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Contrary to industry expectations, Myanmar has yet to award a tender for the Offshore Block Bidding Round 2013 that closed last June. An announcement for the award of 30 oil and gas blocks-comprising 19 deepwater and 11 shallow water blocks-is now likely to be made before the end of March.
The award could contribute to greater upstream oil and gas activities in Myanmar, home of Southeast Asia’s most promising petroleum resource base, which has been generally underdeveloped following decades of political and economic sanctions against the former military government.
In November, Myanmar’s Ministry of Energy prequalified 61 of the 75 bidders, including major independent oil companies (IOC), Asian national oil firms and other petroleum companies in the country’s offshore bidding round. Of these ,only 30 firms submitted bids for the 30 offshore blocks when the deadline closed mid-November. No details were available on bidders for the blocks, but participants indicated interests in more than one block.
Results of the tender, which the energy ministry had indicated would be released late December or early January, are expected in March.
Even so, the March timeline “will [also] depend on the management,” an energy ministry source told Rigzone.
Evaluation of the bidder’s final proposals for the country’s offshore exploration blocks appeared to have been completed although top governmental officials are still finalishing the tender award.
“Maybe the Ministry of Energy finds it very hard to select from the many bidders,” legal and tax advisory company VDB Loi’s Senior Associate Wai New Turn told Rigzone.
Compared to the award of Myanmar’s upstream tenders issued prior to the lifting of Western economic sanctions, when there were fewer bids, the Ministry of Energy now has to evaluate 30 bids and joint bids in the latest tender from major IOCs, Asian national oil companies and several regional firms.
Major industry players biding in Myanamr’s offshore tender include: Royal Dutch Shell plc- Mitsui Oil Exploration Co Ltd (3 blocks); Exxon-Mobil Corp (2 blocks), Chevron Corp (2 blocks), Total  SA (2 blocks), Total SA (2 blocks), Eni SPA (1 block) and Eni-Petro Vietnam (2 blocks), Statoil ASA Conoco-Phillips Co (2 blocks).
Several large Asia Pacific’s national and independent oil and gas firms also submitted bids for the offshore blocks. They included companies keen to increase their upstream assets in Myanmar such as Malaysia’s Petronas Carigali, Thailand’s PTT Exploration and Production plc.
(PTTEP) and India’s ONGC Videsh Ltd. (OVL) – all of whom received onshore blocks awarded by the Myanmar government in last October’s tender.
Other major companies vying for offshore blocks in Myanmar include: Woodside Petroleum Ltd-BG Group (2 blocks), Santos Ltd (1 block), Reliance Industries Ltd (3 blocks), Oil India Ltd.-Mercator Petroleum Ltd-Oil Max Energy Pte Ltd (3 blocks), GAIL (India) Ltd-Kris-Energy Ltd (3 blocks).
The latest tender attracted 42 proposals for shallow water blocks, while deepwater blocks drew 22 proposals.
Successful firms in the Offshore Bidding Round 2013 are likely to spend at least $3 billion for production sharing contracts (PSC) they signed with MOGE to get the right to explore and produce oil and gas offshore Myanmar for 30 years.
Meanwhile, some analysts noted that delay in the offshore tender award could be attributed to politics in Myanmar.
“The main issue is rising pressure from local bussiness community and politicians against foreign bussiness interests [the Myanmar government has to be] careful with elections coming … not be seen as selling out … it does not want to be critised [and want to be seen to have] done all their homework … It’s a political not just an bussiness issue,” Dr Tin Maung Than, a senior research fellow at the Institute of a Southeast Asian Studies told Rigzone.
MOGE revealed that the evaluation of final proposals for the offshore tender was completed late 2013.
The opening of Myanmar’s energy sector to foreign investors in recent years has already brought some tangible benefits to the country, which oil and gas investments amounting to $14.372 billion last year, data from the Myanmar Investment Commission showed.
Furthermore, Myanmar earned around $4 billion in annual revenue from the oil and gas industry, although the government never released official data on the matter.
