THAILAND and the Myanmar government have verbally agreed to increase natural gas production at the Yetagun gas field by a quarter to supply Myanmar’s energy thirsty neighbour, an official from the Myanmar Ministry of Energy said August 7.

PTT Exploration and Production, a unit of Thailand’s largest energy firm PTT Plc, holds a 14.17 percent share in the Yetagun project and is negotiating with its partners to buy an additional 100 million cubic feet of gas a day (mmcfd) on top of the 400 mmcfd it pipes from the project in the Gulf of Mottama.

Thailand buys all the gas from the Yetagun project, which is operated by Malaysia’s Petronas which has 56.67pc stake, the Myanma Oil and Gas Enterprise (MOGE) with a 15pc stake, and Nippon Oil and PTTEP with about 14.17pc each.

“Although the partners have agreed to increase production, it takes time to reach a final agreement,” the ministry official said.

He added that the stakeholders were still discussing whether increasing production to 500 mmcfd was profitable as it required building an additional platform and upgrading existing facilities at the site.

“Building the platform is expensive and will also take time,” he said.
According to the official, Petronas, was conducting a feasibility study for increasing production at Yetagun.

The contract to buy gas from the field would be over 20 years and this period would be increased if further gas reserves were found in the area, he said.

Myanmar started selling Thailand 200 mmcfd of gas from Yetagun gas field in 2000 and increased the amount to 400 mmcfd last year. Reserves at the existing Yetagun project have been placed at 3946 billion cubic feet (bcf) with a sale reserve of 2437 bcf.

Thailand’s bid to secure more gas from the Yetagun field is only one of a series of moves in recent weeks to become more heavily involved in Myanmar’s oil and gas sector.

A senior PTT official, speaking on condition of anonymity, said this month that Myanmar was “very important to [Thailand’s] energy plans”.

“Basically we are short of energy so we have to look for reserves in gas, LNG and liquefied hydrocarbons anywhere we can. But piped gas is better for us because it’s more secure,” the official said.

“Oil and gas is top of the agenda between Thailand and Myanmar.”
PTTEP already has five projects under development in Myanmar, mainly in the Gulf of Mottama and pipes about one billion cubic feet of gas a day from Myanmar.

On August 4, PTTEP revealed it had submitted bids to the Myanmar government for more petroleum concessions.

“We have already submitted proposals for concessions on another four petroleum blocks in Myanmar and those are in Bengal Gulf,” a PTTEP spokeswoman told AFP, adding that “Myanmar is our key focus at present.”
Sidhichai Jayant, another company spokesperson, told ThaiDay that the new concessions were “around the A-1 block”.

“We have a lot of gas already, so we are hoping to find more liquid (oil). But you can never tell until you start drilling test wells.

“We are keen to join in any new bidding Myanmar opens to build up our reserves amid skyrocketing oil prices,” she said.

On July 31, PTT confirmed it had joined the race against China and India for exclusive rights to gas in the A-1 block off the Rakhine State coast.

Thailand’s caretaker Prime Minister Thaksin Shinawatra, in a weekly radio address on August 5, reaffirmed his country’s reliance on Myanmar energy production. “Myanmar will continue to be Thailand’s biggest source of energy,’’ he said.

His comments came after an announcement on August 2 by PTTEP that an affiliate of the company had discovered a new petroleum source at the offshore “Zatila-1” well, in the M9 area about 250-300 kilometres south of Yangon.

Thaksin said the find was of a “significant amount’’ of natural gas and oil.
PTTEP has been granted a concessionary right to conduct petroleum exploration and production in the M9 block for a limited period.

“PTTEP’s affiliate, PTTEP International Co., discovered the new petroleum source on June 28 and we’re testing the commercial prospect of the newly-discovered well and will soon report to the public,” PTTEP president Maroot Mrigadat told journalists on August 2.

PTTEP’s growing focus on Myanmar comes during a plan by the company to spend US$6.16 billion in the five years to 2010 to boost production of crude oil and natural gas at home and overseas. The company has contracts to explore and develop oil and gas fields in countries such as Vietnam, Myanmar, Indonesia and Algeria.

But since Thailand is forced to import nearly 90 percent of its oil, pressure has grown on PTTEP to balance out its gas-heavy portfolio.

Myanmar, which sits right on Thailand’s doorstep, is a much more attractive place to look for oil than the Middle East.

“The geographic proximity of Myanmar is quite inviting; we are the closest for them,” PTTEP spokesperson Sidhichai said. “The transportation costs from the Middle East are ridiculous these days with the high oil prices. We may even sell the oil we found in Oman because the transportation costs don’t make it worth shipping it back to Thailand.”

Large oil companies from around the globe also have already scooped up the most attractive finds.

“To be fair, we can’t go into Malaysia, Saudi Arabia, Kuwait and Brunei because all the blocks are taken up,” Sidhichai said. “We don’t have too many choices. But the closer, the better.”