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Last Updated: August 2016

Overview


Map of Myanmar
Map of Myanmar
  • Burma (Myanmar) is an important natural gas producer in Southeast Asia, although its upstream hydrocarbons sector is severely underdeveloped. Financial constraints by Burma’s national oil company, a lack of technical capacity, opaque regulatory policy, insufficient investment by foreign firms, and international sanctions have significantly impeded the country’s efforts to realize its oil and natural gas production potential. These factors have also severely hampered the development of necessary energy infrastructure. However, U.S. and European Union sanctions were eased or suspended in 2012 and 2013 in response to political and economic reforms in Burma.
  • Following the suspension of sanctions, more international companies have initiated oil and natural gas exploration efforts in Burma. The Burmese government is keen to attract foreign investment and technical assistance and, starting in 2011, has issued production-sharing contracts through direct negotiations or recent licensing rounds.

Petroleum and other liquids

  • Burma’s oil industry has been underdeveloped for decades. The country produces a minimal amount of crude oil and condensates from the onshore Salin basin and offshore Yetagun field. Total liquid fuels production has gradually fallen since the 1980s to around 16,000 b/d in 2015. As part of Burma’s most recent offshore bidding rounds in 2013, the country awarded 16 onshore and 20 offshore blocks to several foreign and domestic companies. International companies have started surveys and exploration activities at over half of these blocks. Additional offshore seismic campaigns are planned for 2016 and 2017, though the extent of exploration may depend on the future price environment for oil and natural gas. The Burmese government has decided to delay launching the next offshore bidding round until at least 2017 and focus upstream development of the 20 blocks awarded in 2013.
  • The country’s petroleum consumption is also small, estimated at more than 60,000 b/d in 2015, although recent economic development has driven up oil consumption, especially in the transportation sector, since 2012. Burma’s limited production and refining capacity are insufficient to meet rising domestic consumption for crude oil and petroleum products, making the country a net petroleum liquids importer.
  • Burma’s economy is beginning to expand following the lifting of sanctions and energy sector reforms. According to World Bank data, gross domestic product (GDP) growth in the country is projected to increase by around 8% by 2016-2017, one of the highest growth rates in Southeast Asia. More petroleum products will be required to meet growing transportation and industrial needs.
  • Burma had less than 50,000 b/d of refining capacity in 2015, and utilization rates are less than 40% as a result of aging infrastructure within the country’s three small state-owned refineries. Burma approved the construction of a 100,000-b/d refinery by China’s Guangdong Zhenrong Energy Company in early 2016, one of the largest foreign investments in the country to date. This facility is designed to supply both domestic and export markets with oil products.

Natural gas

  • Burma’s natural gas production has risen substantially in the past few years, from about 450 billion cubic feet (Bcf) in 2012 to 692 Bcf in 2015. Most of the country’s current natural gas output comes from four offshore basins off the country’s west coast: the Yadana, Yetagun, and Zawtika fields in the Moattama basin, and the Shwe field in the Rakhine Basin. Burma’s natural gas production is forecasted to rise as new offshore projects come online. In early 2016, the state-run Myanmar Oil and Gas Enterprise (MOGE) and Australian stakeholder Woodside Energy announced the discovery of two large natural gas wells at opposite ends of the Rakhine Basin.
  • Burma’s natural gas consumption has historically lagged behind production levels, but the country’s recent economic development has sparked growth in consumption, which reached around 140 Bcf in 2014. In anticipation of greater local gas demand for the power, fertilizer, and transportation industries, MOGE can opt to retain a production percentage from any new project for use in the domestic market. The Burmese government is also seeking international investment in liquefied natural gas (LNG) projects to help meet export obligations and growing domestic demand over the next several years.
  • Most of Burma’s natural gas production is exported to Thailand and, more recently, to China. Natural gas exports to Thailand, which accounted for roughly three-quarters of Burma’s natural gas exports, totaled around 340 Bcf/y in 2015. Natural gas exports to Thailand are supplied from the Yetagun, Yadan, and Zawtika gas fields. The Zawtika project is the newest of Burma’s major offshore gas projects, with Thailand’s PTTEP launching commercial operations in the second half of 2014. The project exports natural gas to Thailand and also serves Burma’s growing domestic market.
  • Natural gas exports to China commenced in mid-2013 with the development of the first phase of the Shwe natural gas project in the Rakhine Basin. In 2015, the Shwe field produced over 182 Bcf of natural gas, and Burma exported about 138 Bcf of natural gas to China by pipeline in the same year.
  • Burma and China recently constructed 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, commissioned the onshore natural gas pipeline with a capacity of 424 Bcf/y in 2013 to carry exported gas from the Shwe gas project to China. The crude oil pipeline, holding a capacity of 440,000 b/d, allows China to diversify transit routes for its crude oil imports from the Middle East and Africa, avoiding the Strait of Malacca. This pipeline commenced operations in January 2015, and most of the crude oil is expected to serve the Yunnan refinery project in China. However, the refinery has encountered delays and environmental protests, and is not expected to be operational before 2017. The delays could limit the amount of oil offtake from the pipeline in the short term.

Electricity

  • Burma relies heavily on hydropower for its electricity generation (making up 72% of power production in 2014), yet the country has abundant hydropower resources that remain undeveloped. The country possesses over 46 GW of potential installed capacity from 92 possible hydropower projects, according to Burmese government estimates. Natural gas and coal accounted for 23% and 5% of the country’s power generation, respectively.
  • Currently, the electricity sector fails to meet the country’s needs. Roughly 32% of the total population and 18% of the rural population had access to electricity in 2013, according to IEA estimates. In addition, aging power plants and poor electricity transmission infrastructure cause severe power shortages, especially during the dry season when hydropower is in low supply. Consequently, traditional biomass and waste (typically consisting of wood, charcoal, manure, and crop residues) is widely utilized, especially in the rural areas, and accounts for about 65% of Burma’s primary energy consumption.
  • In 2014, the Burmese Government released its National Electrification Plan, with the goal of providing electricity access to all households by the year 2030. The plan aims to expand the national grid and develop off-grid electrification for remote communities by means of mini-grid and renewable energy technologies.
  • The country’s insufficient electricity generation has prompted efforts by the government to attract investment in hydroelectric, natural gas, and coal-fired electric capacity, to improve grid reliability, and to promote demand management. However, hydropower and coal-fired power plants are facing delays from local opposition, and gas-fired generation is dependent on the country’s future domestic gas production and potential LNG developments, posing challenges to the country’s electricity growth.
  • Burma’s new Electricity Law passed in 2014 allows for more participation by foreign and private companies in both generation and distribution of electricity in the country. Also, the government announced that it will address some of the infrastructure issues by raising electricity tariffs for all consumers above a certain demand threshold, in effect increasing revenues that can be used for investment in system modernization.
  • A joint venture between Burma’s U Energy Tharketa Power Co. Ltd. and China’s Union Resources and Engineering Company will develop the country’s largest power plant. The gas-fired plant, which will add an additional 106 MW of supply, is scheduled for completion in early 2018 and is the first phase of a 500-MW capacity project.