The Irrawaddy Business Roundup (Jan. 10, 2015)

By William Boot 10 January 2015

Burma Offshore Gas Project Faces Axe

One of Burma’s most promising offshore oil and gas projects is on an investment cancellation list drawn up by developer PTTEP if global oil prices continue their fall.

The Thai state-owned oil company said its M3 Block in the Gulf of Martaban, where promising gas discoveries have been made, is one of five foreign investments now facing the axe.

“If average oil prices fall to $55 a barrel, PTTEP and the PTT group may adjust investment plans. We could put a brake on [Burma’s] M3 projects,” PTTEP chief executive Tevin Vongvanich told a Press briefing in Bangkok this week.

PTTEP signed a production-sharing contract with Myanma Oil & Gas Enterprise in 2004 and has carried out surveys and some exploratory drilling in the 6,200 square kilometre (2,400 square mile) sea block.

As the operator of the block with an 80% ownership PTTEP was scheduled to “continue a drilling campaign preparation for 5 appraisal wells and 1 exploration well” in 2015, the firm said on its website.

PTTEP’s minority partner with 20% is Mitsui Oil, a Japanese company.

The M3 Block is in the same area as the Zawtika gas field which is also managed by PTTEP and began producing natural gas in 2014. Burma is receiving about 50 million cubic feet of gas per day from Zawtika but the bulk of production, about 250 million cubic feet per day, goes to Thailand.

Uncertainty over PTTEP’s M3 project coincides with concerns that the 5-year low global oil price may also affect some of the production sharing contracts currently being negotiated in Burma for 20 new offshore blocks. Licenses were granted last March to a number of foreign oil companies but to date only one has been converted into an actual exploration contract.

Japan ‘Ignores Land Rights Issues’ in Haste to Invest in Burma

Japanese companies have been accused of putting business before local rights in Burma in Tokyo’s “attempt to curtail China’s influence in Asia”.

Aided by the government-funded Japan International Cooperation Agency (JICA), companies have brushed aside land ownership rights, notably at the Thilawa Special Economic Zone (SEZ), a report in the Wall Street Journal said.

“Haste and irresponsibility have so far undermined Japan’s reputation as a friendly regional neighbor and have the potential to derail Burma’s fragile peace process while exacerbating human rights concerns,” it alleged, under the headline ‘Japan’s Misadventures in Burma’.

The report was written by two analysts with the Burma Partnership, a collection of Burmese and foreign rights groups campaigning for democratic development.

The Thilawa SEZ involves Japanese corporation heavyweights Marubeni, Mitsubishi and Sumitomo, but “villagers have been forced to make way…often through coercion by Burmese authorities”.

“Around 300 people have already been relocated and thousands more will have to move during future phases of the project in return for inadequate compensation, poor quality housing, reduced livelihood opportunities and worsening access to essential services,” said report authors Rin Fujimatsu and Alex Moodie.

The report said the Burmese business partners in Thilawa working with the Japanese corporations are led by a man still on the US sanctions list, Dagon Win Aung.

JICA is also involved in industrial project plans in Karen and Mon states where “resources remain heatedly contested,” the report said.

UN human rights representative Yanghee Lee will include issues relating to theft of land, or poor compensation for land taken for commercial developments, as well as the suppression of public protests against development projects, during her visit to Burma. She is in the country until Jan. 16.

Mining Firms Line Up for Chin State Operations

Surveys by a “joint task force” are being carried out in Chin State following applications for mining operations, a report said.

“We are surveying the areas where about 26 mining companies have applied to conduct exploration in Chin State. If the companies ensure transparency, and the operations are beneficial to the local communities which also give their consent, we intend to approve them,” state mining and forestry minister Kyaw Nyein, was quoted by Myanmar Business Today saying.

Chin State has nickel, chromite, iron, copper, aluminium and limestone reserves, the minister said. However, he conceded that only the Naypyidaw government has authority to issue mining permits.

There is ongoing local opposition to a project by a Chinese firm to extract nickel from the Mway and Phar mountains in the Tedim township area.

Jade Trade ‘Undermined’ by Anti-Corruption Campaign in China

A continuing crackdown on corruption in China is having an adverse knock-on effect on Burma’s jade trade, a report said.

Sales of jade slumped towards the end of 2014 and do not look promising for 2015 because many regular Chinese buyers are staying away, traders were quoted as saying by the Myanmar Times.

Those that visit Burma are demanding price cuts, the traders said, and the availability of quality jade stone has deteriorated because armed conflict in Kachin State has disrupted mining operations.

“China has also conducted a high-profile crackdown on its own corrupt officials, which some [traders] are blaming for falling interest from the country’s buyers,” the report said.

The crackdown on corruption in China, led by President Xi Jinping, is one of the toughest and most public seen in the country for many years and has affected all areas of the economy.

Burma-Laos Linking Bridge over Mekong to ‘Open in March’

An US$18 million bridge across the River Mekong linking Burma with Laos is ahead of construction schedule and is now expected to open in March, reports said.

The bridge, more than 500 meters (1640 feet) long, is being financed by the governments of the two countries. On the Burmese side it starts at Kainglap in Shan State.

The bridge is primarily intended to carry heavy commercial trucks and other vehicle traffic and will not be open to pedestrians or cyclists, said the regional tourism newspaper TTR Weekly.

Construction supervisor Xaysongkham Manotham told local media that construction is more than 90% complete and ahead of schedule so should be ready for opening in March, TTR Weekly said.