China May Start Receiving Myanmar Gas Through Pipeline in 2013

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By Shinhye Kang

March 10 (Bloomberg) -- China, the world’s second-biggest energy consumer, may start receiving natural gas from Myanmar’s Shwe project through a cross-border pipeline in April 2013.

China will import 400 million cubic feet of gas a day from Myanmar’s offshore fields, U Aung Htoo, director of planning at state-run Myanmar Oil and Gas Enterprise, said in an interview in Seoul today.

A group led by Daewoo International Corp. signed an agreement in December to sell gas from Myanmar to China National Petroleum Corp. The group -- which includes Myanmar Oil & Gas Enterprise, India’s Oil & Natural Gas Corp., GAIL India (Ltd.) and Korea Gas Corp. -- will supply the fuel to China’s biggest oil company for 30 years.



China and Myanmar are still in talks on how the gas link is to be built and how construction costs may be split, Aung Htoo said. China shares with Myanmar a mountainous land border of 2,185 kilometers (1,355 miles).

Gas will account for 8 percent of China’s overall energy consumption by 2015 compared with 3.3 percent in 2007, Cui Yingkai, a director at PetroChina Co.’s gas and pipeline unit, said on Nov. 27.

Prices will be negotiated with China on a quarterly basis to reflect global market conditions, Daewoo International said in December. The Shwe, Shwe-Phyu, and Mya areas in the A-1 and A-3 blocks are estimated to hold between 4.5 trillion and 7.7 trillion cubic feet of gas in total, according to the Seoul- based company.

Daewoo International has a 51 percent stake in the fields while Myanmar Oil and Gas Enterprise has a 15 percent share. Oil & National Gas owns 17 percent, GAIL India 8.5 percent and Korea Gas 8.5 percent.

Zawtika Project

Commercial output at M-9 gas block in Myanmar will begin in 2015 or earlier, Aung Htoo said. The project in Zawtika field is developed by PTT Exploration & Production Pcl, Thailand’s only publicly traded oil and gas explorer, and Myanmar Oil and Gas Enterprise, he said. As much as 250 million cubic feet of gas will be exported to Thailand, Aung Htoo said.

PTT Exploration will postpone output at the M-9 block to 2013 from 2012, Krungthep Turakij newspaper reported last month. The block is estimated to have at least 1.5 trillion cubic feet of gas reserves, which can be supplied over 20 years. Thailand, which buys about 30 percent of its gas from neighboring Myanmar, uses gas to generate about two-thirds of its electricity.

Proven gas reserves in Myanmar, formerly known as Burma, jumped 39 times to 21.19 trillion cubic feet at the end of 2007, equivalent to almost a quarter of Australia’s proven reserves, according to the BP Statistical Review.

Myanmar’s daily gas production will almost double to 2.235 billion cubic feet by 2015 from 1.215 billion cubic feet currently, Aung Htoo said.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg. net.
Last Updated: March 10, 2009 01:50 EDT