They did not even wait to see if Aung San Suu Kyi would win a parliamentary seat. They did not wait to hear if European Union ministers will vote later this month to end economic sanctions. They did not wait for promised legislation to make Burma a more secure place to invest.
Instead, executives from oil and gas production companies big and small, from the East and West, swarmed around a government-backed Rangoon trade fair to sniff at what was on offer.
The “Gearing Up for the Emerging Oil and Gas Opportunities” show attracted scores of representatives from dozens of companies from 20 countries eager not to miss out on the prospect of 30 or more offshore and onshore exploration blocks being put up for sale.
“Myanmar’s onshore and offshore mineral potential is too great for investors to ignore,” said organizers the Center for Management Technology (CMT) of Singapore. “Whilst awaiting the expected removal of economic sanctions against the New Myanmar, international oil and gas executives are planning and preparing for their participation in the lucrative oil and gas deals.”
This upbeat mood was underlined by Burmese Energy Minister Than Htay who welcomed industry representatives at the three-day gathering in Rangoon. “There has never been a better time for you to come to Myanmar and search for opportunities in the oil and gas sectors,” he told the visitors who came from Japan, the United States, Britain, Australia, Germany, France, Switzerland, South Korea and Singapore.
Names on the attendance list included Nippon Oil & Gas Exploration, Total, Mitsui & Co, Chevron, PTT of Thailand, Salamander Energy, CNOOC, Roc Oil, ENI, Perenco Holdings, Shell, Coastal Energy, Mitsubishi Corporation, Japan Oil Gas and Metals National Corporation, Fichtner Gmbh & Co, GS Engineering & Construction, Sumitomo, Todd Corporation, and many more.
But beyond the hype, what exactly is on offer in a sector which for the last 20 years has enriched the Burmese military and its close business cronies at the expense of the rest of the country?
The director general of the Energy Ministry’s planning department, Htin Aung, told the Rangoon gathering last week that Burma has “proven” oil reserves of almost 140 million barrels and 11.4 trillion cubic feet of gas.
Outside analysts doubt these figures, pointing to inadequate research data and a lack of modern surveying over the last 20 years.
“There is clear evidence of substantial natural gas offshore from the fields already being worked, however, large tracts of sea territory haven’t been properly surveyed,” Hong Kong industry analyst Vince Lomax told The Irrawaddy.
“The Burmese are claiming that there are 35 million barrels of oil onshore but we have yet to see hard evidence of that. To date, there is a trickle from rather tired old fields which the British developed before World War II.
“What will be interesting many potential investors are the 20 or so large offshore blocks which have not yet been licensed for exploration.”
Several blocks closest to Burma’s central coast have already been allocated to two Chinese state-owned giants, the China National Petroleum Corporation and China National Offshore Oil Corporation.
Most gas so far found offshore is destined for export under licensing deals previously agreed by the Myanmar Oil and Gas Enterprise (MOGE), a state agency which has long been a tool of the army generals who have run Burma for decades.
It remains to be seen whether MOGE will be restructured, made more accountable, or abolished and replaced with a new industry body. However, Than Htay is on record saying that much of any new discoveries after 2013 will be used to benefit Burma’s economic resurgence.
According to Oilwatch Southeast Asia, a regional grouping of NGOs, Burma is exporting roughly one billion cubic feet per day of gas and this will grow to over 1.6 billion cubic feet per day with new sales commitments to China and Thailand.
In the financial year 2011-2012 the sales revenue on these exports totalled nearly US $3 billion, said Oilwatch.
“Gas revenues over the last decade have disappeared under corrupt military leadership, leaving the country with some of the worst social indicators in the world,” said Oilwatch’s chief coordinator Clemente Bautista. “Investment in Burma’s oil and gas sector is not benefiting the people of Burma nor the country’s sustainable economic development.
“As long as there is military rule and no democracy in Burma, there will be no transparency and accountability in the oil and gas industry,” Bautista said.
That plea for patience seems likely to fall on deaf ears.
“There is a Klondike-like mentality developing around Burma and nobody wants to get left behind in the rush,” Southeast Asia energy industries consultant Collin Reynolds told The Irrawaddy in Bangkok, referring to the famous stampede for gold in Canada’s Yukon in the late 19th century.
“The curbs put on many oil and gas businesses by the sanctions over the last 20 years or so have left large tracts of offshore territory unexplored, but Burma isn’t Saudi Arabia. There might be a lot more gas to find in the sea off Burma’s shores, and there might be some oil, but there are no certainties,” Reynolds added.
Certainly though, foreign money will be needed to exploit Burma’s oil and gas potential. The cost of drilling, especially offshore, and building infrastructure to deliver hydrocarbons is becoming ever more expensive as explorers probe greater depths in search of their prize.
Gas was discovered just in March in an offshore block near Ramree Island licensed to a Burmese company, MPRL E&P Limited. Although the strike, as yet unquantified, was made in shallow waters, MPRL has to drill 1,000 meters beneath the seabed to find anything.
MPRL is now seeking partners to fund further exploration and, possibly, production, and said it is “receiving a lot of interest from oil majors and investment groups.”
Canadian, Australian and European companies look like being the first to test the investment waters, while American firms such as Chevron are likely to be troubled by a much more ponderous struggle in the US Congress to unravel complex economic sanctions.
The Canadian and Australian governments have already intimated that their sanctions could be lifted soon, and the EU Council of Ministers meets on April 23 to review European sanctions in the light of Sunday’s parliamentary elections, which appear to have given Suu Kyi and many other members of her party seats.
A trade lobby group, Business Europe, is already hammering on Brussels’s door urging an end to the sanctions.
But EU Trade Commissioner Karel De Gucht, who was in Phnom Penh at an EU-Asean conference at the weekend, suggested that the Europeans may not rush into Burma.
“These are only the first steps. It’s very important they continue in that direction but also that it also happens in a sustainable way,” de Gucht commented to Reuters news agency on the reforms so far in Burma.
“You should not overestimate pressure by private companies and certainly you should not overestimate the influence this has on the decision-making of politicians,” he said.