Petronas, CNPC in Talks Over Myanmar Blocks

BEIJING, March 31, 2008 (Dow Jones Newswires)

Malaysia's state oil company Petroliam Nasional Bhd, or Petronas, is in talks with China National Petroleum Corp. over cooperation in exploring the Chinese company's natural gas blocks in Myanmar, officials from the two companies said.

A delegation from Petronas, one of the biggest investors in Myanmar's oil and gas industry, visited Beijing earlier this month for negotiations with CNPC's overseas exploration unit, China National Oil and Gas Exploration and Development Corp., or CNODC.

CNPC, China's largest oil producer by capacity and parent of PetroChina Co., owns licenses for blocks AD-8, AD-1 and AD-6 off the western Rankhine coast as a result of production-sharing contracts signed in the first half of 2007.

A senior CNODC official confirmed Petronas has seen its data on the blocks in Myanmar. Petronas spokesman Azman Ibrahim said officials from the company's exploration and production unit visited their counterparts in CNPC last month, but declined to discuss details of the talks.

Another Petronas official said: "We are still in discussion for these blocks, but it's not finished yet."

Foreign oil companies are vying to strengthen their foothold in Myanmar, despite international criticism of the Southeast Asian country's human rights record.

A bloody clampdown on pro-democracy demonstrators in October sparked calls by some, mostly Western, nations for tougher sanctions against the Yangon regime.

Myanmar sits on top of some of the richest natural gas reserves in Asia. It had proven reserves of 18.99 trillion cubic feet of natural gas by the end of 2006, equivalent to 540 billion cubic meters, according to the BP Statistical Review of World Energy.

Among the major Western investors active in Myanmar's energy sector are French oil giant Total SA and Chevron Corp., who are partners in an offshore gas field.

For Beijing, Myanmar is strategically important for China's future energy security, and there are plans for a natural gas pipeline crossing the border into the southern Chinese province of Yunnan.

CNPC is also considering building a 400,000 barrels-a-day crude oil pipeline from the Myanmar coast through to Yunnan.

China's oil companies have been searching for partners to share the exploration risk in their awarded blocks.

Cnooc Ltd., China's third-largest oil company by capacity, has an agreement with Thailand's PTT Exploration & Production to swap stakes in their Myanmar assets, PTTEP President Maroot Mrigadat said on Feb. 12.

Maroot also said PTTEP is in talks with two major Chinese oil companies to jointly develop block M9 offshore Myanmar for natural gas production. Industry insiders say one of these companies is CNPC.

It isn't clear what Petronas is offering CNPC for access to its Myanmar blocks.

Currently, Petronas has an interest in the producing Yetagun Gas Project, which is fed by blocks M-12, M-13 and M-14 operated by Petronas. The gas is channeled into a cross-border pipeline running to Thailand.

In addition, Petronas is the operator of blocks M-15 and M-16 offshore southern Myanmar, which are still in the exploration phase.

BEIJING, March 31, 2008 (Dow Jones Newswires)