Interview: Ken Tun
How important is Myanmar’s oil and gas industry to the overall development of the economy?
KEN TUN: The oil and gas industry is a crucial one for Myanmar. The oldest continuously-producing field in the world, Yenangyaung in central Myanmar, has been in operation since 1887. The sector will be important in many ways. We expect rapid expansion in the number of vehicles as a result of speedy economic growth, and these vehicles will be relying entirely on fossil fuels. Daily cooking for 10m households is still overwhelming, and because of this the cooking gas sub-industry will expand quickly once the basic infrastructure and distribution networks are in place.
Ample oil and gas reserves also make substantial development of downstream industries possible. The gas-based fertiliser production industry, in particular, would help realise the major potential of Myanmar’s agricultural sector. We could also see the establishment of power plants for electricity production; reliable electricity is critical for the development of the manufacturing industry, but at present, less than 30% of the population has access to electricity. Gas export revenue will combine with external aid to provide the financial resources needed for filling infrastructure gaps and building the human resource base of the country. All these factors will contribute to generating more national income, supporting the president’s GDP target and developing national capabilities in supporting industries.
What policies are in place to promote sustainable development of Myanmar’s natural resources?
TUN: In the past, our short- and medium-term policies were developed and implemented by different ministries, often on an ad hoc basis. Therefore, there is a need for a single body to oversee the sector and avoid fragmented approaches. The Energy Management Committee (EMC) and the National Energy Management Committee (NEMC) were founded in early 2013. They are both chaired by authorities from the Ministries of Energy and Electricity, as well as six other ministries. The NEMC focuses on the sustainable development and efficient utilisation of energy resources, as well as raising awareness of relevant environmental and social issues. It will also help establish a rural energy grid, as a means of alleviating poverty. We welcome these developments, although we must note that the tasks set out for these groups are large and there is a critical shortage of capable staff in the public sector. This shortage can be addressed, at least partially, by learning from the experiences of other countries that have gone ahead of us. We can also learn by getting the private sector involved – the domestic private sector, in particular – in formulating key resource management policies.
What steps are being taken to ensure that rights to lucrative energy reserves are granted fairly?
TUN: During the past 20 years, blocks were awarded on the basis of direct negotiations. The current democratic government has tried to improve on this by introducing a free and open bidding process. The Ministry of Energy works to improve transparency in the bidding processes through regular consultation with the vice-president. Competition for rights is very intense; local and foreign companies with good political connections and economic influence are in the game. For this reason I believe the current bidding rounds should be more transparent and fair.
On the other hand, Myanmar needs to expedite developing its petroleum resources amidst huge demand for power and infrastructure. The government may lack the adequate number of staff and expertise required to expedite the bidding processes for onshore and offshore simultaneously.
Because of this, we also believe that the most efficient and timely method of ensuring a fair tender selection process would be to outsource the task to a reputable international firm, which we think would ensure sufficient transparency and accountability.
Read More from OBG
