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Myanmar delays energy tender to improve transparency

Source: Thomson Reuters Foundation - Wed, 5 Sep 2012 06:03 GMT
Author: Reuters
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    * Tender still to take place this year, but after Sept

   * Gov't working to meet global transparency standards

   * ConocoPhillips, Hess among US firms interested

(Adds quote from energy minister; paragraphs 11-12)

   By Aung Hla Tun

   YANGON, Sept 5 (Reuters) - Myanmar has delayed an oil and gas exploration tender to meet the transparency standards of the Western energy majors lining up, many for the first time, to invest in the rapidly reforming nation, a senior energy ministry official said.

   Myanmar, which is opening up to the world after nearly 50 years of military rule, still plans to hold the tender this year, the official, who declined to be named because he was not authorized to speak to the media, told Reuters.

    The tender was expected to be launched this month, but the official said it was postponed after the government was approached by several Western oil firms, including ConocoPhillips <COP.N>, Hess Corp <HES.N>, Royal Dutch Shell <RDSa.L>, BP <BP.L>, BG Group <BG.L> and Australia's Woodside Petroleum <WPL.AX>.

   "Some of the oil companies, like Shell, are very strict about international standards like transparency, environmental, social and biodiversity impacts," the official said on the sidelines of an industry conference in Yangon.

   "Therefore our leaders instructed us to make ours be in line with the international standards, so we are taking some more time on this. I guess we will be able to launch the second round around the end of this year," he added.

   The government is expected to offer more than 10 offshore and around 10 onshore blocks to foreign investors, the energy minister told Reuters last week.

   The tender follows Myanmar's largest oil and gas offering in August last year, which saw nine out of 18 onshore blocks snapped up by foreign firms.      

   The surge in interest in Myanmar's energy sector comes amid warnings by Nobel Peace Prize laureate Aung San Suu Kyi to avoid partnering with the state-owned Myanma Oil and Gas Enterprise, due to its lack of transparency and accountability.

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   LACK OF TRANSPARENCY

   The Southeast Asian country is one of the poorest in the world and the civilian government that took over last year is seeking to maximise earnings from the energy sector.

   But many multinational executives say they want regulatory clarity in a market dominated for decades by tycoons with ties to well-connected generals and a tightly knit circle of cronies who feel threatened by the efforts to free up the economy.

   Speaking at the conference which began on Tuesday, Energy Minister Than Htay assured participants of his government's commitment to transparency.

   "Myanmar's newly elected democratic government is putting great emphasis on transparency and the rule of law," he said. "Thus our petroleum industry is exercising transparency as one of the norms in line with international practice." 

   Asian firms, especially from China, Thailand and India, have dominated foreign investment in Myanmar's oil and gas sector, though Chevron <CVX.N> and Total <TOTF.PA> also operate there. 

   Besides opening up the economy, the government has implemented political reforms such as releasing hundreds of political prisoners, permitting greater media freedom, legalizing protests and undertaking peace talks with ethnic rebel groups.

   It also freed opposition leader Suu Kyi from two decades of house arrest last year and permitted her this year to contest and win a seat in parliament.

   Last month, the United States eased sanctions on Myanmar to allow for new investment, which means U.S. firms will be able to participate in the energy tender for the first time in at least 15 years.

   Shell, Chevron <CVX.N> and other Western firms sent officials to the oil conference, but all were tight-lipped when asked about their interests in Myanmar.

   "At first we meant to carry the tender out around September, but with the relaxation of U.S. sanctions a number of international companies ... approached us with very keen interest, so we had to postpone it," the official said. 

   "There are a lot of offers from these big ones, including eight from Shell, if I remember correctly. They all will take part in the second round of bidding," the official said.

   Myanmar, a country of 60 million people that is the size of England and France combined, is believed to be rich in natural gas reserves, which various government officials estimate to range between 11 trillion and 23 trillion cubic feet.

   It produces around 19,600 barrels of crude oil and 1.475 billion cubic feet of natural gas each day.

(Writing by Randy Fabi; Editing by Miral Fahmy)

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