new draft of the petroleum law has been tabled. After the bill is amended, Hluttaw will enact in. However, before in comes into force, it can be amended if the people provide suggestions.
Will the new law be effective in the case of the oil block tenders that will be called soon and for the tenders called before the law is passed? These are questions that must be asked. Traditionally, the old law is overshadowed by the new.
It is important that the amendments make the landscape attractive to investors. If the government wants to encourage investments, it needs to think more about the benefits for both the country and investors. Restrictions need to be eased as it is important for the country to receive taxes from investors while streamlining the process for investors to bring money into the economy.
The question of whether there will there be interest in new oil and gas blocks should also be looked into.
It is expected that new blocks and blocks from previous tenders which did not see any interest will be offered to investors. A degree of interest in the offerings is anticipated as it is believed that some of the blocks offer potential.
However, the oil exploration business is risky by nature and no one can say with certainty whether efforts will pay off.
Some 18 inland blocks and 12 offshore blocks may be included in new tender. It will also include permissions to redevelop old oil fields. As some inland blocks hold potential to produce oil, they will be the focus of attention.
Who will compete in the tender?
It will be interesting to see which oil companies will participate in the international oil site tender expected to be made in beginning of next year. In 2014, many big oil companies participated and entered production sharing contracts with the country. The government also negotiated with companies that needed more time before entering the country’s oil and gas sector.
Companies that won tenders in 2014 carried out seismic studies only in offshore blocks and started exploration and drilling. As soon as the companies initiated exploration, they were required to pay a bonus to the government and commit to drilling a well under the conditions of their contracts.
If no one explores, no discoveries will be made – no risk, no success. Oil companies actually doing good work must be encouraged.
The coming year will be an important one as it is necessary to attract capable international oil companies. Myanmar will not benefit if the tender attracts only small players.
This year, an exploration well was dug in the AD-1 Block by China National Petroleum Corporation, resulting in the discovery of a potential natural gas source. Australia’s Woodside Energy Ltd dug a well in the A-7 Block which came up dry. Meanwhile, a MPRL-Woodside-Total appraisal well in Shwe Yee Htun 2 tested natural gas production.
One success for Myanma Oil and Gas Enterprise (MOGE) was the Myanaung Well 172 which produced over 100 barrels of oil. It is a record for Myanaung which has seen declining production for many years. MOGE is using exploration wells to see if there is gas in the old field. PTTEP from Thailand and Petronas from Malaysia are also drilling development wells in old oil fields.
There were few exploration wells drilled this year. If no one explores, no discoveries will be made – no risk, no success. Despite discoveries offshore, production is not certain. It takes time. Oil companies actually doing good work must be encouraged.
It’s important to note that the new petroleum law should provide more benefits for investors. Only by doing so will foreign investments flow into the country. If the conditions are difficult for them, they will be reluctant to invest. It’s crucial to find more new oil and gas fields. Money should not to be spent on uncertain fields.
Tendering for new work sites should be welcomed. Reputable and capable petroleum enterprises are needed to do business in the country. It’s important to take care not to select corporations with low budgets and poor track records.
Oil and natural gas production should be boosted up by effectively conducting inland quests for oil and gas by the Myanmar Oil and Gas Enterprise (MOGE). It is our responsibility to provide as much supply as possible to meet growing demand. It’s necessary to have dependable amount of oil and gas in hand. The coming year is expected to see as a year of remarkable success.
U Than Tun is former Director of Myanma Oil and Gas Enterprise and is now Advisor for Arc and Partners Co.
