26 February, 2014Trader Hotel, Yangon, Myanmar

Aung Kyaw HtooDeputy Director

Energy Planning DepartmentMinistry of Energy

Myanmar Petroleum Sector

Future Pathways and Prospect

Myanmar Oil and Gas Summit 2014

Content

(1) Milestones of Myanmar Oil and Gas Industry

(2) Ministry of Energy and Movements

(3) Plan and Prospect

(4) Perception, Challenges and Recognition

(5) Conclusion

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(1) Milestones of Myanmar oil and gas industry

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Onshore

− 18 Century: Several hundred shallow hand-dug wells, yield an average of 10 to 50

gallons a day in Yenangyaung Oil Field

− 1886: The establishment of a modern petroleum industry by London based Burmah Oil

Company (BOC)

− 1905 to 1942: Major crude supplier of India’s oil requirement

− 1939: Pre-Second World War, annual oil production peaked at 6.5 million barrels

− 1960-1965: 4.6 million barrel per year (Nationalized)

− 1975: 7.09 million barrel per year and decline to 5.4 million barrel per year at year 1988

− 1989-2000: Launched onshore and offshore blocks and 23 foreign companies entered

in 29 onshore blocks-> Apyauk Gas Field, discovered by Shell Co.

− 2000-2010: 15 foreign companies in 10 onshore blocks

− 2011: First international bidding round, 9 blocks being awarded to 7 foreign companies

− 2013: Second international bidding round, launched 18 blocks and awarded 16 blocks

Milestones of Myanmar Petroleum Industry

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Offshore

− 1969: Surveyed by Japanese firm in Gulf of Martaban, Bay of Bengal

− 1970-1976: Seismic survey and exploration wells for Myanma Oil Corporation

(MOC) by Prakla German Co.; (Cities Service Co., Petrolas, Esso Exp & Prod.,

Japanese consortium)

− 1978: MOC invited foreign companies: No one interested!

− 1982: MOC signed Cooperation Agreement with Myanmar Development Co.

Ltd. (BPDC) of Japan

− 1989-2000: Launched onshore and offshore blocks and 10 offshore blocks being

awarded to 9 foreign companies-> Yatana and Yetagun Gas Fields

− Direction negotiation to take part Petroleum E&P before 2012

− 2013 First International Bidding: launched 30 blocks (11 shallow and 19 deep

water blocks)

Milestones of Myanmar Petroleum Industry

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(2) Ministry of Energy and Movements

Ministry of Energy

Energy

Planning

Department

(EPD)

Myanma Oil

and Gas

Enterprise

(MOGE)

Myanma

Petrochemical

Enterprise

(MPE)

Myanma

Petroleum

Products

Enterprise

(MPPE)

• Exploration

• Drilling

• Production

• Onland Oil and Gas

Pipeline Network

• CNG

• Refineries & Process

• Fertilizer Plants

• Methanol Plant

• CO2 and LPG Plants

• Waxing & Tar

• Coordination

• Management

• Regulation

• Marketing

• Distribution

Ministry of EnergyOrganizations and Respective Responsibilities

* Ministry of Energy is Focal Point for Myanmar Energy Sector Cooperation with International

and Regional organizations.7

OnshoreDaily Production - Crude Oil 7600 bbl & Natural Gas 55 mmcf

Discovered - 28 oil and gas fields

Producing Fields - 18 oil fields and 5 gas fields (Total 23)

Tested/Suspended Fields - 1 tested and 4 suspended oil fields

Appraisal - 1 in Southern Chindwin Basin

Unconventional Project - Shale Gas Projects under Study Period

IPR - 1 field by Horizontal Drilling

Onshore Blocks

Total Demarcated - 53 (Operating 16, awarded 16 blocks in 2013

Bidding, Open 21)

Domestic Crude Pipeline Network - 535 kmDomestic Gas Pipeline Network

Onshore (4” to 20”) - 2874.5 km

Offshore Yadana to Yangon (24“) - 436 km (Offshore 286.5 km+ Onshore 149.7 km)

Myanmar –China Pipeline

Crude Pipeline (32”) - 741 km Gas Pipeline (40”) - 736 km 8

SummaryExploration and Development of Petroleum

Offshore

Producing Fields - Yadana,Yetagun and Shwe

Daily Production - Crude Oil 10,000 bbl & Natural Gas1400 mmcf

Yadana - 750 mmcfd (722 BTU)

