UNION OF MYANMAR
MINISTRY OF ENERGY
Country Report for Myanmar
Presented by:
U Kyaw NyeinManaging Director
Myanma Oil and Gas Enterprise
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COUNTRY REPORT FOR MYANMAR
1. Introduction
Myanmar has a total area of 676,577 km2 sharingborders with –� Bangladesh and India on the north-west,� China on the north-east,� Laos on the east, and� Thailand on the south-east.It has a coastal strip of 2832km facing to the Bay ofBengal and Andaman Sea.The population is about 50 million people with anaverage growth rate of 1.82% per annum.
2. Brief History of Myanmar Petroleum Industry
� Myanmar petroleum industry evolved in the 10th century in Yenangyaung area ofcentral Myanmar during the Pagan Dynasty. Initially oil was extracted and used fromthe seepage and then from shallow hand dug wells.
� The first Myanmar crude was exported in 1853.� In 1871, the first foreign oil company, ROC (Rangoon Oil Company) was established
and carried out the refining and marketing.� In 1886, Burmah Oil Company (BOC) which was a British company, was established
in Yenangyaung. The first Machine-Drilled Well was completed in 1887 and the firstRotary-Drilled Well was introduced in 1922.
� Another giant oil field " Chauk " was discovered in 1902.� Apart from BOC, some other 30 smaller oil companies were active before WWII.� The winds of WWII changed the atmosphere of the Myanmar Petroleum Industry
abruptly. The oil wells, equipment and refineries were destroyed in 1942.� After WWII, the Petroleum Industry was still under the control of BOC till 1963.� The Myanmar national oil company was established in 1963 after the Myanmar
Government took over the entire petroleum industry from BOC. Since then, thePetroleum Industry has been entirely operated by Myanmar nationals only.
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3. Energy Policy
The Ministry of Energy of the Union of Myanmar has been meticulously pursuingthe following energy policy, in order to increase the energy production level :
� To maintain the status of energy independence,� To save nonrenewable energy for future energy sufficiency of the nation,� To promote efficient utilization of energy and impress on energy conservation,� To prevent deforestation caused by excessive use of fuel wood and charcoal.
Under MOE, there are three state economic enterprises and one department.
� Energy Planning Department (EPD) : Coordinate / negotiate thedevelopment program inenergy sector.
� Myanma Oil and Gas Enterprise (MOGE) : Oil & gas exploration /production / distribution.
� Myanma Petrochemical Enterprise (MPE) : Refineries/ Fertilizer Plants/LPG Plant/ Methanol Plant/etc
� Myanma Petroleum Products Enterprise (MPPE) :Marketing / distributionof petroleum products.
4. Upstream Activities
Myanma Oil and Gas Enterprise (MOGE), working under the Ministry of Energy(MOE), was established in 1963 after transactions between the Burma Oil Co.(1954)Ltdand the Myanmar Government. Previously, upstream and downstream activities were runas one entity. Starting from 1970, MOGE was responsible only for upstream activities.
Myanma Oil and Gas Enterprise (MOGE) is a 100 % State owned Enterprise andhas the following basic responsibilities:-
� To explore and produce oil and gas by using its own resources,� To supply the domestic natural gas by constructing its own gas pipelines,� To supply the Compressed Natural Gas (CNG) as a substitute fuel instead of
gasoline for vehicles,� To participate in and oversee the production Sharing Contracts (PSCs) in
cooperation with foreign oil companies.
4 Organization
MOGE is headed by the Managing Director, under whose direction, the Directors,Departmental Heads and Oil and Gas Field General Managers exercise control in theirrespective departments and fields. Currently, MOGE has about 13,000 employeesincluding 850 management staff.
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CENTRAL MYANMAR
PYAY
AYEYARWADY
DELTA
CENTRAL MYANMARCENTRAL MYANMAR
PYAYPYAY
AYEYARWADY
DELTA
AYEYARWADY
DELTA
The following departments headed by the respective directors directly report to theManaging Director:
1. Planning2. Exploration & Develop3. Drilling4. Production5. Engineering6. Administration7. Material Planning8. Finance9. Offshore
4.2 Oil and Gas Fields of Myanmar (Onshore)
Hydrocarbon prospects in Myanmar are conveniently evidenced by the longhistory of petroleum industry. Giant oil fields like Yenangyaung Field (Original Oil-in-Place700 MMBBL) and Chauk Field (Original Oil-in-Place 500 MMBBL) were discovered over100 years ago and are still being exploited.
