Thursday, September 21, 2017

Companies eye LNG potential

Imports of liquefied natural gas (LNG) are likely to begin in the future due to growing energy demand in the country, according to officials.

Although Myanmar produces over 2 billion cubic feet of natural gas a day, the majority of that is contracted to Thailand and China.

“Natural gas production at some of our offshore fields has been declining. The other blocks are still in exploration, and newly awarded blocks will take time,” said U Min Min Oo, a director at the Ministry of Energy.

“It will be compulsory that we use LNG, due to rising energy demand.”

LNG is natural gas that is cooled to about -160 degrees Celsius, which shrinks the fuel by a factor of 600 to make it easier to store and to ship.

The energy ministries of Myanmar and Thailand signed a memorandum of understanding on June 15 in Nay Pyi Taw to enhance ties in the energy sector. A follow-up statement by Myanmar’s Ministry of Energy said the two ministries had agreed to closer cooperation in energy-related businesses, including cross-border pipelines and development of LNG import capability.

U Min Min Oo said one of the agreements with Thailand is to cooperate in the initial feasibility study of LNG development. He added it does not necessarily mean the LNG business is to start with Thailand.

“At the moment, we haven’t decided yet whether [the Ministry of Energy] will proceed alone or do it as a joint venture with a foreign partner,” he said. U Min Min Oo added there will be international bidding for LNG imports to meet the demand gap.

Myanmar’s current energy demand is expected to more than double from current rates by 2025. Official estimates say Myanmar will need installed capacity of 23,594 megawatts by 2030 to meet the goal of 100 percent electrification, while current installed capacity is only 4987MW. It is also expected to double its current oil consumption to 42,000 barrels per day by 2025.

About one-third of current generation is from gas-fired power plants, with hydro being the largest source of energy. A total of 13 state-owned and privately run gas-fired plants are operating, though they periodically face fuel shortages.

A Ministry of Electric Power official said about 210 million cubic feet per day of natural gas is earmarked for Yangon power, while about 2 billion cubic feet per day is exported.

“There’s not enough gas to develop more gas-fired plants at present,” the official said.

The Ministry of Electric Power has been signing agreements to build more power plants, to be developed by local and foreign firms.

Singaporean firm Sembcorp Industries won a contract in April to develop a 225MW gas-fired plant in Myingyan near Mandalay. Japanese firm Marubeni Corporation will also develop a 400MW plant in Thanlyin near Yangon. The Ministry of Electric Power official said it will obtain about 56mmcfd of natural gas from the Shwe Gas project, which will be use to fuel the Myingyan plant and a separate one at Kyaukpyu.

Ensuring there is enough gas to generate electricity for Yangon is a main concern of the ministry. “We will need 300-400mmcfd of natural gas in the next years,” he said. “Importing LNG is one of the options. We are going to invite private companies to do this through a tender.”

Companies from China, Korea, Japan, Norway, Singapore and Thailand have already proposed investing into LNG development in Myanmar. Ministry of Energy officials say some of them have already completed feasibility studies. LNG requires specialised terminals for shipping and receiving. “Potential areas for LNG facilities are Yangon, Pathein, Dawei and Kyaukpyu in Rakhine State,” said U Min Min Oo.

None of these proposed LNG projects have yet received Myanmar government approval, though insiders say it is expected to happen shortly.