* Route to investment clouded by corruption, fragile reforms
* Global reputations, huge funds at risk in frontier market
* Shell, BG Group among firms interested in Myanmar
* Key meeting in Yangon next week to draw oil firms, govt officials
By Randy Fabi
SINGAPORE, Aug 30 (Reuters) - Western energy firms eyeing Myanmar's wealth of untapped resources face potential minefields of risk from entrenched corruption and still-fragile reforms, which could damage global reputations and cause huge losses if not carefully managed.
Myanmar is expected to offer more than a dozen oil and gas blocks to foreign investors as early as September, giving U.S. firms their first chance to participate in at least 15 years.
After almost 50 years of isolation under military rule, the former British colony has launched sweeping reforms and opened up to the outside world with astonishing speed.
In June, President Thein Sein set a goal of tripling the size of the economy in five years and modernising a backward state where 30 percent of the population lives under the poverty line and three-quarters get by with no electricity.
Washington has rewarded Myanmar by suspending sanctions on new U.S. investment in the Southeast Asian country, spurring the quick entry of major Western firms, such as General Electric Co. <GE.N> and PepsiCo Inc <PEP.N>.
But others, such as Pepsi's rival Coca-Cola Co <KO.N>, have held off committing investment in a country that ranks only after Somalia and North Korea among the world's most corrupt, according to Transparency International.
"Going into a market like this is not a no-brainer. Your reputation may be at risk if you do it the wrong way," Dane Chamorro, Asia-Pacific director for consultancy Control Risks Group, said at an industry conference in Singapore.
French oil major Total <TOTF.PA> and U.S. firm Chevron <CVX.N>, which set up in Myanmar before sanctions took effect, faced years of criticism from human rights activists for operating in a country under the control of a military junta.
Many multinational executives say they want regulatory clarity in a market dominated for decades by tycoons with ties to well-connected generals - a tightly knit circle of cronies who face competitive threats as the government seeks to free up the economy and introduce greater transparency.
Oil firms also face the risk that the reforms could slow, stop or be rolled back, potentially threatening investment. A deep offshore oil project may take as long as a decade to start production and can cost hundreds of millions of dollars.
Recent protectionist clauses that Myanmar's parliament has introduced to a long-awaited foreign investment law have sparked concern the legislation could scare off foreign companies.
LOOKING TO JOIN IN
With the easing of U.S. sanctions and a reform-minded government in place, Royal Dutch Shell <RDSa.L> and Britain's BG Group <BG.L> are among the Western oil companies looking to join Chevron and Total in Myanmar, the country's energy minister told Reuters this week.
Although Shell has declined to confirm its interest, its vice president for exploration in Asia will be one of the main speakers at a major energy conference next week in the capital Yangon, focusing his remarks on Myanmar's offshore potential.
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 19,600 barrels of crude oil and 1.475 billion cubic feet of natural gas each day.
BP <BP.L>, ConocoPhillips <COP.N>, ExxonMobil <XOM.N> and Statoil <STL.OL> were also sending officials for the first time to the conference in Myanmar, where the country's top energy officials are expected to discuss investment opportunities, said G. Seelan, an official of event organiser Centre for Management Technology.
THE RIGHT PARTNER
The huge interest in Myanmar's energy sector comes despite warnings by Nobel Peace Prize laureate Aung San Suu Kyi to avoid partnering with her country's state-owned Myanma Oil and Gas Enterprise, due to its lack of transparency and accountability.
"I don't think a comment from her (Suu Kyi) is a death knell for a major oil and gas player. It just makes it a lot more sensitive in terms of how you go about doing it," Chamorro said.
One of the first challenges faced by Western oil companies investing in Myanmar is identifying an experienced local partner free of ties to officials blacklisted by the United States.
Around 60 Myanmar firms, such as MPRL E&P and Parami Energy, are authorized to bid for oil blocks with foreign partners, but few have much experience in energy exploration, said Aung Thura, chief executive of Yangon-based consultancy Thura Swiss.
"If you want someone already experienced in the oil and gas sector, these people may have done dirty business in the past and you don't know," Aung Thura told Reuters.
"It is difficult to get public data on Myanmar companies and a lot of people have low profiles. The best thing is to hire a local company that has the contacts to do the due diligence."
(Reporting by Randy Fabi; Editing by Clarence Fernandez)