This is a best prospect industry sector for this country. Includes a market overview and trade data
Last Published: 7/25/2017
Overview
With economic reforms and loosening of international sanctions, the Government of Myanmar has sped up oil and gas exploration and promoted foreign direct investment in the Oil & Gas (O&G) Sector.  Myanmar produces about 6 million barrels of crude oil annually.  According to the Central Statistic Organization- CSO, the total gas production (pipeline gas and compressed natural gas- CNG in FY 2014-2015 was over 650 billion cubic feet (Bcf) and in FY 2015-2016, the production went up to 700 Bcf.

According to DICA, Myanmar has received more than US$69 billion in cumulative foreign direct investment (FDI) as of January 2017.  The oil and gas sector attracted over US$22.4 billion in FDI which is approximately 32 percent of the total FDI from 154 permitted foreign enterprises.  This makes the country’s oil and gas sector one of the top sectors for FDI in the country, followed by power, manufacturing, transport and communication.

The Government of Myanmar (GOM) aims to develop Myanmar’s estimated 3.2 billion barrels of oil reserves through foreign investment. According to the government’s official data, Myanmar earned over US$4.3 billion from natural gas exported to China and Thailand in FY 2015.  Natural gas exports dropped by about 37% in the first half of FY 2016 in comparison to the same period a year earlier.  The significant decline in natural gas export is mainly due to the lower price of crude oil which is a close substitute for natural gas in some countries and sectors.  This substitute can result in more people switching to oil and lowering the demand for natural gas, according to Mr. Khin Maung Lwin, joint secretary of the Ministry of Commerce.
The major buyers in the O&G sector are state owned enterprises (SOEs) under the Ministry of Electricity and Energy: Myanma Oil and Gas Enterprise (MOGE), Myanma Petrochemical Enterprise (MPE) and Myanma Petroleum Products Enterprise (MPPE).  MOGE is the oil operator, service provider and regulator of oil and gas sector in Myanmar.  It oversees two other state-owned enterprises which are MPE (responsible for oil and gas exploration and production and  domestic  gas  transmission) and MPPE (manages  retail  and  wholesale  distribution  of petroleum products and has four main fuel terminals, 24 sub-fuel storage facilities and 12 oil stations throughout the country).  These SOEs are responsible for issuing tenders to foreign companies.

While there is optimism about Myanmar’s potential O&G reserves, there is also a large degree of uncertainty.  Proven natural gas reserves are about 1,820 Bcf  and crude oil reserves are estimated to be around 139 million barrels. Further exploration may unveil much more substantial reserves. Now that Myanmar is open to international exploration, major international oil companies are making significant investments using updated technology to locate new sources.

Myanmar has 53 on-shore blocks and 17 blocks are operated by 12 companies.  The first bid round was commenced in 2011 and the second bid round in 2013.  Offshore areas are divided into 51 blocks and 18 are under operation. 20 new blocks were awarded in 2014 and 13 blocks with the government.  In the second bid round for onshore blocks in January 2013, 18 blocks were launched and 16 blocks were awarded to international companies.  In the first offshore bid round in April 2013, 30 blocks were launched (19 deep water blocks and 11 shallow water blocks) and 20 blocks (10 shallow water blocks & 10 deep water blocks) were awarded to winning bidders.  

Blocks were awarded to prominent companies such as Chevron, Shell, Statoil, Total, ENI, along with the other regional players and independent operators. While these blocks are still undergoing seismic evaluation, development is estimated to begin by 2020.  According to Myanmar’s Ministry of Electricity and Energy, some of the existing foreign companies working in onshore blocks are MPRL E&P Pte. Limited, GoldPetrol, CIS Nobel Oil, NPCC, SNOG, PTTEPSA, PT Istech, Petronas Cargali, GeoPetrol, JUBLLANT, Brunei National Petroleum Co, ONGC Videsh Limited, JSOC Bashneft, Pacific Hunt Energy Co, ENI Myanmar B.V and Petroleum Exploration (PVT) Limited.  Some of the existing players in offshore blocks are Daewoo International, MPRL, WOODSIDE Energy, BG, Mpep, PETROVIETNAM, PTTEPI, PTTEPSA,TEPM, PCML, CNPC,  Oil India, Mercator, Oilmax, Oil Star, Tap Oil, Berlanga Myanmar, Reliance Industries, Ophir Energy Plc, Shell, Statoil/ Conocohilips and Eni Myanmar B.V.  There are about 150 local companies engaged in the oil and gas industry in the country.  Leading suppliers in the industry are Myanmar Oil and Gas Enterprise (MOGE), GE Oil & Gas, Yoma Strategies, PT Brunei, TOTAL, United Engineering and Sapura Kencana.

