Myanmar Prepares Ground to Boost Upstream Oil, Gas Investments
The energy resources will provide Myanmar with much needed revenue and could help it meet a projected increase in domestic electricity demand as the country develops its economy. Natural gas accounted for around 40 percent of Myanmar’s total exports in recent years, according to the WEF report.
Therefore, Myanmar needs foreign upstream energy investment urgently. The EIA in its March country analysis report on Myanmar noted that “sanctions, a lack of technical capacity, opaque regulatory policy, and insufficient investment by foreign firms have significantly impeded the country's efforts to realize its oil and gas production potential.”
Major Western countries have responded to the introduction of political and economic reforms by the Thein Sein government. The United States and the European Union have ease or suspended economic sanctions since the beginning of 2012, around the same time that Myanmar started to reform its foreign direct investment law to provide greater revenue incentives for global companies.
Further steps have been taken to encourage global energy firms to invest in Myanmar’s upstream energy sector. These include the government’s plan to implement the Extractive Industries Transparency Initiative (EITI), which is a global standard promoting revenue transparency and accountability in the extraction of natural resources, including energy. The United States is now working with the Myanmar government to help it meet EITI's membership criteria.
Rising Interests in Bids for Exploration Blocks
With their attention constantly fixed on tapping oil and gas resources worldwide, foreign energy companies have gradually began taking notice of the improved investment climate in Myanmar. The opening up of the Myanmar market has generated greater interest among foreign firms participating in tenders offering onshore and offshore exploration blocks.
So far, foreign investors in Myanmar have centered their oil and gas interests on the physically and financially accessible onshore exploration blocks. In 2011, Myanmar Oil and Gas Enterprise (MOGE) - a state-owned enterprise responsible for the upstream petroleum sector - said that a tender offering 18 onshore blocks for exploration drew 27 bids from 18 countries. Nine of these blocks were awarded to seven companies.
The Ministry of Energy followed up with a second tender in January in which 18 blocks were offered. The tender attracted over 75 letters of interests, before the government shortlisted 59 bidders. Major industry players such as Esso Exploration International Ltd., Total E&P Myanmar, Eni International B.V. and China’s Sinopec unit Sinopec International Petroleum Exploration and Production Corporation participated in this tender. Other major regional energy companies, including Australia’s Woodside Petroleum Ltd., India’s ONGC Videsh Ltd., Malaysia’s Petroliam Nasional Berhad (PETRONAS), Vietnam’s PetroVietnam Exploration Production Corporation Limited and Thailand’s PTT Exploration and Production Public Company Ltd. (PTTEP), were also among the bidders.
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