In May 2018 local energy firm Elite Petrochemical inaugurated the first stage of a $128m LPG import and distribution facility in the Thilawa Special Economic Zone, located 25 km south of Yangon. The terminal and hub, developed under a build-operate-transfer model, includes a jetty for cargo handling and a 3000-tonne storage tank farm. The second stage, currently under construction, will expand storage capacity to 25,000 tonnes of LPG and up to 100,000 tonnes of diesel and petrol. The development is Myanmar’s first private sector LPG processing and handling facility.
In December 2017 local firm Parami Energy Group became the first private company to lease state-owned LPG facilities, securing a MMK6.5bn ($4.9m) tender from the Ministry of Electricity and Energy (MoEE) for a jetty, terminal and storage facility at the Thanlyin refinery in Yangon Region. The facility is expected to handle between 8000 and 10,000 tonnes of LPG per month once it is completed.
This was followed by the announcement in April 2018 that Asia AVA Gas was in the early stages of developing an LPG import, storage and distribution centre at Bogyoke, in Thalyin District, in a joint venture with the state-owned Myanma Petrochemical Enterprise (MPE). The $60m project will create a storage capacity of 12,000 tonnes, as well as jetties for unloading carriers and a gas-filling plant. The facility is expected to be operational early next decade.
Meeting Demand
These developments are taking place alongside government efforts to expand marine imports of LPG in order to satisfy increased demand. With local output of the fuel currently accounting for less than 10% of consumption, the bulk of existing domestic LPG demand is imported from Thailand, Malaysia and Indonesia, and until recently was transported into the country by truck.
While LPG usage is still considerably lower than in neighbouring countries – estimated to be around 40 times less than in Thailand – the supply-demand imbalance is expected to rise further in line with government policy. The MoEE aims to replace electricity with LPG as the main energy source for household cooking, and in March 2018 announced that it intends to supply 1m households with LPG by 2020, up from 150,000 households in 2017.
With power consumption forecast to increase by 15% each year to 4351 MW by 2021, and total generation capacity at just under 3200 MW, utilisation of LPG could ease pressure on the grid and free up more power for industry. “There is a lot of demand to be met,” Ken Tun, CEO of oil and gas services company Parami Energy, told OBG. “It is estimated that LPG penetration in Myanmar households is at 3%, and in most rural areas it is still common to see people cooking with charcoal. Meanwhile, 90% of ASEAN households use LPG for cooking.”
Expanding Usage
While foreign investment in LPG is rising, closing gaps at different points in the supply chain will be key to expanding its usage and achieving government power targets. In particular, Myanmar has a significant deficit in storage and trans-shipment facilities, along with modern filling points to transfer the fuel from large depots to smaller cylinders for retail.
To help meet these infrastructure demands, MPE recently licensed 15 new privately operated filling stations across the country, and granted approval to 600 companies to either use LPG or operate in the segment. Efforts are also being made to ensure LPG facilities adhere to internationally recognised safety standards, as this is crucial to secure continued foreign investment in the industry. “Improvements in safety standards along the supply chain should help to promote both international and domestic investment in LPG,” Tun told OBG. MPE is working to develop regulations for LPG usage under the Petroleum and Petroleum Products Law of August 2017.
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