Geologically, 14 sedimentary basinsdeveloped within the territory of onshoreMyanmar.
Out of 14, only 3 basins (CentralMyanmar, Pyay Embayment, and DeltaBasins) have been actively explored forpetroleum and the rest are eithersparsely explored or not at all exploredyet. All the oil and gas fields are locatedin these 3 basins.
4.1 ORGANIZATION4.1 ORGANIZATION
PLANNINGPLANNINGEXPLORATIONEXPLORATION
& & DEVELOPMENTDEVELOPMENT
DRILLINGDRILLING PRODUCTIONPRODUCTION ENGINEERINGENGINEERINGADMINIADMINI--STRASTRA--TIONTION
MATERIALMATERIAL
PLANNINGPLANNINGFINANCEFINANCE OFFSHOREOFFSHORE
MANAGING DIRECTORMANAGING DIRECTOR BOARD OFBOARD OFDIRECTORSDIRECTORS
MINISTRY OF ENERGYMINISTRY OF ENERGY
MYANMA OIL & GAS ENTERPRISEMYANMA OIL & GAS ENTERPRISE
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Prior to 1963, oil was extracted mainly from Chauk and Yenangyaung Oil Fields inthe Central Myanmar Basin with an annual production of 3.99 million barrels. After theestablishment of the national oil enterprise, new oil and gas fields were discoveredincreasing the yearly production, which peaked at 11.20 million barrels in 1984-85. Theoil and gas fields of Myanmar are listed as follows:
Oil & Gas Year of RemarksFields Discovery
Yenangyaung 1887 ProducingAyadaw 1893 ProducingChauk 1902 ProducingPayagon 1959 SuspendedMyanaung 1964 ProducingPyay 1965 ProducingShwepyitha 1967 ProducingPyalo 1969 SuspendedMann 1970 ProducingLetpando 1974 Produced for 2 years
& suspendedPeppi 1976 ProducingHtaukshabin 1978 ProducingHtantabin 1980 SuspendedKanni 1985 ProducingApyauk 1991 ProducingShwegu 1994 SuspendedKyaukkwet/Letpando 1995 ProducingIndaing 1996 SuspendedNyaungdon 1999 ProducingThargyitaung 2001 New discovery
MOGE is currently operating its land operations by using the following its ownresources handled by Myanmar national employees as follows:
� Surface geological field parties 4 parties� Seismic acquisition party 2 parties� Seismic processing center 1 center� Magnetic / Gravity party 1 party� Pipe laying force (up to 20" pipeline) 1 party� Drilling rigs (various capacity 3000'-12500') 18 rigs� Workover rigs 13 rigs� Research Lab. 1 center� Rig mobilization fleets / Construction fleets (for wellsite preparation, access
road, welllsite accommodation) / Well completion teams / Well repairingteams/ etc. )
Currently MOGE is producing about 10,000 bopd and 120 mmcfd gas fromonshore oil and gas fields. Oil is sent to the nearest refineries by barges and pipelines.The produced gas is transmitted to gas turbines, fertilizer plants, methanol plant, LPGplant, cement factories and other industries by pipelines.
Very recently, commercial oil and gas were discovered in Thargyitaung-Sabe areain central Myanmar and Nyaungdon area in delta. Drilling of appraisal wells are beingconducted for field development. Consequently, frontier-explorations in the northern partof Myanmar such as Tanai, Yebawmi and Indaw areas are actively being conducted byMOGE.
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A total of about 1200miles land pipelinehas been laid by MOGE own pipe layingfleet for domestic gas transmission. Thepipeline size varies from 6" up to 20".Recently 180miles of 20" pipeline wassuccessfully constructed by MOGE'snational team, from Kanbauk to Myainggalewhere a new cement factory is justcompleted. The gas is being transmittedfrom offshore Yadana Field throughKanbauk Pipeline Center. The current landgas production is being supplied to gasturbines (65%), urea plants (16%) and therest goes to cement factories, refineriesand other industries.
