Daewoo against Myanmar gas export decision to China

Vol 10, PW 24 (05 Apr 07) People & Policy

Myanmar’s decision to export gas to China from offshore blocks A1 and A3 has run into fierce opposition from consortia at both blocks.

ONGC Videsh and GAIL together hold 30% stake of A1 and A3; operator Daewoo holds 60% while KOGAS holds 10%. PETROWATCH learns opposition to the China export plan by Myanmar’s ruling military junta surfaced at a consortium meeting in Yangon on 16th March.

“Myanmar authorities told partners at the meeting that the government had decided to sell its share of gas to Petrochina,â€‌ says a source. Faced with resistance, Myanmar officials tried to mollify the consortium by saying the MoU with Petrochina, “was only an extensionâ€‌ of an earlier document.

“They (Myanmar) said that only an in-principle decision had been taken.â€‌ Justifying its move, Myanmar officials said state-owned Petrochina had been selected over companies from India and Thailand purely for political reasons.

“Their argument is that only China (but not India or Thailand) can insulate and support Myanmar against international censure,â€‌ says a source. As a permanent member of the UN Security Council, China has the power to block any move against the ruling military junta.

As recently as January this year, China vetoed a Security Council resolution criticising the Myanmar generals. More, Myanmar already exports gas to Thailand, “and they (Myanmar) said they don’t want to sell all their gas to one buyer.

â€‌ Consortium anger against Myanmar’s decision to sell gas to Petrochina is compounded by China’s price offer, the lowest among potential buyers. Last year when Myanmar invited bids for its share of A1 and A3 gas, Petrochina offered the least attractive price: only $4 per mmbtu at China’s border with Myanmar.

PTT of Thailand was highest bidder offering $6 per mmbtu on its border with Myanmar while the GAIL-led consortium offered $5 per mmbtu. At the time Myanmar rejected all offers saying it wanted a price of more than $6 per mmbtu.

With China offering much less, is it any wonder the A1 and A3 consortium is surprised