Weekly Business Roundup (October 13, 2008)

By WILLIAM BOOT

Vietnam Joins Hunt for Gas and Oil in Burma

Vietnam is joining a growing list of countries bidding for a stake in Burma’s oil and gas development.

Rapidly expanding state-owned PetroVietnam has won a concession to explore in an offshore block in the Gulf of Martaban, in a partnership that includes the influential Burmese building company, Eden Group.

PetroVietnam, along with its subsidiary Vietsovpetro, will search for hydrocarbons in Block M-2 in the gulf.

The block, about 100 kilometers southeast of Rangoon, is in the same area where Thailand’s PTTEP recently announced a big gas find in its M-9 Block.

No details of the concession have been disclosed by the junta’s Myanmar Oil and Gas Enterprise, which will also be a nominal stakeholder in the venture.

However, the award of the exploration and production license follows an agreement signed between Burma and Vietnam just over one year ago to engage in “strategic cooperation in oil and gas.”

PetroVietnam announced earlier this year that it intended to become more of a player in the regional and global industry.

Eden Group is a construction and hotel management company with no previous experience in oil and gas.

The company is run by Chit Khaing, a member of a small, elite group of Burmese businessmen with close links to the military regime.

The M-2 block is also close to the major gas-producing Yadana field, which supplies Thailand.

Drilling tests so far by PTTEP in the M-9 Block have produced estimates of at least 50 billion cubic meters of gas, the company said recently.

Virtually all the gas so far discovered in Burma’s offshore waters is sold abroad, and industry observers said any gas found by PetroVietnam will likely find an eager buyer in Thailand, which depends heavily on the fuel for its electricity generation.

Japan Bids to Curb Pollution by Burma’s Factories

Japan is to spearhead the establishment of an anti-pollution agency in Burma, ahead of plans to try to develop a stronger chemicals industry in the country.

An “ethical standards” program targeting the 70 or so factories in Burma that handle chemicals in some way will be managed by the Japan External Trade Organization (JETRO), a Japanese government agency.

JETRO says it will organize and manage the Myanmar Responsible Care Council in cooperation with the Myanmar Industrial Association and the Japan Chemical Industrial Association.

Similar councils, which have no legal teeth, have been set up in some other member countries of the Association of Southeast Asian Nations.

JETRO said in a statement it would seek to introduce environmental awareness standards in Burma similar to those practiced by Japan’s domestic chemicals industry.

The Myanmar Industrial Association is on record as saying it wants to press the development of a bigger chemicals production industry in Burma.

Burma ‘Not Likely’ to Sell Fuel to Bangladesh despite Talks

Industry insiders say there is little likelihood of Burma selling gas to Bangladesh, despite reports that the two neighbors had agreed a deal in principle during a high-level Burmese visit to Dhaka.

Bangladesh media said last week that gas sales were on the main agenda of the talks between Burma’s Vice Snr-Gen Maung Aye and Bangladeshi government leaders.

“In principle, Myanmar has no restriction on exporting gas to us. They are open to discussion with us on the gas export issue,” Bangladesh’s special adviser for the power and energy ministry, M. Tamim, was quoted by The Daily Star as saying.

Bangladesh—like Burma—is desperately short of energy to generate electricity.

“The major gas find in Burmese offshore waters nearest to Bangladesh is very large, but it is all earmarked for China,” energy commodities analyst Sar Watana told The Irrawaddy in Bangkok this week.

“It’s also doubtful that Bangladesh could afford to compete for purchases against the likes of China, Thailand and Japan and South Korea.”

Bangladesh had to get a loan from the Asian Development Bank to finance a survey of its known gas fields.

Another energy industries analyst said a continuing dispute between Rangoon and Dhaka over offshore territorial waters will “drag on the idea of selling gas” to Bangladesh.

“There is more likelihood of Bangladesh doing a deal to build a small hydroelectricity project in Burma’s Arakan region, but I think all this really depends on how the sides progress on offshore territory talks which are becoming increasingly important in view of the growing hunt for hydrocarbons under the sea,” said Malcolm Harding, a consultant based in Bangkok.