Meanwhile, Myanmar has taken steps toward implementing global standards in exploiting the country’s natural resources. Earlier this month, representatives from  resources – including oil and gas – companies, government and civil society set up a multi-stakeholders group under the Extractive Industries Transparency Initiative (EITI). The group, which includes representives from Total and Petronas, will publicise income and tax payments of Myanmar-based energy firms and report to the EITI, which Myanmar has applied to join.
While industry watchers wait for results of Myanmar’s offshore tender, petroleum firms already operating in the country continue with their scheduled upstream activities.
PTTEP, one of the most active upstream players in Myanmar after the imposition of Western economic sanctions against the country’s former military government, is busy with several exploration and development projects this year, according to the firm’s February 18 statement to the Stock Exchange of Thailand.
Attention will be focused on the Zawtika project in Block M9 in Myanmar’s Gulf of Martaban, with first gas expected to flow in the first quarter of 2014 at around 300 million standard cubic feet per day (MMscf/d). Field development for the project, which PTTEP holds on 80 operating precent interest and MOGE the remaining 20 percent, is nearing completion.
Last year, the Thai upstream operator completed installation of 3 wellhead platforms and the ZPQ central processing platform as well as laid intrafield pipelines and an offshore export pipeline. The remaining work for the Zewika project includes construction of an onshore pipeline and facility and the drilling of production wells.
Zawtika will be the second project to commence production this year after Posco’s subsidiary Daewoo International officially begun gas production at the Shwe project in Block A1 the Andaman Sea off Myanmar in January.
Daewoo will finish drilling and installing “production facilities for the Shwe gas field and start extracting gas through the first of 11 production wells. The remaining 10 wells will then begin drilling so that the current daily production of 200 million cubic feet (MMcf) increases to 500 MMcf,” Posco said in a January 16 statement.
Meanwhile, appraisal work is underway at PTTEP’s M3 project in the Gulf of Martaban. The firm is currently conducting further studies to assess the commericiality of the project after finding gas and condensate in four appraisal wells last year. It plans to drill 8 additional appraisal wells at the Aung Sinkha field beginning in the third quarter of 2014.
Myanmar also presents an attractive upstream growth opportunity for Woodsite, which has a 50 percent operating interest and a 40 percent non-operating stake in Block A-6 and Block AD-7 in the Rakhine Basin, respectively.
Woodside, while waiting for results of its joint-bid with BG Group plc for 2 blocks in the Offshore Biding Round 2013, plans to complete processing the data of a 689 square mile (1,786 square kilometer) Padauk 3D seismic survey in Block A-6 and drill an exploration well in AD-7 before the end of March.
“If you recall hisorically we’ve been slow into new plays… so one of the reasons we’ve gone to a more global viwe of our exploration is that we’re trying to make sure we get into plays at the right time, at the right price. And that’s what Myanmar is,” Woodside CEO Peter Coleman said in a February 19 teleconference with analysts and investors.
Like Woodside, ROC Oil Co Ltd is another Australia-based petroleum exploration and production firm drawn to potential growth opportunities offered by Myanmar’s upstream sector, both onshore and offshore. The company was prequalified by Myanmar’s energy ministry for the offshore tender and and it subsequently submitted bids for two shallow water blocks in the current licensing round.
“Entry into Myanmar remains aligned with ROC’s wider strategic objective to identify and secure material exploration, appraisal and field redevelopment opportunities in established petroleum provinces across Southeast Asia,” the company said January 29 in its fourth quarter 2013 activity report.
Besides offshore blocks, ROC Oil is also actively pursuing farm-in opportunities for onshore petroleum acreage in Myanmar near existing infrastructure.
While industry’s interest in Myanmar’s Offshore Block Bidding Round 2013 could be due to the number of blocks being offered as well as participation from several IOCS, the tender, when it is finally awarded, could mark a new chapter in the country’s upstream sector. Total may soon be joined by other major IOCs operating in Myanmar petroleum industry.