4.3 Production Sharing Contracts (PSC)
In order to increase the country's oil and gasproduction and reserve potential, it is of keyimportance for Myanmar to introduce moderntechnology and foreign investment in additionto MOGE's own efforts.
With the promulgation of the ForeignInvestment Law and its related procedures inNovember 1988, MOGE has entered into PSCcontracts with multinational oil companies since1989 October for petroleum exploration andproduction in both onshore and offshore areas.A total of 46 onshore blocks and 25 offshoreblocks for petroleum exploration and productionhave been apportioned in Myanmar
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Current onshore operating foreign companies
Company Block/Field(Area)Myanmar Petroleum ResourcesLtd. Mann FieldGoldwater Yenangyaung Field
Chauk FieldWestburne RSF-6 (Mindegyi-Chaungtha)
RSF-8 (YEnanma)PT. Exspan Sumatera RSF-5 (Ondwe)
MOGE3(Padaukpin- Monatkon)Focus Energy Htaukshabin/Kanni FieldPrime Resource EP-4 (Mayaman-Pyay West)TG World RSF-2 (Tuyintaung)
RSF-3 (Gwegyo-Ngashantaung)IOR-3 (Tetma)
4.3.1 Onshore PSC
In onshore area, 3 types of PSCs are available, such as:� Exploration (EP),� Improved Oil Recovery (IOR)/Performance Compensation Contract (PCC),� Reactivation of suspended Fields (RSF).Since 1989, 21 international companies have joined MOGE and signed 33 land
PSCs.
Currently 7 PSC companies are working on 12 blocks.
A total of 21 EP, 4 RSF and 3 IOR blocks are open for petroleum investment.
Open Land BlocksBlock Block Area RemarksType (sq-miles)
PSC B2 6297 Relinquished by AMOCOC2 10234 Relinquished by YUKONGD 4763 Relinquished by IDEMITSUE 4453 Relinquished by PETRO-CANADAF 2530 Relinquished by UNOCALG 5148 Relinquished by SHELLH 9940 Relinquished by BHPI 1390 Relinquished by CROFTJ 4438 Relinquished by KIRKLANDK 2532 NewL 3905 Relinquished by South Pacific Co.M 3007 Relinquished by Empire Oil Co.O 3970 NewP 4390 NewQ 1536 NewEP-1 438 Relinguished by PT. ExspanEP-2 519 NewEP-3 637 NewMOGE-4 352 Myintha areaMOGE-6 1420 IndaingMOGE-7 185 Myanaung East
RSF 4 509 Nyaunggon-Yedwet 7 747 Padan
9 984 Pyay-Pyalo10 541 Kanma-Nattaung
IOR 5. Htantabin Field6 Myanaung Field
7 Shwepyitha Field
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4.3.2 Offshore PSC
In Myanmar offshore, between 1972 and 1987, MOGE as an operator had carriedout seismic survey over the area of interest and 27 wells have been drilled includingYadana and Badamyar Gas Field discoveries. From 1974 to 1976, four foreigncontractors conducted detailed seismic surveys and 18 wells were drilled including onegas discovery.
Since 1990, a total of 7 international oil companies have signed 15 offshore PSCs.
Currently, 3 international companies are operating in 6 offshore blocks.
A total of 6 blocks in Rakhine Offshore, 9 blocks in Moattama Offshore and 4blocks in Tanintharyi Offshore are open for petroleum investment.
