Thailand
Myanmar: Offshore opportunities emerge in wake of gas discoveries
Promising opportunities are emerging for Myanmar’s oil and gas service providers. Leonard Oh, executive chair of Myanmar Offshore Supply Base, discusses his company’s plan.
Last week, gas was discovered at Block A-6, off the coast of Southern Rakhine, at water depths of up to 4,570 meters. It was the deepest gas well ever drilled in Myanmar, and the third finding in the same area over a period of five years. The two earlier discoveries, at 200 meters and 2,034 meters respectively, were made in 2012 and 2015. Now, plans are being laid out for a fourth well to be drilled at Block A-6 later this month.
For Leonard Oh, executive chair of Myanmar Offshore Supply Base (MOSB), the discoveries represent an excellent opportunity for the Singapore oil and gas service provider to prove its mettle. With the presence of gas now proven in Myanmar, the next step is to begin producing, storing and transporting the fuel to gas refineries across the region.
To meet the anticipated demand for those services, Myanmar will need its own offshore supply base – an offshore platform to store supplies and house drilling personnel – situated nearby. According to Oh, there is no such supply base in Myanmar yet, and the nearest platforms are in Singapore and Thailand, which is at least 4-5 days away by boat.
“But if there is a base at the Bay of Bengal to service the drillers operating in Myanmar, it would cut down the travel time by at least half and help to save a lot of costs,” Oh told The Myanmar Times in an exclusive interview.
MOSB first applied for approval to begin building Myanmar’s first offshore supply base three years ago across 46 acres of commercial land in the Mon State, near Block A-6, where most of the offshore drilling in Myanmar is currently taking place. It last month received approval to proceed with development under a 50-year build, operate and transfer arrangement with the government, with options to extend for up to 20 years.
Rising competition
Now, competition is rising. Last year, Myint & Associates, a government-linked offshore service provider, submitted an application to build a similar supply base in the Ayeryawaddy Region. It received the green light to start development earlier this year. A second company, SIM Co, also received approval to build an offshore supply base in the Ayeryawaddy Region, not far from Myint & Associates, in May. According to media reports, SIM Co is now exploring funding options to begin building its base this year.
If there is a base at the Bay of Bengal to service the drillers operating in Myanmar, it would cut down the travel time by at least half and help to save a lot of costs. Naing Wynn Htoon/The Myanmar Times
Meanwhile, global demand for oil and gas isn’t what it used to be, and oil prices have dropped from their peak of almost US$150 a barrel in 2014 to just between US$40 and US$50 a barrel. Meanwhile, many offshore service providers that over-invested in expensive infrastructure have taken a hit as demand trickled thin. While gas demand is projected to rise in Myanmar, where power is in frequent shortage, Oh admitted that “there is only space for one offshore supply base given the level of drilling activity taking place currently.”
Demand versus supply
He isn’t too worried though. For one, MOSB’s base is located just six kilometers away from the main road, and, it is also easily hooked up to a nearby power grid. Meanwhile, safety tests are underway to build a jetty for docking, while preparations have started for oil companies to store basic equipment and house personnel at the base. So far, between US$500,000 and US$1 million has been ploughed into the project.
“Once the jetty is up and the basic pipe infrastructure is ready, vessels can dock, load and unload anytime,” said Oh. “Our strategy is to build the basics, and then speak to potential customers about their long term needs. Then, we will build according to what is required in order to avoid over-building.”
In the meantime, Oh will is working with villagers in Mon State to provide basic infrastructure and training facilities. Even as testing and the basic infrastructure is being laid in place, he is training the locals for future positions at MOSB once things are ready within the next six months to a year.
“For MOSB to be a success and stand out against the competition, we need to get the locals to help and give them jobs. We will need engineers, technicians and skilled workers who can understand English when the oil majors start coming in. At the same time, we are also providing benefits to the locals in the form of better roads, drainage, access to education and power. It’s a win-win situation for everyone involved,” said Oh.
In the meantime, Oh is also exploring options to fund the expansion of MOSB in the coming years. “We have good land and good access to the grid and main roads. We have also gained rapport with the locals. Now, we need to engage with customers and potential investors who will not only bring in the funds but the technology needed for Myanmar’s offshore sector to move on to the next level,” he said.
Source: http://www.mmtimes.com/index.php/business/27243-offshore-opportunities-emerge-in-wake-of-gas-discoveries.html