Energy Bangla - Gas Resource of Myanmar - Beyond Bangladesh Reach?

In the wake of serious energy supply situation Bangladesh made initial proposal to its Southeastern neighbor Myanmar for importing gas from the adjacent off shore gas field. But Myanmar government appeared to have politely regretted to consider the proposal for the time being stating that Myanmar is committed to export most of its gas to China and India. According to them at this moment there is no spare gas over and above those already committed or in the process for export to China and India. Myanmar started exporting gas to Thailand for a while. The gas export to China or India has not started yet. Gas pipeline to China and India will be much longer than that to Bangladesh.The A-1 and A -3 gas fields in the Bay of Bengal in Rakhaine Province is pretty adjacent to Bangladesh. Yet Myanmar prefers China and India as Bangladesh is very late to propose for this gas. Bangladesh has also initiated actions to let off PSCs for 28 offshore blocks in shallow and deep waters in the Bay of Bengal. India and China commencing exploration for Gas and oil much later than Bangladesh have already managing several off shore PSCs in offshore , many of these are in the Bay of Bengal adjacent to Bangladesh coast. These they did without demarcating maritime boundary and Exclusive economic zone. There have been thoughts some of the Indian and Myanmar blocks may have encroached Bangladesh territory. No Bangladesh government after the Bangabandhu Government ever made any effort to explore in the deep waters of Bay of Bengal. Excepting the Feeble protest by Engr. Mahmudur Rahman no Bangladeshi authority ever protested the action of neighbors about probable encroachment of Bangladesh territorial water while exploring for petroleum. All these make the current Bangladeshi effort to let out PSCs in the Bay of Bengal very challenging.

Myanmar made significant Gas discovery in A1 block, which lies under the Bay of Bengal offshore from the Myanmar town of Sittwe and is only about 100 KM from Technaf coast of Bangladesh and few hundred Kms from Kolkata.Other Myanmar fields are also not very far .Yet the government of Myanmar has reportedly decided to pipe its prolific offshore natural gas to China.

Situation in Januray 2007

State Owned Myanmar Oil & Gas Enterprise (MGOE) and China National Petroleum Corp (CNPC) are jointly studying routes for a planned oil and gas pipeline according two officials of two companies. “A joint survey team comprising Myanmar and Chinese personal are carrying out a pre-feasibility survey of a gas pipeline route,” U mint Kyi, MD, MGOE , said at the Sino- Asian oil and Gas Pipeline Projects Cooperation Forum. The route was expected from Kyauk Phyu, a location for deep sea port , to Muse , a China –Myanmar border town. The source of gas from any specific field was not made known at that time. “China approached us for 600 MMCFD of gas supply through the pipeline in the initial phase, which would later increase to 1 billion cubic feet per day “according to MD, MGOE. CNPC & MGOE was also jointly studying building an oil pipeline using the same route as the gas pipeline. The oil pipeline would have an annual capacity of 20 million metric tons. The oil for the pipeline would be shipped to Myanmar deep sea port from Middle East and Africa. The gas pipeline would speed up Chinese efforts to tap gas reserves in Myanmar to meet its strong domestic demand, while oil pipeline would boost security of China’s oil imports from Middle East and Africa reducing its sole dependence on Malacca Strait. Vice President of Petro China Han Jinkuan felt, “Technically speaking, the oil and gas pipelines should be built art the same time, given the complicated geopolitical situation in the mountainous areas of Myanmar.”

China at that stage was also actively considering setting up of a refinery near Kunmin, the capital city of Southwestern Yunnan province, to refine oil imported through the above pipeline. However, no time schedule for construction of the pipeline was made known at that stage. By middle of January 2007 China signed PSC with MGOE to explore for oil & gas in 3 offshore Myanmar blocks.

