• Burma (Myanmar) is an important natural gas producer within Southeast Asia, though its upstream hydrocarbons sector is underdeveloped. Sanctions, a lack of technical capacity, opaque regulatory policy, and insufficient investment by foreign firms have significantly impeded the country's efforts to realize its oil and gas production potential. However, many U.S. and European Union sanctions were eased or suspended in 2012 in response to political and economic reforms in Burma.
• The government is keen to attract foreign investment and technical assistance and is issuing production-sharing contracts through direct negotiations or recent licensing rounds. The government held licensing rounds for onshore blocks in both 2011 and January 2013, and plans to hold another licensing round in early 2013 for 30 offshore oil and gas fields. Burma began reforming its foreign direct investment law and providing greater revenue incentives for international company investments in 2012.
• Burma produces a minimal amount of crude oil and condensates from the onshore Salin basin and offshore Yetagun field. Total liquids production has gradually increased over the past decade from 13,000 barrels per day (bbl/d) in 2000 to 21,000 bbl/d in 2011. However, Burma's limited production and refining capacity are insufficient to meet domestic demand for crude oil and products, making the country a net oil importer.
• Burma's natural gas production has increased substantially over the past decade, rising from 61 billion cubic feet (Bcf) in 1999 to 420 Bcf in 2011. The country's current natural gas output mostly comes from the offshore Yadana and Yetagun fields, but is forecasted to rise further due to new projects. Burma's natural gas consumption, which was 118 Bcf in 2011, has been increasing, but not at the same pace as production. Exports to Thailand, which began in 1999, now account for about 75 percent of Burma's natural gas output. Exports to Thailand could rise further when PTTEP, Thailand's national oil company, launches commercial operations of the Zawtika gas project, which is supposed to have a capacity of 300 million cubic feet per day (MMcf/d). Meanwhile, exports to China would commence with the development of the Shwe gas project in the Rakhine Basin, which could have a peak production capacity of 500 MMcf/d.
• In a 2009 agreement, Burma and China decided to construct twin crude oil and gas pipelines running from Burma's port of Kyaukphyu to Kunming in southwestern China. A consortium of Asian oil companies, including the China National Petroleum Corporation, plan to commission the onshore gas pipeline by 2014 to carry exported gas from the Shwe gas project to China. The crude oil pipeline is designed to allow China to diversify transit routes for its oil imports from the Middle East and Africa, which must currently pass through the Straits of Malacca chokepoint.
• Burma relies heavily on hydropower for most of its electricity generation (nearly 70 percent in 2010). The electricity sector fails to meet the country's needs, with a mere 22 percent of the population having access to electricity in 2011. Consequently, traditional biomass is widely utilized and accounts for about two-thirds of Burma's primary energy consumption. This has prompted efforts to invest in more hydroelectric, gas, and coal-fired electric capacity, improve grid reliability, and promote demand management.

Revised: March 27, 2013

Analysis Last Updated: March 2013