Yetagun - 10,000 bbl/day + 450 mmcfd (1010 BTU)

Shwe - 200 mmcfd (1012 BUT)

Export - 1100 mmcfd (Thailand) and 200 mmcfd (China)

Ongoing - Zawtika Project M-9 (year 2014)

Plan - A Project for domestic supply, Block M-3

Offshore Blocks - Demarcated Total 51 (Shallow 26 & Deep 25)

Export Gas Pipeline to Thailand (PTTEPI)

Yadana to Metering Station (36”) - 410 km

Yetagun to Metering Station (24”) - 274 km

Zawtika Project is undergoing in progress and Fist Gas be soon!

SummaryExploration and Development of Petroleum

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Status of Onshore and Offshore Blocks

Status of Blocks

• Demarcated 53 onshore and 51 offshore blocks, Total 104 blocks.

• 16 onshore blocks and 19 offshore blocks are operating by multi companies in present

• 2nd Onshore Bidding Round, 16 Onshore Blocks are awarded to 10 companies.

• 1st Offshore Bidding Round, out of 30 blocks, 21 blocks are interested only in,

evaluated proposals and announcement will be soon!

Type Description Block Current Open

Total Operation Bidding Submitted Blocks

PSC Production Sharing Contract 23 8 7 6 9

EP Exploration and Production 5 2 3 3 0

RSF Reactivation of Suspended Fields 10 3 1 1 6

IOR Improved Oil Recovery 7 1 5 4 2

MOGE MOGE's oil and gas field areas 8 2 2 2 4

TOTAL ONSHORE BLOCKS 53 16 18 16 21

(Shallow)

A Arakan (Rakhine) Coastal Area 7 3 3 3 1

M Mottaban & Taninthayi 19 10 8 7 2

Shallow Water Block Total 26 13 11 10 3

(Deep)AD Arakan Offhsore Area (Deep) 16 4 12 6 6

MD Mottama/ Taninthayi (Deep) 9 2 7 5 2

Deep Water Block Total 25 6 19 11 8

TOTAL OFFSHORE BLOCKS 51 19 30 21 11

104 35 48 37 32

2013

Block Total

Onshore Blocks

Offshore Blocks

Existing Petrochemical Plants Operated under

Myanmar Petrochemical Enterprise (MPE)

Crude Oil Refinery - 3 (51,000 bbl/day)

LPG Plant - 3 (50 mmscfd)

Fertilizer Plant (Urea) - 5 (Ammonia 1340 MTD & Urea 2012MTD)

Methanol Plant - 1 (450 MT/day, under rehabilitation)

CO2 Recovery Plant - 1 (Liquid 24 Ton & Dry ice 6 Ton/day)

Others - Waxing and Bitumen (548 MT/day)

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(3) Plan and Prospect

1. Main Concern-> Domestic Orientation2. Secure for long-term sufficient3. Priority: Upstream E&P in Onshore and Offshore Area

− Exploration and Associated Services− Drilling and Related Services− Engineering, Infrastructure and Supporting Services

4. JV System:− Midstream and Downstream Area− Fabrication Yards!− Marine Supply Base!− Laboratories− Training Centers!− New Infrastructures!

5. Privatization (Marketing in Petroleum Products)6. Unconventional Sources of Hydrocarbon!7. Next Bidding Rounds!

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Plan !

1. Government− Assessment of potential reserves country-wide− Upstream E&P monitoring and State participation− Revenue and generated skilled-environments− JV with International companies: Capital, Technology,

Associated Infrastructure, Supply base and Services etc.2. JV System in Downstream Area

− Encouraging JV to existing refineries and following plan!3. JV System in Service and Supply Base

− Marine Supply Base!4. JV System in Laboratories and Training Centers!5. JV System in New Infrastructures6. New Refinery (2 mil. MT per Ann.)7. Privatization Scheme: LPG, Petroleum Products, !!!8. The lack of an adequate infrastructure-> Opportunities9. No information-> Expect huge reserves!

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Prospect!

