Economy

Burma Business Roundup (Saturday, April 13)

By William Boot 13 April 2013

Offshore Gas, Oil Bids Open and MOGE to Get Involved

Major Western oil companies BP, Shell and Chevron are tipped to be among the likely bidders for 30 new offshore exploration blocks now being offered for licensing by the Burma’s Ministry of Energy.

Other large firms expected to make offers include China National Offshore Oil Corporation (CNOOC), Petronas of Malaysia, PTTEP of Thailand and India’s GAIL—all state-owned enterprises.

Details of the blocks have not been made public, other than that 11 are in shallow water and 19 in deep water. And it will be late June before licenses are awarded.

Bidders can apply for up to three blocks. Shallow water licenses will require a local partner but the deeper water blocks can be 100 percent foreign operated due to the technical expertise and cost involved.

“Even firms such as CNOOC do not yet have the extensive technological skills to explore deep sea under floor territory,” regional industry consultant Collin Reynolds in Bangkok told The Irrawaddy. “CNOOC has only recently acquired its first deep-water drilling rig. These Bengal bay blocks will need serious investment and there are no guarantees of success although tentative surveys indicate a lot of natural gas.”

The closing date for bids to the Ministry of Energy is June 14.

No details on the transparency of the selection process have yet been published and it appears that the state Myanma Oil and Gas Enterprise (MOGE) will retain close involvement.

MOGE will participate in production contracts resulting from successful commercial discoveries of gas and oil.

MOGE was closely linked with the former military regime’s secretive manipulation of Burma’s offshore gas riches to date and is widely reported to have been the main reason why plans to hold an offshore blocks auction last September were postponed until now.

Chinese Investment in Burma Still Welcome, Says Thein Sein

China’s businesses and investment are still welcome in Burma, President Thein Sein told the state-controlled newspaper China Daily.

In an interview with the paper, Thein Sein rejected reports that Burma’s opening up to the West had made China less welcome.

“Chinese investment in Myanmar [Burma] has not only benefited Chinese investors but also helped Myanmar people,” China Daily quoted him as saying.

The impression that China was less welcome now follows Thein Sein’s surprise decision to suspend construction of the multi-billion dollar hydroelectric river dam project that was being built by Chinese firms in Burma.

Most of the huge volume of electricity to be generated by the Myitsone dam was scheduled to be pumped to China. Thein Sein suspended the project on environmental grounds.

“We very much welcome big Chinese enterprises and projects which can create jobs,” Thein Sein was quoted as saying.

The Burmese president met China’s new President Xi Jinping on a brief visit to China last weekend to attend an economic forum.

“During the talks both [presidents] confirmed they would enhance their economic ties, particularly in cooperation on major projects,” said China Daily.

German Engineer Bosch Joins 1,300 Firms Entering Burma

More than 5,000 new businesses have officially registered in Burma since the beginning of 2011, said the Directorate of Investment and Company Administration (DCIA), a government agency.

The total of 5,200 includes 1,300 foreign companies opening branch or representative offices in the country for the first time, said the agency.

The foreign firms came from 32 countries and have invested about US $6 billion.

The new domestic businesses were created from “affiliates or units of previously registered companies,” the agency said, and they had invested $1.16 billion in the last two years.

The latest major foreign company to set up a branch in Burma was Germany’s Bosch, a global brand in engineering.

Bosch opened a branch in Rangoon to promote sales of fire and safety equipment.

Southeast Asian sales director Chan Yit Ming said Bosch was negotiating with the Myanmar Fire Services Department to develop fire prevention systems and a centralized monitoring system for fire control.

Bosch has factories in Cambodia and Vietnam but has not yet committed to building one in Burma.

Japanese Advertising Giant Wins Deal to Promote Burma’s SEA Games

One of the world’s biggest advertising and public relations companies, Dentsu of Japan, has won the contract to promote Burma’s hosting of the Southeast Asian Games in December.

Toyko-based Dentsu “has been appointed by the government of [Burma] as its sponsorship management consultant,” the multilayered conglomerate said in a statement.

Dentsu, with dozens of subsidiaries across the world and thousands of employees, said the contract would be handled by Dentsu Sports Asia, based in Singapore.

“In its role as sponsorship management consultant, Dentsu Sports Asia will work with the Dentsu Asia branch in Myanmar [Burma] and other Dentsu Group companies under the Dentsu Asia umbrella to offer integrated advertising communications proposals related to the 27th SEA Games to existing global, regional and local clients as well as to attract new clients,” the Tokyo statement said.

“Together they will contribute to business expansion as well as build corporate and product brand strength for clients in Myanmar and other countries in the Asean [Association of Southeast Asian Nations] region.”

The Games will be held from Dec.11-22 and involve participation by the 10 countries of Asean plus tiny Timor Leste. Sporting events are scheduled for Naypyidaw, Mandalay and Rangoon, but concern has been expressed in some quarters about the adequacy of sporting facilities and athletes’ accommodation.

Thai State Firm Bids for Dawei Telecommunications Ticket

The state-owned Communications Authority of Thailand is bidding to win a contract to install a fiber optic cable system for Burma’s southeast coast centered on Dawei.

The authority, also known as CAT Telecom, said such a system would provide broadband quality Internet communications for the planned special economic zone around Dawei.

A feasibility study showed CAT would need to invest the equivalent of US $41 million to construct a cable, mostly undersea, for 800 kilometers from Dawei down the coast to its base station in Satun, southern Thailand, executive Surapon Sanguansilp was quoted by the Bangkok Post as saying.

It was not made clear why such a long cable route was necessary when Bangkok is less than half the distance from Dawei.

A number of foreign firms are bidding for telecommunications rights in Burma although most are focused on the busier Rangoon-Mandalay corridor.

The multibillion dollar Dawei project—contracted to another Thai company, Italian-Thai Development, and backed by the Bangkok government—is stalled due to a lack of big investor support.

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