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Country Report for Myanmar

Presented by: U Kyaw Nyein Managing Director Myanma Oil and Gas Enterprise


1. Introduction

Myanmar has a total area of 676,577 km2 sharing borders 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 of Bengal and Andaman Sea. The population is about 50 million people with an average growth rate of 1.82% per annum.


Brief History of Myanmar Petroleum Industry

Myanmar petroleum industry evolved in the 10th century in Yenangyaung area of central Myanmar during the Pagan Dynasty. Initially oil was extracted and used from the 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 first Rotary-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, the Petroleum Industry has been entirely operated by Myanmar nationals only.

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Energy Policy

The Ministry of Energy of the Union of Myanmar has been meticulously pursuing the 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. v Energy Planning Department (EPD) : Coordinate / negotiate the development program in energy 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 / distribution of petroleum products.


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)Ltd and the Myanmar Government. Previously, upstream and downstream activities were run as one entity. Starting from 1970, MOGE was responsible only for upstream activities. Myanma Oil and Gas Enterprise (MOGE) is a 100 % State owned Enterprise and has the following basic responsibilities:v To explore and produce oil and gas by using its own resources, v To supply the domestic natural gas by constructing its own gas pipelines, v To supply the Compressed Natural Gas (CNG) as a substitute fuel instead of gasoline for vehicles, v To participate in and oversee the production Sharing Contracts (PSCs) in cooperation with foreign oil companies.


MOGE is headed by the Managing Director, under whose direction, the Directors, Departmental Heads and Oil and Gas Field General Managers exercise control in their respective departments and fields. Currently, MOGE has about 13,000 employees including 850 management staff.

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The following departments headed by the respective directors directly report to the Managing Director: 4.1 ORGANIZATION 1. Planning 2. Exploration & Develop 3. Drilling MINISTRY OF ENERGY 4. Production MYANMA OIL & GAS ENTERPRISE 5. Engineering 6. Administration 7. Material Planning BOARD OF MANAGING DIRECTOR DIRECTORS 8. Finance 9. Offshore






Oil and Gas Fields of Myanmar (Onshore)

Hydrocarbon prospects in Myanmar are conveniently evidenced by the long history of petroleum industry. Giant oil fields like Yenangyaung Field (Original Oil-in-Place 700 MMBBL) and Chauk Field (Original Oil-in-Place 500 MMBBL) were discovered over 100 years ago and are still being exploited. Geologically, 14 sedimentary basins developed within the territory of onshore Myanmar. Out of 14, only 3 basins (Central Myanmar, Pyay Embayment, and Delta Basins) have been actively explored for petroleum and the rest are either sparsely explored or not at all explored yet. All the oil and gas fields are located in these 3 basins.




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Prior to 1963, oil was extracted mainly from Chauk and Yenangyaung Oil Fields in the Central Myanmar Basin with an annual production of 3.99 million barrels. After the establishment of the national oil enterprise, new oil and gas fields were discovered increasing the yearly production, which peaked at 11.20 million barrels in 1984-85. The oil and gas fields of Myanmar are listed as follows: Oil & Gas Fields Yenangyaung Ayadaw Chauk Payagon Myanaung Pyay Shwepyitha Pyalo Mann Letpando Peppi Htaukshabin Htantabin Kanni Apyauk Shwegu Kyaukkwet/Letpando Indaing Nyaungdon Thargyitaung Year of Discovery 1887 1893 1902 1959 1964 1965 1967 1969 1970 1974 1976 1978 1980 1985 1991 1994 1995 1996 1999 2001 Remarks

Producing Producing Producing Suspended Producing Producing Producing Suspended Producing Produced for 2 years & suspended Producing Producing Suspended Producing Producing Suspended Producing Suspended Producing New discovery

MOGE is currently operating its land operations by using the following its own resources 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 repairing teams/ etc. ) Currently MOGE is producing about 10,000 bopd and 120 mmcfd gas from onshore 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, LPG plant, cement factories and other industries by pipelines. Very recently, commercial oil and gas were discovered in Thargyitaung-Sabe area in central Myanmar and Nyaungdon area in delta. Drilling of appraisal wells are being conducted for field development. Consequently, frontier-explorations in the northern part of Myanmar such as Tanai, Yebawmi and Indaw areas are actively being conducted by MOGE.
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v v v v v v v v v

A total of about 1200miles land pipeline has been laid by MOGE own pipe laying fleet for domestic gas transmission. The pipeline size varies from 6" up to 20". Recently 180miles of 20" pipeline was successfully constructed by MOGE's national team, from Kanbauk to Myainggale where a new cement factory is just completed. The gas is being transmitted from offshore Yadana Field through Kanbauk Pipeline Center. The current land gas production is being supplied to gas turbines (65%), urea plants (16%) and the rest goes to cement factories, refineries and other industries.


Production Sharing Contracts (PSC) In order to increase the country's oil and gas production and reserve potential, it is of key importance for Myanmar to introduce modern technology and foreign investment in addition to MOGE's own efforts. With the promulgation of the Foreign Investment Law and its related procedures in November 1988, MOGE has entered into PSC contracts with multinational oil companies since 1989 October for petroleum exploration and production in both onshore and offshore areas. A total of 46 onshore blocks and 25 offshore blocks for petroleum exploration and production have been apportioned in Myanmar

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Onshore PSC In onshore area, 3 types of PSCs are available, such as: v Exploration (EP), v Improved Oil Recovery (IOR)/Performance Compensation Contract (PCC), v 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.

