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A watershed year for Myanmar’s Oil & Gas Industry culminates in the 2nd Myanmar Upstream Summit

(CWC Group) - 2014 has been a watershed year for Myanmar’s energy sector. On 26 March 2014, the Myanmar Ministry of Energy (MOE) announced the winning bids for 20 blocks out of 30 in the Myanmar Offshore Blocks First Bidding Round, which began in April 2013.

According to Deloitte, the round attracted 64 bids from 36 international Energy & Petroleum companies for the 30 blocks on offer. Of those, Petroleum Sharing Contracts (PSC) for the 10 shallow water blocks and 10 deep water blocks will be awarded to the successful bidders upon the finalisation of terms between the companies and the Ministry of Energy.

Shell, BG Group, Total and Chevron were among the companies that had winning bids.

The collective experience of these international companies is important to the successful development of Myanmar’s oil and gas industry, which is one of the Myanmar government’s most important revenue sources.

Ken Tun, CEO of the Parami Energy Group of Companies, an indigenous group of companies with a strong hold in Myanmar’s Oil & Gas sector said that, “The government should involve new operators in setting standards for the policy and to set HSE requirements.” He added that, “The Oil & Gas industry in Myanmar is so small that any mistake you make can be visible to anyone in a very short period of time. Even big service companies cannot escape that.”

Tun expressed that it is still a challenge for local companies to move up the value chain by offering international standard service. Supplier education programs are needed, such as HSE certification, procurement procedures, and other forms of training to help future operators to gain more confidence in local companies. As such, he is urging the government to draft a policy document with local content, in a timely manner, so that supporting industries which are being developed locally can grow in a sustainable manner.

“Developing business for local companies in the oil and gas sector still has its challenges. Steady progress is being made but it is a long and painful process to acquire the jobs, execute and deliver up to the expectation of owners and yet sustain profitability.

Local companies like Parami are highly cognizant of their responsibilities to build a sustainable local industry. Tun made mention that “There is obviously a shortage of local qualified people in our sector. Yet, more than 50% of our population is of a young working age. Offering education, vocational and professional training is very important for our industry to make it sustainable.” Myanmar probably still has at least 7-10 years to develop these resources, because most of the winning bidders have not begun exploration yet and production is still a long way off.

Oil and gas has long been one of the Myanmar government’s most important revenue sources. According to the Ministry of Commerce, Myanmar’s natural gas exports amounted to over US$10 billion in three years. The gas revenues comprise $3.5 billion for fiscal year 2011-12, $3.66 billion for 2012-13 and $3.3 billion for 2013-14.

The near-term and long-term economic effects of the new exploration licenses will be significant, as private operators have been awarded production contracts to sell 85 per cent of output from three fields while the state-owned Myanmar Oil and Gas Enterprise (MOGE) has the control over the remaining 15 per cent.

All the operators mentioned will be discussing their plans, connecting with vendors and detailing their efforts to commence exploration at the CWC Group’s forthcoming 2nd Myanmar Upstream Summit, to be held in Yangon 28-30 October 2014.

The event is a key platform for the Myanmar government and is supported by the Union Minister for the Ministry of Energy (MOE), His Excellency U Zay Yar Aung. In a keynote address, the Minister will deliver Myanmar’s Vision for Expansion and Sustainable Development of the Oil & Gas Sector.

A discussion showcasing new acreage holder’s and detailing current operations, regional experiences and development plans for upcoming projects will feature new operators moving into the country. This session will be led by U Than Tun, the Director (Offshore) for the Myanmar Oil & Gas Enterprise (MOGE). Other speakers in this session include the General Manager for Total E & P Myanmar, the VP Exploration –Asia & Australia from Shell and the General Manager – Exploration from BG Group.

Discussion as to the extent of reserves in Myanmar will be led by U Tin Myint Aung, Executive Geologist, Myanmar Oil & Gas Enterprise (MOGE).

Discussion panels will elaborate on the development of Myanmar’s capacity, its future gas development, utilization and monetization plans; what infrastructure is required to support the growth of the industry. There will also be a technology and innovation showcase around the conference.

Sponsors of the event include Total, Chevron, Shell, BG Group, Statoil and Ophir Energy.

MOE will host a cocktail reception and Total and Chevron will co-host a gala dinner during the conference.

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The second Myanmar Upstream Summit occurs in Yangon, Myanmar from 28-30 October 2014 at the Shangri-La Hotel. Visit http://www.cwcmyanmar.com/ to learn more or register.

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