Myanmar Utilizes Foreign Investment to Develop Oil, Gas Resources
by Duan Tingchang
YANGON, Nov 18, 2001 (Xinhua via COMTEX) -- Crude oil and natural gas are main energy resources of Myanmar. Full exploitation of its oil and gas resources has much important significance in meeting the demand of energy of the nation and promoting its social and economic development.
However, for a prolonged period, due to being lack of capital, out-dated equipment and being technically backward in exploration and exploitation, it has critically restrained the development of Myanmar's oil and gas resources.
After taking over state power on September 18, 1988, the present ruling Myanmar government made a reform of its "close-door " policy that had been adopted for the past several decades and began to introduce the market-oriented economic system, permitting foreign companies to make investment in the many sectors including oil and gas.
Myanmar applies the form of production-sharing basis in the exploitation of its oil and gas towards foreign companies, while foreign oil firms shall have to provide the Myanmar government with reasonable quota of product income, according to the difference of geographical conditions and its risks, Myanmar government makes a reasonable payback to the foreign oil companies. Myanmar encourages foreign oil companies to access the country's potential reserves of oil and gas as well as to exploit as much as possible oil and gas in border areas.
Myanmar's oil and gas reserves are scattered onshore and offshore, of which that lie onshore mainly concentrate on the areas in the central basin, while that locate offshore mainly concentrate on the coastal areas of Rakhine, Martaban and Tanintharyi.
According to official statistics, as of the end of June this year, Myanmar's oil and gas sector had absorbed contracted foreign investment of 2.355 billion U.S. dollars, accounting for 31.8 percent of its 7.385 billion dollars' total. The 51 investment projects, made by foreign oil companies, came from Thailand, Indonesia and others. Up to now, foreign oil companies have drilled more than 10 test wells in Myanmar's onshore areas but the output of oil is not as encouraging as expected.
However, the exploration of oil and gas in the offshore areas by the foreign companies has made initial achievements, discovering two gas fields -- Yetagon and YADANA, of which the gas reserves of the YADANA had been identified as up to 254.7 billion cubic meters.The YADANA field started supply gas to Thailand in October 2000 and will earn 300 million dollars of foreign exchange annually for Myanmar.
According to the figures published by Myanmar's Central Statistical Organization, in 2000, the country produced a total of 3.538 million barrels of crude oil and 1.538 billion cubic meters of natural gas, increasing by 4.2 percent and falling by 8 percent respectively from 1999. In the first half of this year, the production of Myanmar's crude oil and natural gas respectively stood at 1.639 million barrels and 684 million cubic meters, falling by 10.38 percent and 10.8 percent compared with the same period of 2000.
So far, Myanmar's crude oil is still not self-sufficient and has to import more than two million barrels of the oil, about 300, 000 tons of petrol and 150,000 tons of diesel annually.
Myanmar's allowance of foreign oil companies to cooperate with it to exploit oil and gas reserves, has, to certain extent, relaxed the country's phenomena of capital insufficiency in the energy exploitation. Meanwhile, it has also enabled the nation to learn from abroad some advanced technology and administration experiences.
Despite achievements made in the exploitation of oil and gas sector, Myanmar, at present, still faces with some difficulties in the sectoral development, they are mainly the facts that:
Firstly, the economic sanction imposed on Myanmar by the United-States-led western countries and the slowing down of growth rate of global economy have affected the degree of investment power of foreign oil companies in the country's oil and gas sector. Although the contracted investment of foreign oil companies in the sector has reached 2.355 billion dollars, but in fact the actual utilized investment is so much limited, bringing about the difficulties of capital insufficiency in the development.
Secondly, Myanmar's geographical condition is poor, the degree of difficulties in exploitation is high and the investment cost is relatively high.
Thirdly, the weakness of infrastructure in transport, communication and electric power has constituted an un-negligible impact on the exploitation of oil and gas resources.