Junta Signs Gas Deal with Thailand

By WILLIAM BOOT
The Irrawaddy News

The Burmese military regime is selling off the country’s natural gas, its chief resource, as hundreds of thousands of Burmese still struggle for the bare necessities to survive after Cyclone Nargis.

The junta-run Myanmar Oil and Gas Enterprise this week struck a deal to sell neighbor Thailand more natural gas from the new, still-to-be-developed M-9 offshore field in the Gulf of Martaban.

The gas will fuel Thailand’s expanding electricity generating industry—while most of Burma remains without power.

Senior executives of PTTEP, Thailand’s state majority-owned energy exploration company, and Thai government officials were in Rangoon this week to close the deal. No details were released on how much PTTEP will pay the junta.

The deal allows Thailand to begin pumping at least 300 million cubic feet per day from the field starting about 2012. Some 80 percent of the gas will go to Thailand via a new pipeline still to be built across southeast Burma.

Thailand is already Burma’s No 1 customer for gas. Burma- watcher Sean Turnell, an economics professor at Australia’s Macquarie University, estimates gas sales earn the generals at least US $100 million per month.

Gas was Burma’s biggest foreign revenue earner in 2007, netting about half of the regime’s declared exports income of $8.7 billion.

“Burma’s gas industry operates in a vacuum of secrecy, and it’s uncertain just how much the generals rake in from it,” said energy industry consultant-analyst Collin Reynolds in Bangkok.

“One thing for sure, it’s a rapidly expanding business and has the potential to grow much more as new reserves are certain to be found in the current round of explorations.

“It’s ironic,” he said, “that despite all that onshore destruction in the cyclone, the gas industry was unscathed.”

The PTTEP deal comes as an interim damage assessment report on Cyclone Nargis was presented in Rangoon by the Tripartite Core Group, made up of Asean, the UN and Burmese officials.

The report, which will be finalized in July, says a survey of the devastated Irrawaddy delta region showed that more than 40 percent of food stock was destroyed in 380 wrecked villages, and that 90 percent of the affected population needs help.

Some NGO estimates have put the number of people in need at 2.4 million.

A little more than $200 million in aid was pledged by foreign governments, after Burmese officials asked for help, but Turnell—who produces the Burma Economic Watch bulletin—has estimated that the junta has about $4 billion in foreign exchange reserves from gas sales.

PTTEP has estimated that the M-9 field holds at least 1.76 trillion cubic feet and probably much more. The Thais have agreed to include the China National Offshore Oil Corporation on the deal.

Meanwhile, more details have emerged on the future of the much bigger Shwe gas field off Burma’s southwest coast, bordering Bangladesh.

Most of the gas in that field—with proven reserves of more than 6 trillion cubic feet—is destined for China, the chief developer, Daewoo confirmed this week.

The South Korean company has been pressured to sell the gas to China and has now invited competitive bids to build production platforms and transmission lines to shore, probably via the port of Sittwe, which is being redeveloped by Indian companies.

Daewoo is also likely to oversee—with the China National Petroleum Corporation—construction of a 1,000-kilometer pipeline through Burma into China’s Yunnan Province.

Daewoo and the Seoul government had wanted to convert the Shwe gas to liquefied form and ship it to South Korea.
But Daewoo will still do nicely out of the deal.

The South Korean newspaper Chungang Ilbo this week quoted company officials saying profits of around $1 billion could be expected over 25 years, once the gas begins pumping in about 2012.

The Burma generals’ pursuit of gas profits—little of which finds its way into the public purse—has also recently extended to a challenge to neighbor Bangladesh over disputed territorial waters west of the Shwe field that are believed to hold rich gas or oil reserves.

Burma’s ministry of energy protested to Dhaka about its plan to issue exploration licenses in the disputed zones.

Several international companies are queuing to move in after submitting bids in May.

Bangladesh’s state energy company Petrobangla is now proposing a halt to all new developments in the Bay of Bengal pending a three-nation conference also involving India.