Description:
"80% of the natural gas produced in Myanmar is exported (75% to Thailand and 25% to China as of 2016) [1].
Four large-scale offshore fields (Shwe, Yadana, Yetagun, and Zawtika) have played a significant role in earning
foreign currency for the government. Among them, the Yetagun field has been closely connected to Japanese
government and corporations since its development.
Nippon Oil Exploration (Myanmar), a Japanese
company, acquired working interests in the M13
and M14 blocks in 1991 and M12 block in 1992
[2]. The company developed the Yetagun field
located in these blocks through exploration,
assessment, and construction of production and
shipping facilities including pipeline.
The Yetagun field, which began production in
2000, also produces light liquid hydrocarbon
(liquid natural gas similar in nature to oil) called
condensate, a byproduct of natural gas. The
shareholders of the field are Malaysia’s stateowned Petronas Carigali, the operator (40.9%);
Myanma Oil Gas Enterprise (MOGE) (20.5%);
Nippon Oil Exploration (Myanmar) (19.3%) , and
Thailand’s PTT Exploration and Production
(PTTEP) which is a subsidiary of state-owned
PTT (19.3%)[3].
In Myanmar, a production sharing contract for offshore natural gas development [4] may allocate as much as
60% to 90% for the Myanmar government [5]. Further, there are numerous payments to be made to the
government under such a contract, including a surface fee, signature bonus, production bonus, 12.5% royalty,
25% corporate tax, and 8% special goods tax [6]. Because MOGE is currently under control of the military that
staged the coup d’état in February 2021, payments made now would benefit the military.
All of the natural gas from the Yetagun field is sold to Thailand’s state-owned PTT and exported to Thailand,
but it has been used for electricity projects implemented by and have generated profit for Japanese companies
in Thailand. The gas is supplied to the Ratchaburi and Wangnoi power plants as fuel for generating electricity
[7]. The Ratchaburi power plant is an independent power producer (IPP) in which JERA (a Japanese joint
venture by Tokyo Electric Power Corporation and Chubu Electric Power Corporation) and Toyota Tsusho
Corporation hold shares along with PTT and other corporations [8]. This plant was originally planned as Hin
Krut Coal-fired Power Plant, but the plan was scrapped due to strong opposition by local residents. Under
guidance from the Thai government, fuel was changed from coal to natural gas, and the controversial plant was
finally built after the project site was also changed from Prachuap Khiri Khan to Ratchaburi [9].
Japanese entities have long been interested in natural gas development in Myanmar. The Overseas Technical
Cooperation Agency, the predecessor organization to the Japan International Cooperation Agency (JICA),
conducted a study on natural gas development in Myanmar in 1963 [10]. The study was commissioned by the
government in Burma (Myanmar) at the time for the purpose of using the gas for fertilizer and cement production, but the records of detailed geographical surveys contained in the study suggest that Japan has long been
involved in resource development in Myanmar.
Nippon Oil Exploration (Myanmar) is jointly held by the Japanese government (50%), JX Nippon Oil & Gas
Exploration Corporation (40%), and Mitsubishi Corporation (10%). Shares now held by the Japanese
government were previously held by the Japan National Oil Corporation (JNOC), but after JNOC received much
criticism for incurring huge losses and was reorganized into the Japan Oil, Gas and Metals National Corporation
(JOGMEC), the Ministry of Economy, Trade and Industry (METI) took over the shares held by JNOC [11].
Between 2000 and 2011, profit from the sale of gas from the Yetagun field was an important source of income
enabling the Myanmar military to exert control. Ordinary expenses by the Myanmar military increased threefold
between 1995 and 2007 [12]. A significant increase is seen in 2001, and the trend continued after 2004. Given
this, it can be assumed that the increase in expenses is due to the increase in income from export of natural
gas including that from the Yetagun field.
Petronas Caligari, the operator of the Yetagun project, declared force majeure on the Yetagun field and ceased
production in April 2021 due to the production rate dropping below the technical threshold [13]. METI has
indicated that production resumed on July 21, but that it was suspended again due to multiple workers having
contracted Covid-19. Production was still suspended as of August 31 [14].
Gas production at the Yetagun field had been estimated to be near depletion even before the recent cease in
production [15]. Even so, in the past, gas from the Yetagun field was an important source of income for the
Myanmar military regime. It is unclear whether royalties, tax and other payments have been made to Myanmar
after the coup or whether such payments, if they had been suspended due to the production cease, will resume
in the future..."
Source/publisher:
Mekong Watch
Date of Publication:
2021-09-15
Date of entry:
2021-09-18
Grouping:
- Individual Documents
Category:
Countries:
Myanmar
Language:
English
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286.46 KB
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text
Text quality:
- Good