Oil and gas companies operating in Southeast Asia see the further easing of US sanctions on Myanmar as an opportunity to make new investments in the country and have been preparing to do so over the last several months, according to a senior executive at a Singapore-based independent with exploration and production stakes in four countries across the region.
President Barack Obama said in a statement released late Wednesday that the US was easing restrictions on US companies doing business in Myanmar due to "significant progress along the path to democracy."
Oil companies had already gotten a "little more aggressive" in Myanmar after US Secretary of State Hillary Clinton's trip to the country in December 2011, and the recent announcement is likely only to increase investment activity, said KrisEnergy's Director of Business Development Richard Lorentz.
"Obama's news of last night was good news for us," he said, adding KrisEnergy had already been looking at possible investments, either as farm-ins or bids on open blocks. "We've had people looking at data rooms from various independent oil companies, and we've visited the [energy] ministry several times," he said.
Obama's announcement came the same day that Derek Mitchell arrived as the first US ambassador to Myanmar since 1988.
US senators had quickly passed Mitchell's nomination to the post in the midst of pressuring Obama to lift the sanctions, put in place after Myanmar's former ruling junta had disregarded election results that would have given Aung San Suu Kyi's National League for Democracy party 80% of parliament.
KrisEnergy, since it isn't a US company, wasn't barred from doing business with Myanmar under the sanctions. However, since it had employees that were US citizens, as well as a major shareholder with some US ties, investment in Myanmar would have been "difficult," Lorentz said.
"We avoided Myanmar," he said.
In anticipation of the easing of sanctions, non-American employees of KrisEnergy have been going into Myanmar this year to look at investment opportunities. "We started getting a little more aggressive over there [after Clinton's December visit], but every other oil company on the planet has, too," he said.
An oil and gas investment conference in Myanmar in March drew about 400 delegates, according to estimates by KrisEnergy employees that attended.
"The conference attendance in March tells you that there's going to be a lot of competition," Lorentz said.
Investment sentiment in Myanmar has improved considerably in the last year after the former military government handed power over to President Thein Sein.
Last July, Myanmar's Ministry of Energy invited bids on 18 onshore blocks, the first formal bid round held in five years. Prior to that companies had entered into private discussions with the government for direct award of blocks.
The bulk of production now is offshore. France's Total is operator of the 600,000 Mcf/day Yadana project alongside Chevron and Thailand's PTTEP, while Malaysia's Petronas operates the 400,000 Mcf/day Yetagun project, partnering Japan's JX Holdings and PTTEP.
"We view the easing of sanctions on new investment and financial transactions for US companies as a positive development for the country and its people," Chevron told Platts when asked about what impact the lifting of investment restrictions would have on the company.
Total, Chevron and other oil companies doing business in Myanmar have been targeted for decades by human rights groups, who have said that companies doing business in the country helped to prop up the former military rulers.
Total and Chevron -- which obtained its interest in the Yadana project when it bought Unocal in 2005 -- have always said that their presence was more positive than negative and that they have always complied with all UN and US laws and regulation with regard to the country.
Sanctions had primarily focused on banning new investments while allowing existing investments to continue.
An upstream analyst based in Singapore said in late June that there are still offshore blocks up for grabs in Myanmar, "Although some have expired and others have been relinquished by operators who did not complete their work commitments," she said. "These include a number of deepwater blocks in western Myanmar in the Andaman Sea and in southern Myanmar in the Gulf of Moattamma, at 600 to 2000 meter water depth. The government could likely open these up for formal bidding soon."
Companies that have recently been awarded exploration blocks in Myanmar include Thailand's PTT Exploration and Production, Malaysia's Petronas, Hong Kong's EPI Holdings, the UK-listed Jubilant Energy, Switzerland's Geopetro International and Russia's CIS Nobel Oil.
Now, with the sanctions opening up the possibility of farm-ins and partnerships on exploration, "this is the best thing that could happen to those individual companies," Lorentz said, without naming any of them specifically.
KrisEnergy holds 14 oil and gas licenses, six of which it operates, in Cambodia, Indonesia, Thailand and Vietnam.
