Woodside's Second Dive Shows High Prospect Water

BMI View : Woodside Petroleum has confirmed its significant interest in acreage in Myanmar after acqui ring a stake in a second offshore block since the beginning of the quarter. The improving regulatory framework has caught the attention of some international oil companies although exploration is still dominated by i nde pendent players based in Asia and Oceania.

Australia-based Woodside Petroleum announced on December 10 that it had acqui red a second stake in Myanmar ' s offshore licen c es. The company will be farming-in to Block A-6 in the Rakhine Basin , sharing an equal interest with private local company MPRL E&P Pte . This development echoes Woodside ' s October entry in to Myanmar, when the company acquired a 40% stake in Block AD-7 , which was formerly fully owned by South Korea ' s Daewoo (see our online service, ' Woodside Latest To Enter Asia's Newest Frontier ' , October 22 2012 ) .

Since the withdrawal of international sanctions on the country, Myanmar has generated a great deal of interest amongst various investors, including i nternational o il c ompanies (IOCs), and has undertaken the steps necessary to improve its regulatory framework. IOCs and independent frontier players have progressively entered Myanmar to undertake exploration , or to boost their asset base s in the country . To tal ' s recent offshore farm-in is a good example (see our online service, May 3 2012, Western IOC's To Join Road To Mandalay,' and see, 'Tot al Takes The Lead,' September 4 ) .

Myanmar ' s huge potential mostly comes from largely unexplored acreage surrounding the already 334 bcm of proven gas reserves (according to state-owned Myanmar Oil and Gas Enterprise data) . So far, the country has produc ed a modest 12bcm per annum, but with consumption stagnating at around 3bcm , there is significant potential for exports.

Little Goldfish Could Become Cash Whale
Myanmar's Gas Production, Consumption & Net Exports, 2000-2011 (bcm)

Beware The Regulatory Accident

Woodside ' s ambitious dive in to exploration in Myanmar further illustrates that offshore frontier exploration in the country is dominated by Asia ' s and Oceania ' s independent players (see ' Out look Continues To Brighten For Western Entry ' , June 7 2012) . While some IOCs, such as Total , Chevron and PTTEP have already moved into this market, regulatory uncertainty remains because of the situation that was allowed to develop under the old regime , and this continue s to dampen interest on the part of large players. Nonetheless, Myanmar finally adopted early November a long awaited foreign investment regulation that should improve overall investors' sentiment. BMI ' s Countr y Risk team anticipates that the political and economic environment s will continue to improve; firing expectations that more large companies will enter the market over the coming years.

Myanmar - Political and Economic Risk Ratings
Latest Rating Previous Rating Regional Average Global Average
Source: BMI
S-T Political 59.0 56.5 72.7 65.6
L-T Political 37.5 34.7 62.0 63.3
S-T Economy 53.5 53.5 62.1 54.2
L-T Economy 48.7 49.3 59.0 53.6
This article is tagged to:
Sector: Oil & Gas
Geography: Myanmar

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