Myanmar Prepares Ground to Boost Upstream Oil, Gas Investments
Latest Offshore Tender
Given stronger investment interest in Myanmar’s upstream sector, industry players are now tracking the latest tender in which the Ministry of Energy has offered 30 blocks - 11 shallow water and 19 deepwater - for an indication of foreign investment interest, especially from IOCs. The tender was originally planned for launch in September 2012 but - as the WEF pointed in its Myanmar report - was delayed by the government as it wanted the tendering of exploration contracts to be transparent and conform to international standards.
The latest tender attracted around 60 bids, with “British, American, Australian and others” among the foreign bidders, an MOGE source told Rigzone. The government is “now processing and evaluating the bids” and “prequalification is expected to be completed early next month (July).”
The winning bids for these exploration blocks are expected to be announced at the end of the year.
Among these bidders are three state-owned firms in India - ONGC Videsh, Indian Oil Corp. and GAIL (India) Ltd., said India’s Oil Minister M. Veerappa Moilya in a Dow Jones Newswires report. These Indian companies were expected to bid either jointly or separately for eight of the offshore exploration blocks on offer in Myanmar. Meanwhile, bids from traditional sources were also expected, including those from Thailand and China. However, observers will be keenly watching whether Myanmar succeed in attracting major Western oil and gas firms to invest in Myanmar.
Investments in deepwater blocks are “quite risky … (and the) investments required are quite high, infrastructure (to develop these projects is also) quite a problem,” said Sugi Handoko, vice president of Operations at Interra Resources Limited - a Singapore-incorporated company listed on the Singapore Exchange with onshore exploration blocks in Myanmar - to Rigzone.
The huge outlay needed to drill in deepwater - according to Rigzone’s RigLogix Database shows a semisubmersible rig costing as much as $428,000 - probably serves as a limitation in the participation of these blocks to large IOCs. To further incentivize bidding for the deepwater blocks, Myanmar has waived its requirement for the participation of a local partner in such projects. In contrast, foreign firms bidding for onshore and shallow water blocks require a local partner.
“U.S. companies might be there, maybe ExxonMobil, Chevron and European majors like Total ... (but since) oil and gas reserves (around the world) are getting smaller… new discovery (is still) needed … (and) Myanmar may draw interest,” Handoko said.
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