Burma Business Roundup (Saturday, Sept. 8)

By William Boot 8 September 2012

Total, Nippon Ignore Transparency Gripe in Offshore Gas

Two major oil companies have thrown caution to the wind by joining Thailand’s exploration and production firm PTTEP in a major Burmese offshore gas field.

Total of France and Japan’s Nippon Oil announced on Sept. 3 that they will take stakes in the big M11 block in the Gulf of Martaban off Burma’s southeast coast.

The size of their investment has not been disclosed, but PTTEP has previously said that exploitation of the estimated 50 billion cubic meters of gas will cost at least US $1 billion.

PTTEP has held the block alone for two years and until now had failed to attract co-investors, in spite of interest from a number of big oil businesses such as China National Offshore Oil Corporation.

The Thai state-owned company’s Chief Executive Tevin Vongvanich said bringing in partners was to “manage investment risks especially for deep-water exploration.”

PTTEP will remain the chief operator of the field with the biggest stake.

The surprise investment by Total and Nippon comes as Burma’s Ministry of Energy announced this week it was postponing an auction of 20 or more offshore and onshore oil and gas blocks until the industry become more transparent.

An unidentified ministry official was quoted by Reuters news agency as saying the ministry had been petitioned by Western firms—including ConocoPhillips, Hess Corporation of the US, Royal Dutch Shell, and BP—who are “very strict about international standards like transparency, environmental, social and biodiversity impacts.”

The ministry had been expected to invited bids for the blocks during the Sept. 3-6 oil and gas forum held in Rangoon. Some of the events at the forum were sponsored by Shell and ConocoPhillips.

The auction might take place before the end of this year.

Airline’s Faith in Booming Rangoon

One of the world’s biggest and most prestigious airlines is to start a daily direct service between Rangoon and Singapore from October to meet what it says it growing demand travel demand.

“Demand has been growing strongly for both business and leisure travel to Myanmar, and Singapore Airlines looks forward to serving the country for the first time,” Singapore International Airlines’ (SIA) Executive Vice-President Mak Swee Wah said on Sept. 4.

SIA said it will take over half the 16 flights run every week by its budget carrier SilkAir and will introduce 320-seater Boeing 777 aircraft to increase capacity by 50 percent.

Nippon Airways of Japan this month joins airlines from Thailand, China, India, Malaysia, Singapore and Vietnam which have already resumed direct flights since economic and political reforms began.

Also from October, Thai Air Asia begins the first direct flights between Mandalay and Bangkok.

The budget airline will fly four times a week from Oct. 4, using 189-seater A320 planes. The airline will also start flying to Naypidaw and increase its Bangkok-Rangoon service to three times daily.

Hotels Capacity Stretched as Visitors Rocket

Foreign visitor arrivals in Burma are rocketing are the country opens up to the outside world.

The number of business and holiday travelers entering the country between January-July was over 300,000—up 37 percent on the same period of 2011, the Ministry of Hotels and Tourism announced this week.

The biggest leap came from business travelers, said the ministry, up 60 percent on the period last year. However, most visitors are still coming from Asia.

Sixty percent of the total was from Asian countries, with Thailand and Japan topping the list. The biggest single nationality was Thai—with 48,014 visitors.

The total figure for the whole of 2012 is expected to be around half-a-million, prompting calls for a rapid improvement in the country’s hotel accommodation capacity which is severely limited at present.

Singapore Grabs Corporate Rangoon Events Market

Another Singapore firm has won a franchise to organize a business conference in Burma as the tiny city-state appears to be cornering the market in corporate events.

Advantique Group will organize and manage a private sector investment summit scheduled for Nov. 1-2 in the former Burmese capital.

Another Singapore company, the Center for Management Technology, has been responsible for the international oil and gas forum that has been taking place this week in Rangoon, and has already staged an investment and a mining conference in the city.

“[Burma’s] open door policy amid global economic uncertainties is the beacon of hope for companies seeking new markets and sustained growth,” said Advantique.

“The Myanmar Private Sector Investment Summit highlights the importance of the private sector in building up the economy of Myanmar and aims to provide guidance and clarity to investors in the uncharted waters of the Myanmar market.”