Current Offshore Operating CompaniesCompanies (Operator) Blocks
TOTAL M-5 / M-6PREMIER M-12 / M-13 / M-14 DAEWOO A-1
Open Offshore Blocks
Block Type Block No. Area(sq miles) RemarksPSC A - 2 1455 Rakhine Offshore
A - 3 2974 "A - 4 3277 "A - 5 4074 "A - 6 3795 "A - 7 3174 "
M - 1 4013 Moattama OffshoreM - 2 3727 “M - 3 3000 "M - 4 4008 “M - 7 5163 "M - 8 4227 "M - 9 4535 "M - 10 5320 "M - 11 2810 "
M - 15 5204 Tanintharyi OffshoreM - 16 5338 "M - 17 5472 "
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4.3.2.1 Yadana Gas Project
Location : Moattama OffshoreBlocks : M-5 / M-6Sellers : TOTALFINAELF 31.24 %
UNOCAL 28.26 %PTTEP 25.50 %MOGE 15.00 %
Buyer : PTT PlcReserves : 6.5 TCFExport DCQ : 525 mmcfdDomestic Gas : 125 mmcfdOffshore Facilities :
Wellhead Platform 1 (7 wells)Wellhead Platform 2 (7 wells)Production PlatformLiving Quarter PlatformFlare Platform
Onshore Facilities : Pipeline CenterMetering Station
Pipelines : 216 miles 36" pipeline (Offshore)39 miles 36" pipeline (Onshore)
Start of gas export : 1998Project Cost : 1200mm$
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4.3.2.2 Yetagun Gas Project
Location : Tanintharyi OffshoreBlocks : M-12 / M-13 / M-14Sellers : PREMIER 26.66 %
PETRONAS 30.00 %NIPPON 14.17 %PTTEP 14.17 %MOGE 15.00 %
Buyer : PTT PlcReserves : 3.2 TCFExport DCQ : 200 / 400 mmcfd
(about 30 bl condensate / mmcf)Offshore Facilities:
Drilling Platform (6 wells)Production PlatformFSO
Onshore Facilities: Pipeline CenterMetering Station
Pipelines : 126 miles 24" pipeline (Offshore)43 miles 24" pipeline (Onshore)
Start of gas export: 2000Project Cost : about 700MM$
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4.3.3 Investment Incentives
Myanmar now offers an ideal politico-economic environment in addition to itsattractive PSC Terms and geological prospectivity. Investment opportunities are ample inthe petroleum sector. The following attractive incentives are granted in Myanmar PSCterms.
� Duties on import of petroleum industry-equipment/materials are exempted.
� 3 years Tax Holiday is automatically granted.
� Corporate Tax is 30 % on taxable income.
� No export duty levied on export of petroleum.
� Accelerated depreciation (25 %) per year is allowed.
� Domestic Market supply is priced at not too far reduced from fair market value.
� Renegotiations clause specifically allows necessary adjustments/ amendments,in the event of situations arising not envisaged in the original contract.
Terms and conditions for different types of PSC blocks are not rigidly fixed, butnegotiable. Reviewing the data together with Myanmar technical staff can be arranged tounderstand more about the oil and gas prospects of Myanmar. All interested parties arecordially invited to invest in Myanmar.
5. Downstream ActivitiesMyanma Petrochemical Enterprise (MPE) is operating 3 refineries (57,000 bl/day),
3 Urea Plants (1270 ton/day), 1 LPG Plant, 1 Methanol Plant & 1 Bitumen Plant in thecountry. 2 Skid mounted LPG plants are going to be installed very soon.
Myanma Petroleum Products Enterprise (MPPE) is responsible for marketing ofpetroleum products and operating 14 divisional marketing offices, 4 main terminals, 35sub-fuel terminals, 257 filling stations and 10 aircraft refueling stations. Also a fleet ofabout 300 road tankers are operating through out the country to distribute various kinds ofpetroleum products.
Thank you* * * * * *
MPE Plants
Refineries - No. 1 Refinery (Thanlyin) (26000 B/D capacity)No. 2 Refinery (Chauk) (6000 B/D capacity)Petrochemical Complex (Thanbayakan) (25000 B/D capacity)
Urea Plants - No. 1 Fertilizer Factory (Sale) (465 MT/D capacity)No. 2 Fertilizer Factory (Kyun Chaung) (207 MT/D capacity)No. 3 Fertilizer Factory (Kyawzwa) (600 MT/D Capacity)
Others - LPG Extraction Plant (Minbu) (24mmcfd gas)Methanol Plant (Seiktha) (450 MT/D capacity)Bitumen Plant (Thanlyin)2 skit mounted LPG plants (10 & 15mmcfd) ( to be installed)