Foreign firms accused of grabbing oil wealth

Total foreign investment in the oil and gas sector has amounted to nearly US$20 billion by the end of June this year, according to the Directorate of Investment and Company Administration (DICA).

Aung Ye Soe, managing director from Machinery and Solution Co Ltd, at talks on the potential of Myanmar’s oil and gas industry said: “According to the DICA, the oil and gas industry sees a year-on-year rise in investment. There is a massive inflow of foreign investment, based on the bidding rounds.”

The Ministry of Energy’s bidding rules require international companies to form joint ventures with Myanmar businesses for land and offshore ventures. The inclusion of domestic firms amounts to an estimated 5 per cent.

Dr Aung Kyaw Htoo, managing director from DARE Co Ltd, said: “Only a handful of Myanmar companies are involved in this sector. Our general services are about 5 per cent. It amounts to 5 per cent of the total value. We need to make efforts to have a greater stake in this sector. We have many experts who worked on drilling with the Myanma Oil and Gas Enterprise. Our content is less than 10 per cent. Roughly, it is about 3-4 per cent. Domestic contractors know this and need to seek ways of extending their work and services.

“We need more legislation. A 25 per cent ratio would be fairer. Official supervision is weak. Work that domestic companies could do is shifted to overseas companies. We face difficulties despite making efforts. The government should pass laws and directives,” he added.

Myanmar exported its first barrel of oil in 1853. The Yenangyaung oil field was first discovered in 1887 and the Chauk field in 1902. Both are still in production.

The energy ministry invited international bids for oil and gas exploration on inland and offshore fields in 2013 and 2014 with the winners due to start exploration at the end of the year.