Path clear to conclude historic energy block tender in 2014

Path clear to conclude historic energy block tender in 2014

By Aung Shin   |   Sunday, 19 January 2014

The past 12 months could be considered a watershed year for Myanmar's energy sector, as the oil and gas industry saw unprecedented foreign interest.

A drilling ship testing for oil and gas off the coast of Myanmar. Photo: Staff

Myanmar's proven natural gas reserves, some 7.8 trillion cubic feet, were revealed at the World Economic Forum in Nay Pyi Taw in June, but potentials of 0.42 trillion cubic feet of natural gas onshore and 10.24 trillion cubic feet offshore, as revealed by the Ministry of Energy in April, are what global energy firms are after in the ministry's two block tenders.

The first tender saw 78 foreign companies submit letters of interest to the ministry, which then announced in October that 10 – including British Virgin Island-registered MPRL EP, owned by Myanmar tycoon U Moe Myint; ONGC Videsh from India; Eni from Italy; and Malaysia's Petronas Carigali – had won the right to explore 16 blocks.

A Ministry of Energy director, who requested anonymity because he was not authorised to speak to the press, said the dropping of Western sanctions against Myanmar had allowed the tender to be hotly contested.

"This time the tender was most interesting because many international energy companies participated," he said. "In the past we were only able to permit companies from China and Thailand because of sanctions and it was very hard to attract the global energy giants. We want these tenders to be transparent, with no other political or economic influence."

Christophe de Margerie, chief executive of French company Total, told The Myanmar Times last month that the company welcomed competition in the sector.

"Before we were one of the few foreign companies [in Myanmar]. Now there are others. I would take competition as good news. We are used to competition. The re-opening of the country will increase competition," he said.

The second tender announced in April will see the Myanma Oil and Gas Enterprise (MOGE), a wholy-owned state enterprise responsible for the upstream petroleum sub-sector, grant licences for exploration and production activities at 30 offshore blocks, including 11 shallow-water and 19 deepwater. For this, 75 international firms sent letters of interest and 61 were declared in July to be prequalified. An announcement will likely also come in the coming months.

Banking on the transition into an international energy market, the MOGR increased the royalty fee for exploration of onshore blocks from 10 percent to 12.5pc. Operators must also repay tax breaks used to import exploration equipment if and when they begin commercial production.

The surge in foreign interest also prompted an explosion in the number of Myanmar companies registered with the ministry's Energy Planning Department (EPD), now with more than 200 companies registered, up from fewer than 50 one year ago.

http://www.information.myanmaronlinecentre.com/path-clear-to-conclude-historic-energy-block-tender-in-2014/