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Myanmar (Burma) is one of the world’s oldest oil producers, exporting its first barrel in 1853. Rangoon Oil Company, the first foreign oil company to drill in the country, was created in 1871.

Between 1886 and 1963, the country’s oil industry was dominated by Burma Oil Company (BOC), which discovered the Ychaugyaung field in 1887 and the Chauk field in 1902. Both are still in production. 

The oil and gas industry was nationalized after a socialist military regime seized power in 1962. As in many other countries, the State assumed ownership of the resources, either operating them itself or delegating this task to private operators, who were paid for their outlay and work in oil or gas under production sharing contracts (PSCs).

 Map of Myanmar


The linchpin of oil and gas policy in Myanmar is the Ministry of Energy, which has oversight for three state owned enterprises:

  • Myanmar Oil and Gas Enterprise (MOGE), created in 1963, is responsible for oil   and gas exploration and production, as well as domestic gas transmission through a 1,200-mile onshore pipeline grid.
     

  • Myanmar Petrochemical Enterprise (MPE) operates three small refineries, four fertilizer plants and a number of other processing plants.
     

  • Myanmar Petroleum Products Enterprise (MPPE) is responsible for retail and wholesale distribution of petroleum products.


Since nationalization, from 1962 to 1988, oil exploration and production were mainly performed by MOGE; and foreign operators were kept out by a strict nationalistic policy and the lack of an appropriate legal framework. 

However in 1988, Myanmar passed foreign investment legislation to bring in outside expertise, technology and capital to revive its oil and gas industry. This has allowed the discovery of significant new reserves and has also revived areas that had been abandoned since the military take over. 


One major success in the natural gas sector for Myanmar is the Yadana field.   This single field covers 15 to 20% of the natural gas demand of Myanmar’s neighbor and traditional enemy Thailand.  Thailand’s economic growth over the last decade has fueled a rapid rise in electricity demand, which is increasing by 6 to 7% a year. Around 70% of power generation in Thailand is gas-fired, using local gas resources supplemented by gas from Myanmar’s Yadana and Yetagun fields. 
Yadana gas is piped from the field to the gas grid that supplies the Ratchaburi and Wang Noi power plants in the Bangkok region (total capacity of 6400 MW, with Yadana gas used to generate 2500 MW). The same onshore pipeline route in Myanmar is followed by the gas coming from the Yetagun field, with both delivered a the border to Thai consumer PTT under long-term contracts.

Yadana’s production therefore establishes an important, long-term economic link between the two countries and contributes to the regional integration of Myanmar, which has too long been isolated from Southeast Asia’s assertive growth (For instance, Myanmar only joined ASEAN in 1997). 

The Shwe Gas Project is another large-scale natural gas development project now underway in Myanmar.  It will be Myanmar’s largest gas development project ever in terms of gas reserves and potential revenue.  Adding a new element to the Shwe Gas Project, it was recently announced that the Shwe gas consortium will provide natural gas to PetroChina, by way of a new pipeline to China's Yunnan Province.


These new opportunities in this once closed off country are dually beneficial to those investing in Myanmar (Burma) and to the country itself as they move towards a freer market based economy.  Although many retain concerns and some objections to business being conducted in what is seen as a highly repressive country the alternative of the status quo is far worse for the Burmese people.  As Myanmar forms economic trading partnerships with its neighbors and other ASEAN nations the move away from totalitarianism is inevitable as has been witnessed over the last decade in China and Vietnam.


Tricoastal is currently seeking out business partnerships within Myanmar in order to benefit from new discoveries as this country returns to its rightful place as one of the most prosperous regions in Asia.
 
© 2006 Tricoastal Oil & Gas Ltd.