More Burmese Gas Pumped Over the Border as Thai Reserves Dwindle

By William Boot 7 August 2014

As the newest offshore natural gas field in Burma’s territorial waters begins pumping gas to Thailand, operator PTTEP said it will soon extend its drilling activities in the field to “support long-term production levels.”

Thailand now imports about 25 percent of its annual gas consumption demand from Burma, and this is rising as Thai domestic production slowly declines, said industry analysts.

Under the terms of an agreement signed by Burma’s former military regime, Thailand will take 80 percent of the gas in the newly producing Zawtika field in the Gulf of Martaban.

PTTEP began supplying small quantities of gas from Zawtika to its partner Myanmar Oil and Gas Enterprise (MOGE) in March, but the bulk of the daily production of 240 million cubic feet began flowing to Thailand via pipeline through Tenasserim Division on Aug. 5, said the Thai firm in a statement.

State-owned PTTEP said Zawtika is its biggest foreign offshore production field among operations in nine countries, but did not disclose the field’s size.

However, proven reserves in the field are at least 1.76 trillion cubic feet—50 billion cubic meters—and this is likely to grow with new exploratory drilling, said industry magazine Asian Oil & Gas Monitor.

“PTTEP is progressing with the construction of four additional wellhead platforms at Zawtika to support the production plateau, and plans to drill 10 appraisal wells between 2014 and 2015 to increase petroleum reserves and support long-term production levels,” analysts Platts quoted the Thai firm saying.

“Drilling of these appraisal wells is scheduled to begin this month,” said Platts.

PTTEP holds an 80 percent share in the joint venture with MOGE, which holds the remaining 20 percent.

“[The Zawtika] success marks as another important milestone for PTTEP in supplying natural gas to ensure energy security for both Thailand and Myanmar,” said the Thai company’s chief executive Tevin Vongvanich in a statement on August 6.

The Zawtika field agreement signed by PTTEP was the last made under the former Burma regime and the current government is on record pledging that large-scale exports from future oil and gas discoveries onshore and offshore will not be permitted until Burma’s domestic energy needs are fulfilled.

PTTEP has been coy about how much it is investing in the Zawtika field, but some industry media reports have said it could eventually total US$1 billion if additional discoveries are made. The Thai firm sought but failed to find international partners to invest in the project to share costs, said a recent report by Asian Oil & Gas Monitor.

The Zawtika field is approximately 300 kilometers south of Rangoon and 300 kilometers west of Dawei.

PTTEP is the majority stakeholder in five other exploration and production projects in offshore and onshore locations in Burma, plus minority interests in the long-operating Yetagon and Yadana fields which ship most of their gas to Thailand.

PTTEP’s offshore M3 and M11 Blocks, also in the Gulf of Martaban, cover a sea area of 11,700 square kilometers and hold prospects for more gas and some oil, said PTTEP on its website. They are still at the exploration and assessment stage and no indication of the size of recoverable hydrocarbon reserves has been given.

Earlier this year Tevin described Burma as PTTEP’s second home, which is not surprising given that Thailand now depends on Burma as the source of nearly 25 percent of its annual gas demand. Gas fuels 70 percent of Thailand’s electricity generation.

In 2013, Thailand consumed almost 4 billion cubic feet of gas per day, of which 990 million cubic feet per day was imported from Burma, said Reuters quoting the Bangkok Energy Policy and Planning Office.

The Burmese Ministry of Energy and several government agencies including MOGE are still negotiating exploration and production terms on 20 other offshore blocks provisionally awarded to a clutch of large international and smaller foreign oil companies last March. Thirty offshore blocks were originally offered for bidding, but it has never been explained why ten were dropped at a late stage in a process which began in the first half of 2013.

The provisional winners include Royal Dutch Shell, Chevron Corporation, ConocoPhillips, StatOil of Norway and Eni of Italy.