Current onshore operating foreign companies Company Myanmar Petroleum ResourcesLtd. Goldwater Westburne PT. Exspan Sumatera Focus Energy Prime Resource TG World Block/Field(Area) Mann Field Yenangyaung Field Chauk Field RSF-6 (Mindegyi-Chaungtha) RSF-8 (YEnanma) RSF-5 (Ondwe) MOGE3(Padaukpin- Monatkon) Htaukshabin/Kanni Field EP-4 (Mayaman-Pyay West) RSF-2 (Tuyintaung) RSF-3 (Gwegyo-Ngashantaung) IOR-3 (Tetma)

A total of 21 EP, 4 RSF and 3 IOR blocks are open for petroleum investment.
Block Type PSC Open Land Blocks Block Area (sq-miles) B2 C2 D E F G H I J K L M O P Q EP-1 EP-2 EP-3 MOGE-4 MOGE-6 MOGE-7 4 7 9 10 5. 6 7 - 66297 10234 4763 4453 2530 5148 9940 1390 4438 2532 3905 3007 3970 4390 1536 438 519 637 352 1420 185 509 747 984 541 Remarks Relinquished by AMOCO Relinquished by YUKONG Relinquished by IDEMITSU Relinquished by PETRO-CANADA Relinquished by UNOCAL Relinquished by SHELL Relinquished by BHP Relinquished by CROFT Relinquished by KIRKLAND New Relinquished by South Pacific Co. Relinquished by Empire Oil Co. New New New Relinguished by PT. Exspan New New Myintha area Indaing Myanaung East Nyaunggon-Yedwet Padan Pyay-Pyalo Kanma-Nattaung



Htantabin Field Myanaung Field Shwepyitha Field


Offshore PSC

In Myanmar offshore, between 1972 and 1987, MOGE as an operator had carried out seismic survey over the area of interest and 27 wells have been drilled including Yadana and Badamyar Gas Field discoveries. From 1974 to 1976, four foreign contractors conducted detailed seismic surveys and 18 wells were drilled including one gas 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. Current Offshore Operating Companies Companies (Operator) Blocks TOTAL PREMIER DAEWOO M-5 / M-6 M-12 / M-13 / M-14 A-1

A total of 6 blocks in Rakhine Offshore, 9 blocks in Moattama Offshore and 4 blocks in Tanintharyi Offshore are open for petroleum investment.

Open Offshore Blocks

Block Type PSC Block No. A-2 A-3 A-4 A-5 A-6 A-7 M-1 M-2 M-3 M-4 M-7 M-8 M-9 M - 10 M - 11 M - 15 M - 16 M - 17 Area(sq miles) 1455 2974 3277 4074 3795 3174 4013 3727 3000 4008 5163 4227 4535 5320 2810 5204 5338 5472 Remarks Rakhine Offshore " " " " " Moattama Offshore " " " " " " Tanintharyi Offshore " "

- 7- Yadana Gas Project

Location Blocks Sellers

: : :

Buyer : Reserves : Export DCQ : Domestic Gas : Offshore Facilities :

Moattama Offshore M-5 / M-6 TOTALFINAELF UNOCAL PTTEP MOGE PTT Plc 6.5 TCF 525 mmcfd 125 mmcfd

31.24 % 28.26 % 25.50 % 15.00 %

Onshore Facilities : Pipelines :

Start of gas export : Project Cost :

Wellhead Platform 1 (7 wells) Wellhead Platform 2 (7 wells) Production Platform Living Quarter Platform Flare Platform Pipeline Center Metering Station 216 miles 36" pipeline (Offshore) 39 miles 36" pipeline (Onshore) 1998 1200mm$

- 8- Yetagun Gas Project

Location Blocks Sellers

: : :

Buyer Reserves Export DCQ

: : :

Tanintharyi Offshore M-12 / M-13 / M-14 PREMIER 26.66 % PETRONAS 30.00 % NIPPON 14.17 % PTTEP 14.17 % MOGE 15.00 % PTT Plc 3.2 TCF 200 / 400 mmcfd (about 30 bl condensate / mmcf) Drilling Platform (6 wells) Production Platform FSO Pipeline Center Metering Station 126 miles 24" pipeline (Offshore) 43 miles 24" pipeline (Onshore) 2000 about 700MM$

Offshore Facilities:

Onshore Facilities: Pipelines :

Start of gas export: Project Cost :

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Investment Incentives

Myanmar now offers an ideal politico-economic environment in addition to its attractive PSC Terms and geological prospectivity. Investment opportunities are ample in the petroleum sector. The following attractive incentives are granted in Myanmar PSC terms. 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, but negotiable. Reviewing the data together with Myanmar technical staff can be arranged to understand more about the oil and gas prospects of Myanmar. All interested parties are cordially invited to invest in Myanmar. 5. Downstream Activities

Myanma 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 the country. 2 Skid mounted LPG plants are going to be installed very soon.
MPE Plants Refineries Urea Plants Others No. 1 Refinery (Thanlyin) (26000 B/D capacity) No. 2 Refinery (Chauk) (6000 B/D capacity) Petrochemical Complex (Thanbayakan) (25000 B/D capacity) 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) 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)

Myanma Petroleum Products Enterprise (MPPE) is responsible for marketing of petroleum products and operating 14 divisional marketing offices, 4 main terminals, 35 sub-fuel terminals, 257 filling stations and 10 aircraft refueling stations. Also a fleet of about 300 road tankers are operating through out the country to distribute various kinds of petroleum products.

Thank you
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