For decades, the Myanmar oil and gas story was fairly simple. The country had well-established onshore fields, with some regional participation, and a few offshore fields, with regional participation and some legacy participation by international majors. Production was significant given the isolation of the country, and oil and gas was vital to Myanmar as a source of hard currency. Due to economic sanctions, however, development remained far below potential as major international players were all but excluded. Participation by global oil companies was limited to Total and Chevron, which were grandfathered in by an executive order.

The situation started to change after the reforms of 2011 and the subsequent lifting of international sanctions. Activity picked up and transnational firms became more engaged, slowly at first and then in a rush. However, the bidding rounds for the country’s oil and gas assets have been complicated by a number of issues. The first round came before major Western companies could participate, while the second round lacked incentives for energy majors. There have also been delays. Follow through has been complicated and it has taken time to firm up the transactions. Most of all, the bidding rounds have taken place as oil prices have been falling, with some blocks being abandoned for the lack of viability.


The oil and gas market in Myanmar is largely underdeveloped owing to several years of insufficient investment and minimal competition. As of early 2015, the country had 104 oil and gas blocks, of those 53 are onshore and 51 are offshore. However, only 16 onshore and 19 offshore are currently in operation. Since barriers began to be taken down in 2011, three rounds of bidding have been conducted and the results have generally been good, with the government being proactive and positive. The rounds have been conducted transparently and relatively in line with international best practice. Favourable terms have also been offered to encourage participation in deepwater blocks. The international majors, meanwhile, have been bidding enthusiastically on the attractive blocks and demonstrating a real, long-term interest in the assets. Goodwill exists on both sides, and early indications are that the sector could be transformed over the next few decades.

Opening Up

Momentum was slow to develop, and at first it was not clear whether the bidding programme would be a success. The first round, in July 2011, was somewhat limited in scope and appeal, as sanctions had not yet been fully lifted. While relations with Western countries started to improve significantly in 2011, it was not until 2012 that material changes were made. That year, the US sent an ambassador to the country, the first in more than two decades, and started lifting sanctions.

However, in 2011, most multinationals were still highly restricted in what they could do in Myanmar. Nevertheless, the first round was significant. It was conducted after liberalisation began and was conducted in the spirit of transparency and openness. An attempt was made to follow and implement international standards, with a formal invitation to bid being sent out calling for qualified companies.

In the round, a total of 18 onshore blocks were put out for bidding. The response was good. Letters of interest were received from 55 companies, of which 39 were shortlisted. Ultimately, six companies received licences for eight blocks.

Yet, as in the previous years, the bidding was not particularly competitive. Interest was primarily from Asia and a number of blocks received no bids. Those bids received were only from countries that did not apply sanctions and from firms without a major presence in countries that were enforcing the restrictions. International companies that ultimately received blocks in the round were: Thailand’s PTTEP, Malaysia’s Petronas, Geopetrol International of Switzerland, Russia’s CIS Nobel and Jubilant Energy of the Netherlands.

In January 2013, bids were invited for another 18 onshore blocks, but the round was also lacking in participation from major international oil companies, despite the lifting of major sanctions by the West. While a total of 59 companies pre-qualified, the majors were absent from the list. The minister of energy told the press that this had nothing to do with investment restrictions on Myanmar. It was not sanction related.

He argued that international giants were absent due to a requirement that foreign companies partner with local companies for onshore blocks, and that they would prefer to avoid forced tie-ups with local entities. Also, onshore is not as technically difficult as deep offshore, meaning that the work would attract lower-cost entrants and not be as potentially profitable.

Among the blocks being made available was one that had been relinquished by China National Offshore Oil Corporation in August 2012 and two that had been pre-awarded. The bidding was delayed twice. Of the companies that were pre-qualified, 23 were shortlisted. Ultimately, 11 bidders received 16 of the onshore blocks in October 2013.

A Key Moment

The next round, in 2013, seemed to indicate that the failure of the two previous rounds to attract major international interest was a matter of timing and the assets offered, and not a lack of interest by global players. Myanmar offered attractive assets at a time when international companies could participate, and the result was heavy bidding from major players. In the offshore licensing round, 11 shallow and 19 deepwater blocks were offered. Those winning shallow-water licences must work with a local partner, while foreign companies operating deepwater blocks can do so without local shareholders due to the technical difficulty of such projects and the lack of relevant experience locally. A total of 61 companies were shortlisted, including a number of oil majors, and of those 20 submitted bids.

A total of 20 licences were issued for 13 companies to operate in shallow and deepwater blocks. Winners in the shallow-water category included: the UK’s BG Group; Woodside Energy, Transcontinental Group and Roc Oil of Australia; Reliance Industries, Oil India, Mecator Petroleum and Oilmax Energy, all of India; the US’s Chevron; Thailand’s, Top Oil; and Berlanga Holding of the Netherlands. In the deepwater category, the winners were: UK-headquartered Ophir Energy and BG Group; Woodside Energy of Australia; Shell, from the Netherlands; Japan’s Mitsui Oil Exploration; Norway’s Statoil; the US’s ConocoPhillips; Italy’s ENI and France’s Total.

Future Rounds

Despite the success of the second 2013 bidding round, it is not clear when future assets will be offered. In May 2015, Myanma Oil and Gas Enterprise told the local press that it would not be making more blocks available until at least 2016, as it was still in the process of digesting the three previous rounds. The process of negotiating the product-sharing contracts and dealing with other formalities has taken time and capacity. Other sources quoted in the press said it could be as late as 2017 before more blocks are made available. There is some uncertainty on the matter, for it’s part, Ministry of Energy says it is taking a wait-and-see approach as it works its way through negotiating and implementing the three rounds so far, while some officials say that the next round will take place in 2016.

One question mark for the sector is the price of oil. The lower prices are already in part to blame for the lack of further bidding rounds and there are indications that the declines are leading some companies to rethink their Myanmar strategies. For example, although a discovery was made in Block M3 in the Gulf of Moattama, PTTEP, which owns 80% of the block, has indicated that it is considering terminating work in the area. PTTEP has said that it will continue its evaluations of the block, but that it would also be keeping an eye on the price of oil. It is hoped that oil majors will remain engaged, and possibly pick up some slack, as they are less sensitive to short-term movements.

“Even though oil prices are currently depressed, the number of participants in the most recent bidding round is testament to the potential of Myanmar’s deepwater acreage,” U Aung Kyaw Kyaw, managing director at Alliance Logistics, a Mumbai-headquartered group with global operations, told OBG. “International operators are excited about the prospects about the country’s vastly unexplored potential”, he added. Others express more caution. “Even though the government just awarded blocks, the price of oil is going down,” said U Aung Ye So, managing director at Machinery and Solutions Company, a local enterprise. “This will impact company’s investment decisions.”

The offshore situation had also been affected by a maritime border dispute with neighbouring Bangladesh. The two countries had been at odds over a 150,000-sq-km area in the Bay of Bengal. The UN’s International Tribunal for the Law of the Sea helped to resolve the dispute, which has since brought to attention blocks which were previously under question.