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(4) Perception, Challenges and Recognition

− Unprecedented rise-> land Acquisition and market share,

Environmental & Social concerns

− EIA and SIA-> Critical Issuers

− JV System is exercising and on forwarding

− New Foreign Investment Law 2012

− National Energy Management Committee (NEMC) and Energy

development Committee (EDC)-> to compile Integrate Energy Policy

for future program, short terms and long terms-> The final draft of

Working Paper for National Energy Policy in progress

− EITI in extractive sectors-> Government and International Operators

− Transparency and Accountability-> Centre to design investments in

all sectors

Perception and Challenges (Regulation)

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− The investment-> shaped by effective laws and regulations

− Strength legal framework-> more confidence to investors

− An update regulation, laws and rules-> major concerns to promote

investment

− National employee-> Skills shortages->Training facilities-> HR policies

− Technical skills is the key shortage area while Financial skills-> the

bottom of consequence!

− National Competitiveness-> the fundamental issues for a country's

economic development execution

− Controversial between privatization and JV deals!

− Conventional and Unconventional Sources

− International Practice !

Perception and Challenges (Government)

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− Time-> To learn international practice and knowledge

− Time-> To compete at home-> Service from international Co.

− Strategic alliances-> To increase technological base & Practice

with foreign service providers

− Deal with foreign partnerships-> A source of principal and

knowledge, and to associate with global supply chains

− Accomplish international standards-> Quality and Price

− Improve the capacities of employees-> Most fundamental for

future practiced means not only Services but also E&P area

− Upgrade the standards-> Much stronger, ability for facing

complexity in service & process

− Long term relationship with Operators & International Firms

Perception and Challenges (Local Company)

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− Large measurement of cheap labor with poor infrastructure

− Move fast-> To establish lasting business

− Formulate-> A long-term commitment

− Prepare-> Advantage of the opportunities

− Partnership with local companies-> A platform to improve access

to local ability

− Recruitment-> Policy -> Graduates without experience

− Fulfill commitment of Work Program and Expenditure

− Not fully surveyed using modern technology-> Most prospective

exploration target in frontier basins especially deep offshore area

− Wide prospective with very little information-> Prospect hugely

increase the availability of hydrocarbons!

− National Content Quotas-> Domestic demands & Needs!

Perception and Challenges (International Company)

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Perception and Challenges (International Company)

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− Time Schedule ->Working Program in Onshore and Offshore blocks within

“Exploration Periods”

− Seismic and Drilling Campaign-> Survey Teams & No. of drilling rigs!

− Favourable Seasons: Logistic, Survey Parties and Drilling Rigs ?

Signing PSC

Signing PSC

Onshore Blocks

Offshore Blocks

EIA/SIA6 months

EIA/SIA6 months

SeismicSurvey

SeismicSurvey

DrillingCampaign

DrillingCampaign

Year 2014-2015 Year 2020

Joint Study/Initial Exploration Period- 3 years

Study Period/ TEA & Initial Exploration Period- 3 years

Year 2018-2019

SeismicSurvey & Drilling

Terms, Conditions and Expression of Model PSC

• As a Standard for Bidding 2013

• Same level for all bidders

• Revisit and amendment are engaged

EIA, SIA and EMP

Reserves-> Unitization

Project-> Abandonment & Decommission

Additional Contracts

• Negotiation between National Company and IOCs

• Gas Sale Agreement, Crude Sale Agreement

• Infrastructure: Pipeline and related communications

• Tariff etc

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Recognition

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Conclusion

High Geologic Risk in Deep Water

Main theatre of deep water activities-> Last frontier basin!

Priority is Upstream E&P, Onshore and Offshore Area

Required New Infrastructures, Downstream and Value-Change

Process (Improvement on E&P)

Exercising to Joint Venture System for existing Refineries

Model PSC-> Leveling for International Firms

Reserves Unitization, Ring Financing!

Decommissioning and Abandonment Cost-> Recovery fund !

A fiscal scheme that generates Government share averaging up to!,

Would seem appropriate?

Insufficient Infrastructure and No information (Data) > Opportunities

Focal Personal for Ministry of Energy

Person: Director General

Energy Planning Department

Ministry of Energy, Myanmar

Address: Building No.6, Nay Pyi Taw, Myanmar

Fax. 95 - 067 - 411 113

Phone no. 95 - 067 - 411 057

95 - 067 - 411 099

Email: myanmoe@mptmail.net.mm

Website: http://www.energy.gov.mm/

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