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Analysis: Myanmar considers LNG options

21 Sep 2017, 4.54 pm GMT

Analysis: Myanmar considers LNG options

London, 21 September (Argus) — Myanmar (Burma) wants LNG and is considering all options.

The country issued a vague tender last year to buy LNG. No volume, time period or delivery port was mentioned, according to southeast Asian law firm VDB Loi, which has been advising the government.

While the World Bank has estimated that Myanmar would need 3.4mn t/yr to meet demand, VDB Loi senior partner Edwin Vanderbruggen has seen other estimates ranging from 1.8mn t/yr to 8.4mn t/yr because of uncertainty over government policy for building power plants.

And while the government has said it wants to import LNG, it has not given any indication about how it proposes to do so, Vanderbruggen said at the LNG Global Congress in London this week. This opens the door for many options.

On the back Burma

Myanmar has a population of over 50mn, but just 3GW of power generation capacity. The government has already indicated that it would like to use gas for power instead of coal. It has approved seven power projects, five of which can use gas and two solar. No coal-fired plants are planned.

Initial plans are to add 500MW of capacity a year, but this would be below actual demand, Vanderbruggen said, adding that the country could install three to four times more and still not meet demand. Previously, the government said it wanted 40pc of the power mix to be coal-fired, but because no coal-fired projects have been approved, it is assumed that part of the plan has been scrapped.

It's the Thailand countdown

And while the government has issued an open-ended tender, other companies have begun private discussions with the government for importing LNG. This include Malaysia's Petronas, [Thailand's PTT], (https://direct.argusmedia.com/newsandanalysis/article/1060630) Shell, and [Total], as well as Japanese and South Korean consortiums.

If one or more of these projects are realised, it could mean the tender is abandoned, according to VDB Loi. And four possible sites have been proposed for a possible floating storage and regasification unit (FSRU) — at Kyauk Phyu, Ngayok Bay, and two around Kalgauk Island. Each will take around three years to complete.

Companies that want to install an FSRU and build power plants would not have to give any equity to the government, nor would they need a domestic partner, Vanderbruggen said. Local governors would also support any developments to add power generation capacity.

"If you can supply power for 10c/kWh, I can set you up with a meeting with the chief minister," Vanderbruggen said.

But there are still other challenges to overcome. An FSRU moored permanently in Myanmar would need to be Myanmar-flagged, which means the vessel would have to be 100pc Myanmar-owned or else it would have to leave the port every three months. This rule, among others, would have to be changed to develop LNG import projects.

But the prospect of developing an LNG import project is still attractive. Not only would it open up Myanmar's gas market for international oil and gas companies, but it also gives access to Thailand.

Thailand's domestic gas production is starting to decline and an FSRU in Myanmar could be used to export regasified LNG to Thailand. The pipeline infrastructure is already in place and Thailand already imports gas from Myanmar's Yadana, Yetakun and Zawtika gas fields.

Myanmar has previously said it expected to be self sufficient in gas until 2020-21 and the earliest LNG imports would start in 2025.

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