Although Myanmar’s oil and gas sector has a huge potential for further growth in the coming years, local services firms see challenges that need to be addressed for realizing their potential, the Myanmar Oil and Gas Service Society, an association of local service companies in the country’s top-earning industry, said Saturday.
Local companies need to expand their capacity and boost project management skills in order to capture a bigger share of the country’s US$20 billion industry, U Aung Ye Soe, secretary-general of the association, said at a seminar on the potential of Myanmar’s oil and gas industry beyond 2015 in Yangon.
The secretary-general, who also served as one of the panelists at the seminar, pointed out that around 50 of 162 local companies that have been registered at the Ministry of Energy as of this March are operating in the sector, adding that fewer than 10 are serving as integrated services firms.
“The number of locally owned firms providing services in exploration and production projects of international oil and gas companies is low”, he said.
According to the Myanmar Investment Commission, the oil and gas sector was crowned Myanmar’s top-earning sector, with the sector attracting more than $3.22 billion in foreign direct investment the previous year, nearly half of the $8.01 billion that entered the country.
A total of 20 foreign firms have been allowed to operate exploration and production projects, 10 each of shallow-water and deep-water blocks, and the signing of contracts for three shallow-water blocks and one deep-water block has been completed, said Dr Myo Thet, vice-chairman of the Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry.
From fiscal 1988-89 to date, the permitted amount of investment in the country’s oil and gas sector has reached a total of $19.64 billion from 151 companies, accounting for 37.74% of all businesses, the vice-chairman said. “In terms of investments by existing enterprises, 93 firms have invested $18.71 billion in the sector, accounting for 40.47%”, he said.With the influx of foreign companies looking for local partners as well as setting up operations in Myanmar, the sector offers more employment opportunities and increases the work volume for a robust chain of support services, said Dr Aung Kyaw Htoo, another panelist.
As international firms are required to use 25 percent of local labor and inputs, more efforts are needed for local firms to firmly seize this opportunity, Dr Aung Kyaw Htoo, managing director of DARE, added.
He also stressed the need to address the challenges of limited human resources and training and certification in order to extend the scope of services by local firms.
“We need more legislation, more technology transfer, a task force for local content development and business ventures with overseas entities”, he said.
For her part, Daw Hin Phyu Phyu Aung, managing director of Lion Energy Company, said that strong and developed local services will be of benefit to oil and gas operators.
She called for local companies to be able to compete with international players and stressed the need to develop both technical and financial competencies and local talent in the industry.
The managing director also highlighted the importance of clear rules and regulations and policies, a level playing field and tax incentives for small players.
Ms. Vicky Bowman, director of the Myanmar Centre for Responsible Business who was also a panelist, emphasized the importance of creating a responsible business.
In Myanmar, the Myanmar Oil and Gas Enterprise (MOGE) has signed production-sharing contracts with international oil and gas giants including Daewoo, Total, Chevron and PTT to explore and produce oil and gas at Yadana, Yetagun, Shwe and Zawtika blocks.
According to statistics, 53 blocks have been set as onshore and 51 as offshore. Among them, 17 companies have been permitted to operate 17 onshore blocks and nine 20 offshore blocks. Myanmar’s oil and gas are being exported to Thailand and China.
By Ye Myint