Myanmar promises draft gas HoA for A-1 next month

Vol 9, PW 12 (22 Sep 05) People & Policy

Myanmar appears convinced by Indias determination to buy its gas and has promised to submit a draft Heads of Agreement for sale of gas from block A-1 to Delhi by the end of next month.

This can be counted as the most positive outcome of the Indian oil ministry delegations visit to Myanmar in end-August. During the discussions, Myanmar authorities made a presentation setting out a typical gas sale-purchase HoA through pipeline, based on its experience of exporting gas to Thailand.

We learn, for example, that Myanmar gas sold to Thailand is linked to fuel oil prices prevailing at Singapore. Based on current fuel oil prices, said Myanmar, the price of gas at the Thai border works out to about $4.95 per mmbtu.

Of this price, 62% (or $3.07 per mmbtu) is the wellhead price of gas while 38% ($1.88 per mmbtu) is the transmission cost. Myanmar also sets out a step-by-step process for beginning gas sales discussions.

First, operator Daewoo would be asked to prepare a draft HoA by end-October, possibly in consultation with the other stakeholders including (state-owned) Myanma Oil and Gas Enterprise. This draft HoA will be examined by Myanmar authorities - including energy minister Brigadier Lun Thi - and then passed on to the Indian side.

India was told this would initiate the process of discussion on the HoA. India, however, suggested that discussions could begin right away since all the terms in a model HoA for gas sales-purchase are well known to both sides.

As discussions progress, said India, the position of either side with respect to the various elements could be recorded for successive meetings. Continued India: This will lead to clarity and will also help GAIL prepare a more realistic and meaningful feasibility study for transporting the gas.

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