joint-venture

Joint-venture between British and Myanmar firms eyes oil and gas sector

A British company has created a joint-venture with a Myanmar firm to enter the marine industry as well as oil and natural gas sector.

A child sqeezes oil out of a rag at an oil field in Minhla township, Magwe Region. Aung Htay Hlaing / The Myanmar Times

A child sqeezes oil out of a rag at an oil field in Minhla township, Magwe Region. Aung Htay Hlaing / The Myanmar Times

Representatives from the UK firm, James Fisher and Sons, and the Myanmar firm Royal Marine Technology Co Ltd, signed a memorandum of understanding (MoU) at the Sule Shangri-La Hotel on March 20.

Nick Henry, chief executive officer at James Fisher and Sons, said that the reason for entering into Myanmar is to assist with the country’s development of the crude oil and natural gas market, which has recently gained attention internationally.

He added that the company will continue to provide services and support to oil and natural gas extraction companies, offer technological assistance, and educate local engineer graduates in the country.

“The offshore services are going to expand in Myanmar quite soon. That’s why … we have signed a first-step agreement to collaborate with our domestic companies. The UK firm is working with our company to settle here,” said U Myint Aung, managing director of Royal Marine Technology.

James Fisher and Sons will be providing resources such as container ships, and even submarines. It will also supply gas and oil pipeline-related construction equipment, along with repairs and maintenance machinery and apparatus.

“There are marine-related services provided in the country, but a company offering large-scale services, such as this one, has [not yet arrived in Myanmar].

“When the oil extraction companies need assistance, they have to look to expertise abroad,” U Myint Aung explained.

If local oil and natural gas enterprises grow and develop, that will create a lot of employment opportunities. These foreign companies have a foresight, so they are coming here to settle their businesses, he added.

The local Royal Marine Technology Co Ltd was founded two decades ago as a firm offering repairing services for ships. In recent years, the company has provided engineering services for offshore oil and natural gas stations and for the construction of a power plant.

The oil and gas sector in Myanmar is a hotspot for exploration and has become an area of interest among international firms.

According to research firm IHS Global Insights, Myanmar is estimate to possess 3.2 billion barrels of oil and 18 trillion cubic feet (tcf) of natural gas reserves. In fact, the country’s unproven and unrecorded resources may be vastly greater.

A report on the oil and gas sector authored by the then-UK Trade and Investment Department (the predecessor organisation of the UK Department of Trade) states that Myanmar’s proven reserves are almost on a par with those in its neighbour, India, which possesses 5.7 billion barrels of oil and 18 trillion tcf of natural gas and is ranked 16th internationally in terms of the value of its resources by British Petroleum’s 2013 statistical review of world energy.

In June 2014, the Myanmar government awarded 20 international firms preliminary rights to explore and produce offshore blocks.

More recent onshore and offshore bidding rounds have brought some of the world’s biggest oil and gas companies to Myanmar. A number of companies which secured onshore and offshore exploration licenses in the 2013 offshore round were British companies including Shell, BG Group and Ophir Energy.

According to the British Chamber of Commerce’s publication, Oil & Gas, Electric Power and Renewable Energy Market Snapshot published in September 2016, a total of US$4.8 billion in foreign investment was approved for the oil and gas sector in 2015-16, slightly more than 50% of total FDI for all sectors approved during the year.

There are currently four offshore areas in operation.

The oldest is Yadana, run by a consortium led by French firm Total. Yetagun is operated by Malaysia’s state giant Petronas, Shwe by the South Korean firm Daewoo International, and Zawtika by Thai company PTTEP. Shwe Gas links Myanmar and China via a cross-border pipeline to southern China.

As of September 2016, many of the companies recently awarded offshore blocks were still conducting their initial stages of surveying and assessments. Many of the international corporations have partnered with local firms, particularly in shallow-water blocks, and domestic businesses in Myanmar are likely to benefit through improved skills and expertise.

The British Chamber report states that onshore oil and gas projects have generally become smaller in scale in recent years than the offshore industry, though there are still plenty of opportunities for international investors.

Initially the offshore gas industry was developed with an export focus. However, domestic electricity consumption is increasing rapidly. Hence, gas-fired generation is likely to be an essential part of Myanmar’s generation mix in the future.

At present, the country’s local capacity is limited, which means there is a demand for international suppliers across the entire supply chain and in many different areas.

According to the UKTI report, this is because of the lack of local capacity in terms of skilled personnel, and that the business community is keen to diversity their commercial partners. Sectors in demand include infrastructure and equipment, security, risk analysis, training and skills accreditation, legal and professional services, health and safety analysis, as well as environmental and social impact assessment consultancy services.

Apart from British and western companies, Chinese corporations have also been expanding their reach in the sector.

Yesterday, Reuters reported that a US$1.5 billion oil pipeline project to pump oil 770km (480 miles) across Myanmar to southwest China is set for imminent start-up, with a supertanker nearing the port of Kyaukphyu, marking the beginning of a new oil trading route. The deal was made despite simmering tensions between the Myanmar and Chinese governments.

An agreement made between Myanmar’s government and China’s state-owned PetroChina will allow the Chinese energy corporation to import oil from overseas via the Bay of Bengal and pump it through the pipeline, which is expected to supply a new 260,000-barrels-per-day (bpd) refinery in China’s landlocked Yunnan province, according to Reuters.

Source: http://www.mmtimes.com/index.php/business/25436-joint-venture-between-british-and-myanmar-firms-eyes-oil-and-gas-sector.html