Monday, September 25, 2017

Fewer bids than hoped for offshore oil, gas fields

Final applications to work offshore oil and gas fields are fewer in number than expected. Only 30 out of a pre-qualified list of 61 companies have submitted proposals, the Ministry of Energy announced on November 28.

Myanmar Oil and Gas Enterprise (MOGE), part of the energy ministry, opened the bidding for tenders on the 30 offshore blocks last April. A total of 75 international energy companies showed interest and the pre-qualified list of 61 was announced on July 4.

The deadline for final proposals was November 15 and only 30 among 61 pre-qualified companies, including global energy giants such Daewoo, PTTEP, TOTAL, Chevron, GAIL India, Hawkley, ONGC and Petronas, sent a total of 64 proposals.

“We don’t know why fewer proposals [were made] for the final part of offshore bidding. It depends on companies. But some worldwide energy giants are in the list of final proposals,” said an anonymous official from the Ministry of Energy.

The final result of 30 offshore blocks is likely to be announced early 2014 as the ministry has to review again the final proposals, the official said.

Any company can apply for three blocks from 11 shallow-water blocks and 19 deep-water blocks. MOGE will grant licences for exploration and production activities. The international companies that applied for shallow-water blocks have to cooperate with a local partner according to MOGE’s rules and regulations.

“I am not sure why there was less interest in final proposing. But I see two new changes in contract agreements with MOGE. Companies have to pay 10 percent of their annual budget as a deposit, and if they fail, MOGE will keep it. Another regulation requires energy companies to pay tax before being paid by MOGE,” said U Kyaw Thu, a local energy expert.

A total of 12 companies from Korea, China, Japan, India, Thailand and Vietnam are now working blocks in Rakhine, Moattama and Tanintharyi, while there are only three projects in the production stage.

The investment in oil and gas sector, meanwhile, is on the rise, reaching US$14.37 billion as of February, according to data by the Myanmar Investment Commission.