Situation in March 2007

China offered to construct a pipeline from Myanmar’s A-1 and A-3 gas fields in the Bay of Bengal to the Chinese border , a distance of around 900 KM. A-1 alone holds an estimated 4.8 TCF of gas and would produce about 635 MMCFD. Works for concluding the ultimate recoverable reserve of A-3 was still ongoing at that time. However, Myanmar committed to export about two –third of fields total production. The government of Myanmar reportedly decided to accept Chinese proposal. The news particularly disappointed India and South Korea, both of which are heavily dependent on energy imports and have been seeking to diversify their energy sources. India earlier proposed to build a pipeline to Kolkata and South Korea had proposed to develop facilities to export the gas by sea.

The Myanmar Military Junta’s decision is likely to have been influenced by political factors, given the close economic and military ties with China. As permanent member of UN Security Council China successfully shields Myanmar’s military regime from international censure and intervention. China possibly like that the political status quo in Myanmar is maintained, dimming prospect of democratization.

Indian and South Korean Companies hold major stakes in A1 and A3 gas fields. Daewoo of Korea , which is the operator of field owns 60% stakes which two Indian Companies Gas Authority India LTD ( Gail) and subsidiary of Oil and Natural Gas Corporation (ONGC ) hold 30% and the remaining 10% is held by KoGas of South Korea. These companies would jointly spend US$ 2-3 bn to develop the fields.

Tri Nation Gas Pipeline

The concept of Tri Nation Gas pipeline from Myanmar across Bangladesh to India was basically initiated by a Bangladeshi Company Mohona Holdings Ltd. The company Chairman noted CPS Officer and thinker Mr. Mizanur Rahman ( Shelly) and Veteran Pipeliner Mr. K.B. Ahmed after years of hard efforts could make the energy ministers of three countries meet at Yangoon in Januray 2005. This was followed by a meeting of technical experts at Yangoon in February 2005. he author was privileged to participate as Bangladeshi Representative. After almost two days of extensive discussion we managed to initial the draft minutes of Understanding .Very strong and demanding Indian contingent could be persuaded to include Bangladeshi points of interest in the MOU. The agreed proposal for open access pipeline had provision for injection and siphoning off gas from Bangladeshi and Indian Gas fields along the way. The meeting liked the author’s proposal to route the pipeline through Teknaf, Cox’sbazar, Chittagong and follow BkB- CTG, A-B, and B-B pipeline on way to West Bengal. The MOU also recommended letting an international consortium not having any representation of the participating country develop the project. It also had provision for Bangladeshi company GTCL to operate the Bangladesh Segment of the pipeline. The segment of the pipeline within Myanmar was much less about 290Km compared to that in case of gas pipeline to Chinese border. During our stay at Myanmar we observed Mohona holding had very strong influence over MGOE. On return to Bangladesh the author made very extensive report for the Bangladesh government. An inter ministerial committee was formed to further the issue. But narrow vision Bangladesh Government could not progress our good work and apparently lost the momentum we achieved. The author was subsequently made victim of circumstances and made to leave Bangladesh gas sector. The benefit that Bangladesh could obtain from the Tri Nation pipeline is possibly lost for ever. Now it appears that Bangladesh will have to depend on the good gestures of India and China to have any access to Gas Resources of Myanmar if that happens at all.

Natural gas is Myanmar’s most important export, accounting for US$ 1.4 bln in 2006 or about 37% of country’s total export revenue. Myanmar's gas export is about 15% of the country’s GDP. The military regime gave us impression during our visit that they could not wait long for India and Bangladesh to take decision about the Tri Nation pipeline as the military government may need to give way to democracy sooner or later.

The pipeline to China will invariably strengthen Myanmar/s economic relationship with China. Myanmar depends so heavily on Chinese commodities that about 30% of Myanmar’s import comes from that country while China accounts for about 7% of Myanmar's export. China is likely to import 219bn – 365bn CFT gas a year from Myanmar over the next two decades according to RAW India. Bangladesh’s weak capacity to pay for Myanmar gas very likely did not attract any attention of Myanmar.

But Bangladesh must be very firm in dealing with Myanmar and India while demarcating the maritime boundary and EEZ. It must not compromise at all if any of the already contracted out Myanmar or Indian offshore block appear to encroach Bangladesh territory. Energy resources in such cases must be developed under Joint Development Agreement. The international Convention must be followed in such cases.