Negotiations have finally begun to select foreign investors to
explore for oil and gas in the seas off Burma’s coast, but it could be
another eight months before any licenses are awarded.
The Myanmar Oil & Gas Enterprise (MOGE) and the Energy Planning
Department (EPD) will hold talks with 61 companies that have been
“shortlisted” as suitable candidates to bid.
The bidders include major international oil firms such as Shell, ConocoPhillips, ExxonMobil, Total and Statoil of Norway.
The list also contains numerous Asian firmsfrom Thailand, South
Korea, India, Japan and Australia, as well as China National Petroleum
Corporation (CNPC), which has built two controversial oil and gas
pipelines through Burma.
The Ministry of Energy has said the long process is intended to make
sure bidders are able to make the right financial commitment and have
the skills for deep-water exploration and drilling.
The ministry is also planning to offer sweeteners. These are expected
to include a cut in tax on projects down to 25 percent, and a tax
holiday extension from three years to five years, said industry analysts
Platts in Singapore.
After the long delay in announcing the bidding terms, and given the
urgency for Burma to tap into its potential energy resources to help
fuel an expanding economy, it is unclear why the selection process may
not be completed until the first quarter of 2014.
Bidding for these 30 licenses was due to take place last year but was
postponed until April, supposedly because of foreign concerns about
MOGE’s murky past with the former military regime.
However, MOGE remains firmly involved.
“We expect that each company will have about a one hour meeting time
with MOGE, to review data, and one hour with the EPD to discuss terms,”
VDB Loi, a law and tax advisory company that now has offices in Rangoon
and Naypyidaw, said in a report.
“In certain cases, particularly for the deep-water blocks, we expect
that there is little or no data to be reviewed,” it said. “The Minister
of Energy has earlier announced that no negotiations will be entertained
with respect to the commercial terms of the Production Sharing
Contracts.”
VDB Loi, which also has offices in Singapore and elsewhere,
specializes in Southeast Asian business and Burma in particular. It
published an analysis report of the bidding process.
Burma is offering 30 offshore blocks for exploration and possible
exploitation, but the chief interest is in the 19 deep-water blocks
where the greatest potential riches are believed to lurk.
Bidders can apply for up to three blocks. Foreign companies will be
allowed to operate independently in the deep-water blocks with 100
percent operatorship, but for 11 shallow water licences they must
acquire a Burmese partner.
Burma has 7.8 trillion cubic feet of proven natural gas reserves,
according to BP’s annual global analysis report. These reserves were
worth US$75 billion, according to the latest benchmark prices for gas,
Bloomberg recently reported.
“In global terms Burma’s proven reserves are modest. What makes these
offshore block licenses attractive to the big boys of the industry is
the unknown potential, which could be huge—or a disappointment,”
regional industry consultant Collin Reynolds in Bangkok told The
Irrawaddy.
“In terms of the potential benefit to Burma it is going to be a
long-term process. It will take years to bring any major oil or gas
discoveries ashore, and in the meantime the country is still desperate
for energy.”
One of the major changes between the 30 new blocks on offer and the
offshore blocks currently in production is that any new hydrocarbon
discoveries will largely benefit Burma.
“For deep-water blocks, the state’s share of production—represented
by state-owned MOGE—ranges from 60% to 85% for crude oil and 55% to 80%
for natural gas,” Platts reported on Wednesday. “MOGE’s take for onshore
blocks is between 60% and 90% for both crude and gas, depending on the
volumes produced.”
Most of the natural gas now being produced offshore—in the Yadana,
Yetagun and Shwe fields—is for export, in deals that were made by the
former military leadership and still remain opaque.
Those fields are operated by Total of France, Chevron of the United States, Daewoo of South Korea, and ONGC and GAIL of India.
All of those companies are on the MOGE list to negotiate the new
licenses, as are PTTEP of Thailand and CNPC of China, the main buyers of
the existing gas production.
Others among the 61 bidders accepted as “pre-qualified” by MOGE
include Japan’s Nippon Oil; Woodside and Roc Oil of Australia; Repsol of
Spain; Eni of Italy; Petronas of Malaysia; PetroVietnam; Brunei
National Petroleum Company; and Navitas Petroleum, Israel.
The most prominent Burmese company on the list is MPRL E&P, owned by Michael Moe Myint.
“Foreign oil companies may bring in a local partner because they are
required to, or for other reasons. In fact, for onshore blocks and for
blocks on the [shallow waters] shelf, a local partner is required
according to the Ministry’s bidding announcements,” said VDB Loi.
“However, the local partners are only required at the time of the bid,
not at the time of prequalification. That is why there are hardly any
[Burmese] oil companies on the list of 61, although MPRL and Twinza Oil
did prequalify in and of themselves.”
Formal bids for licenses will only begin after MOGE has talked to all
61 companies on the shortlist, which might take the whole of August.
source: The Irrawaddy
No comments:
Post a Comment