Myanmar wants Russian arms in exchange for oilfields

Vol 10, PW 7 (27 Jul 06) People & Policy

Myanmars military junta is offering Russian companies a stake in the countrys oilfields in exchange for arms supplies.

India shares a part of its eastern border with Myanmar and is watching this emerging relationship between Yangon and Moscow with growing concern. PETROWATCH learns discussions on the arms-for-oilfields swap took place in May during a visit to Russia by a high-level delegation from Myanmar led by Vice Senior General Maung Aye, deputy head of the countrys State Peace and Development Council.

They held talks with Gazprom, reveals a source. Myanmar has agreed to allow Russia to share in the exploration of its oilfields in exchange for weapons.

Russian officials are believed to have offered Myanmar advanced technology to explore for oil and gas in onshore and difficult blocks. This report further understands both sides decided to begin exploratory work using the advanced technology on an experimental basis at exploration block RSF-1 in line with the Reactivation of Suspended Fields programme underway in Myanmar.

Gazprom is not the only Russian firm hoping to benefit from Myanmars largesse. Private Russian firms Sun Group (owned by the Khemka family of India) and gas major Itera also want to invest in onland field RSF-1.

But Yangon is reluctant to commit to either until experimental exploration work with Russian technology at RSF-1 block is successful. GAIL, IOC ONGC Videsh and Oil India are trying unsuccessfully to get a stake in Myanmars onland oilfields, notably in RSF-5, RSF-6 and RSF-9.

Last year, they submitted joint bids for RSF-5, RSF-6 and RSF-9 but midway through the bidding process in February 2005 Myanmar authorities sent a surprise one-page letter saying all onland blocks are reserved for the state-owned Myanma Oil and Gas Enterprise. This position has yet to change even though Essar Oil was awarded onland block L and offshore A-2 block in May 2005.