The existing offshore gas projects are Yadana Project, Yetagun Project, Shwe Project (exporting gas to China) and Zawtika Project.  The daily production rate of the Yadana natural gas project is 910 million cubic feet (Mcf); Shwe produces around 500 Mcf; Zawtika produces 360 Mcf; and Yetagon produces over 250 Mcf. There are six deep rigs, nine medium rigs and eleven shallow rigs. The total length of natural gas pipeline in the country is 2,200 miles.  Myanmar has 45 CNG filling stations and has over 27,000 CNG vehicles.  The average domestic natural gas supply is 300 Mcf per day.

The number of private fuel filling stations is now over 1,228 in the country, according to the official data released by the Ministry of Energy and Electricity.  A total of 261 out of 273 fuel stations were privatized over the past five years. Currently, there are six storage tanks and 12 tankers. Moreover, there are more than 406 private companies which have permits for importing petrol and diesel. The Pioneer Services and the National Puma Energy gained license for aviation fuel distribution.  Myanmar Oil and Gas Enterprise (MOGE) has an agreement with Singapore-based Ava Kahyasi Investment Pte Co and SAME Sky and Guiding Star companies (owned by Myanmar nationals) to collaborate in importing, storage and distribution of liquefied petroleum gas.

In late 2013, the Multilateral Investment Guarantee Agency (MIGA), the insurance and credit enhancement arm of the World Bank Group, accepted Myanmar as a member. This acceptance from the agency increases favorable conditions for investing in the country. Myanmar’s MIGA membership allows FDI to become eligible for investment guarantees.  As a candidate for the Extractive Industries Transparency Initiative (EITI), Myanmar must disclose the recipients of the blocks awarded in the 2013-2014 bid rounds, its oil receipts, as well as its production data.  Disclosing the recipients of the blocks will increase transparency.  Myanmar continues to rank low for doing business, according to the World Bank ranking.

Leading Sub-Sectors
Opening up Myanmar’s downstream energy sector to foreign investors is aimed to yield significant rewards for industry players.  In addition to export opportunities, domestic demand for energy, particularly gas, is expected to rise significantly in the coming years.  The demand for electricity heavily outweighs the current supply.

O&G equipment: Myanmar’s annual imports of O&G equipment were modest between US$100 million and US$150 million until 2011 when imports peaked at US$671 million.  In 2013, countries such as China, Indonesia, Thailand, Singapore and Japan were the top sources of O&G equipment imports while the U.S. was the eighth largest source.  Myanmar is currently the world’s 118th destination for U.S. O&G equipment exports.  U.S. O&G exports to Myanmar grew over 300 percent from 2012 to 2013, valued at US$3.3 million in 2013.  In 2014, U.S. O&G field equipment exports to Myanmar were valued at US$1.7 million and US$2.47 million in 2015. However, equipment exports decreased to US$ 0.6 million in 2016.  Parts for boring and sinking machinery, casing, and tubing are the largest portion of O&G equipment exports to Myanmar from the United States.  Although the market still poses many challenges, recent political and economic developments combined with a wealth of natural resources make Myanmar one of the most promising small markets for U.S. exports of O&G upstream materials.

Opportunities
The International Monetary Fund (IMF) estimates that Myanmar’s economy grew by 8.6 percent in 2016.  The country’s GDP in 2015 was US$67 billion and is expected to rise to US$200 billion by 2030.  Domestic demand for oil and gas will increase with economic growth. Domestic crude oil need will reach 320,000 barrels a day and natural gas will reach 1.8 Bcf a day.  Myanmar’s oil and gas sector will continue to grow and there are opportunities to introduce cost-effective solutions for local oil and services companies.

Opportunities for U.S. firms in the oil and gas sector exist in such areas as environmental and social impact assessment, infrastructure and equipment, risk management and legal consultancy services and human resources capacity building.
The future prospects of Myanmar oil and gas sector is tremendous because an increase in exploration activity is expected with requirements from the technical knowledge in seismic and drilling solutions to services.  Since Myanmar’s oil and gas sector is in an early growth stage, expertise in areas like regulation and compliance, logistics and insurance are in high demand.  Following the results of the recent bid rounds, oil and gas activities are expected to increase in momentum as the winners like BG, Petro Brunei, PTTEP and Shell start seismic surveys.

Web Resources
Ministry of Electricity and Energy
 
Myanmar Oil and Gas Enterprise (MOGE)
Email: moe.ho@energy.gov.mm
 
Myanmar Oil & Gas Services Society (MOGSS)
Email: kyisoe.it@gmail.com | swethet.mogss@gmail.com
 
Myanmar Petrochemical Enterprise (MPE)
Email: mpeict@gmail.com

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Burma Oil and Gas Trade Development and Promotion