OBG talks to U Zay Yar Aung, Minister of Energy

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U Zay Yar Aung, Minister of Energy

Interview: U Zay Yar Aung

How has the country’s oil and gas sector evolved following the easing of sanctions?

U ZAY YAR AUNG: The Ministry of Energy (MoE) is mainly responsible for the petroleum sector. In Myanmar there are 53 onshore blocks and 51 offshore blocks, so altogether 104 blocks have been demarcated and now operate in exploration and production (E&P) of petroleum. Currently, Myanma Oil and Gas Enterprise (MOGE) is working in some onshore blocks, while international oil companies are exploring and developing 16 onshore blocks and 20 offshore blocks under production-sharing contracts (PSCs). The first offshore project, Yadana, was discovered by MOGE in 1982. However, due to the lack of a commercial gas market during that period, it failed to convert those gas reserves into a commercially viable project. Since 1998 Yadana has been operated by Total. Today, an average of 600m cu feet per day (mmcfd) of natural gas is being exported to Thailand while 200 mmcfd is being utilised for domestic supply by pipeline. The Yetagun project also exports around 400 mmcfd of natural gas to Thailand.

In addition to natural gas, 10,000 barrels of condensate are also being produced. The MoE endeavours to meet the country’s needs by importing petroleum products and cooperating with international firms on the exploration and exploitation of new blocks. In order to increase production, we are inviting a huge amount of investment that will bring modern technical know-how. Thus, investors with a keen interest in participating in Myanmar’s oil and gas sector can apply and proceed to compete in international bidding rounds for onshore and offshore blocks for E&P and services.

What makes Myanmar an attractive investment destination for energy-sector companies?

ZAY YAR AUNG: Development of the energy industry is one of the key factors for national economic growth. Therefore, the ministry has decided to prioritise domestic supply needs from new discoveries of crude oil and natural gas in both onshore and offshore areas. So far during 2013, a total of 18 onshore and 30 offshore blocks have been launched for international investors under PSCs between MOGE and the contractors. The plan is to enhance E&P of new oil fields in cooperation with local and international companies in order to meet the domestic demand for oil and gas.

In this investment area, we are aware of US concerns of promoting transparency and respecting human and labour rights, and we are working to implement the Extractive Industry Transparency Initiative process and to create an operating environment that attracts qualified and responsible investors. We urge contractors to conduct environmental impact assessments, social impact assessments and environmental management plans to minimise their impact on the environment.

As the region’s economy grows, what steps is ASEAN taking to ensure a secure supply of energy?

ZAY YAR AUNG: ASEAN is one of the fastest growing economic regions in the world and has a rapidly rising energy demand driven by economic and demographic growth. ASEAN has been demonstrating a sharp rebound from the global crisis. In 2010 the region’s real GDP grew above the world average, with some countries showing double-digit economic growth. The region’s economic and population expansion has resulted in a huge increase in final energy consumption.

With the assumed GDP growth of 5.2% per annum from 2007 to 2030, the high economic growth and demand for energy, the challenge to ensure a secure supply of energy is an overriding concern for ASEAN.

Energy is crucial to launching the ASEAN Economic Community (AEC) in 2015 and thus the bloc developed the ASEAN Plan of Action for Energy Cooperation 2010-15. It covers the energy component of the AEC Blueprint 2015 to ensure a reliable energy supply for the region through collaborative partnerships in the ASEAN Power Grid and Trans-ASEAN Gas Pipeline, the promotion of cleaner coal use, energy efficiency and conservation, renewable energy and nuclear energy.

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The Report: Myanmar 2014

Energy chapter from The Report: Myanmar 2014

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