwinding of sanctions have grown. On Friday, British Foreign Secretary William Hague met separately with Myanmar’s government and Suu Kyi, seeking the same reforms and offering similar concessions as U.S. Secretary of State Hillary Clinton did late last year.

“Myanmar is opening up its country and its oil and gas sector almost in unison with Clinton leading the way,” said Victor Shum, an oil consultant at Purvin & Gertz in Singapore.

“Many western oil majors may take a wait and see approach with this due to the sanctions but in doing so, they could miss the boat,” he added.

The second Yangon-based source said in the event of still weak interest from western and also Chinese oil companies for the deepwater and shallow blocks, Myanmar could fall back on investment from southeast Asian countries.

“If the Association of Southeast Asian Nations can have trust in Myanmar by giving it chairmanship (of the regional grouping), Myanmar can get their support for developing its oil and gas industry,” said the source, referring to the 10-member bloc.


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