Shell Inks Contract to Explore 3 Offshore Oil and Gas Blocks

By Kyaw Hsu Mon 6 February 2015

RANGOON — Royal Dutch Shell and its Japanese partner Mitsui Oil Exploration Co., Ltd. (MOECO) signed an exploration and production sharing contract with state-owned firm Myanma Oil and Gas Enterprise (MOGE) in Naypyidaw on Thursday for three offshore deep-water blocks.

The contract allows Shell to assess the potential of deep-water blocks AD-9 and AD-11 off Arakan State and MD-5 off Tenasserim Division, according to a press release issued by the Anglo-Dutch firm.

Shell is the main operator, with a 90 percent stake in each of the three blocks, while MOECO will assume a 10 percent participating interest.

While global oil prices have fallen sharply since mid-2014, Shell said it was delighted to pursue the opportunity to “unlock and develop” Burma’s energy resources.

“The three blocks offer an exciting frontier exploration opportunity to apply the advanced deep-water technical capabilities we have built up around the world over the past three decades,” Graeme Smith, VP Exploration Asia and Australia at Royal Dutch Shell, said in the statement.

The potential oil and gas reserves of the three blocks, which together cover some 21,000 square km with water depths ranging from 1,800 to 2,700 meters, is not known.

Zay Yar Aung, the Minister for Energy, said the oil and gas exploration was pivotal in the development of Burma’s energy sector and would help spur economic growth, according to the press release.

The chairman of Parami Energy Group of Companies, Pyi Wa Tun, said Shell’s return to Burma was good news for the oil and gas industry, especially as some firms have been hesitant to enter the market.

“The government’s bidding rounds were successful for international firms,” he said. “Many world famous oil and gas firms were really interested to invest in Burma.”

Pyi Wa Tun added that the government should ensure its energy policies offered sustainable benefits for the country.

Since the current quasi-civilian government came to power in 2011, the first and second bidding rounds for onshore blocks were held in 2012 and 2013, followed by a third round of bidding last year.

Burma’s Ministry of Energy named nine international companies, including Russian, Italian and Canadian firms, as winners of tenders to explore onshore territory for oil and gas reserves in 2013.

In March 2014, the Ministry of Energy announced the awarding of offshore exploration rights to international firms including Shell, France’s Total, Italy’s Eni, Norway’s Statoil and ConocoPhillips from the United States.

Malaysia’s Petronas, Thailand’s PTTEP and Total are working on deep-water blocks in Tenasserim Division, while South Korea’s Daewoo International and Australia’s Woodside Petroleum Ltd. jointly operate oil and gas fields off Arakan State.