G. Alan Petzet
Senior Staff Writer
Myanmar has issued licenses for all tracts in its first onshore licensing round, received bids for second round tracts, and is expected to invite bids for improved production in existing fields.
Foreign oil companies last operated onshore in Myanmar, formerly Burmah, in 1962.
The government also plans to license offshore acreage and is evaluating bids for at least three tracts.
Myanmar since October 1989 has awarded 10 blocks, including one offshore, for which it received $46 million in signature bonuses (OGJ, Feb. 12, p. 29).
The licenses are expected to result in a combined $363 million work commitment during the first 3 years. Work commitments are $12-70 million/block for the 3 year exploration period.
The first well in each block is to be spudded within 14-18 months of contract signing. The work programs for the 10 blocks include a total of 29 wells.
In all, 28 companies bid for onshore blocks in a round that closed May 8, 1989.
A unit of Idemitsu of Japan signed a contract to study the feasibility of developing Martaban gas fields, with re- serves of 4.1 tcf.
Bidding closed Feb. 15, 1990, for other offshore blocks. Premier Oil Ltd. of the U.K. is understood to be negotiating a production sharing contract for blocks M15, M16, and M17 in the Andaman Sea off Teninsarim in extreme southern Myanmar.
After wrapup of the second onshore licensing round, the national oil company, Myanmar Oil & Gas Enterprise (MOGE), and the government's energy planning department plan to invite bids for improved production agreements. About 15 companies have approached the government to discuss the potential of secondary recovery and development of deeper prospective zones in existing fields.
PROSPECTS FERTILE
Maynmar's production has dropped to less than 15,000 b/d of oil from twice that volume in 1982.
The state oil company's production averaged 14,713 b/d of oil and 103.5 MMcfd of gas in 1989, said Dr. Aung Khin, a Singapore consultant who was managing director and chairman of a MOGE predecessor during 1968-75.
The industry response to the licensing offers results from good geological potential, relatively favorable fiscal terms, and encouragement toward industry from the Ministry of Energy, energy planning department, and MOGE, said Daniel Johnston, president of Daniel Johnston & Co., Dallas consulting firm.
The Myanmar tertiary geosyncline covers about 140,000 sq miles, of which 111,000 sq miles could be considered to have hydrocarbon potential, Johnston said.
Exploration in Myanmar is characterized mainly by strong structural elements, multiple pay sands, and shallow depths.
Many fields were discovered based on surface features, several contain five to 40 pay sands, and average producing depth is about 4,000 ft.
The potential for large discoveries is probably greatest in the Central basin (Salin basin) and southern Chindwin basin, Johnston said.
Almost all production in Myanmar is from Oligocene and lower Miocene sandstones. Crudes are often high in paraffin content with pour points of 80-100 F.
GENERAL LICENSE TERMS
Myanmar's production sharing contract provides for an initial exploration period of 3 years and two 1 year extensions.
Minimum work commitment is 500 line km of seismic and three exploratory wells.
Production period is 25 years with a 10% royalty.
Corporate income tax, 30%, is waived during the first 3 years of commercial production. Cost recovery maximum is 40%.
MOGE's share of profit oil is 65% at production rates to 30,000 b/d of oil and 180 MMcfd of gas, 70% at 30,001-50,000 b/d and 181-300 MMcfd, 80% at 50,001-100,000 b/d at 301-600 MMcfd, 85% at 100,001-150,000 b/d and 601-900 MMcfd, and 90% at more than 150,000 b/d and 900 MMcfd.
Signature bonus varies from $5-7 million/block. Discovery bonus is $1 million.
Production bonuses are $2 million upon reaching 10,000 b/d, $3 million at 30,000 b/d, $4 million at 50,000 b/d, $5 million at 100,000 b/d, and $10 million at 200,000 b/d.
Domestic obligation crude is priced at 60% of the international market price, payable in kyats.
The contractor is required to relinquish at least 25% of the contract area after the initial exploration period.
BLOCK F INTERESTS
Among recent acreage trades, Thailand's state owned PTT Exploration & Production (Pttep) is poised to join Petro-Canada to become a coventurer with Unocal in Myanmar Block F.
Pttep management has tentatively endorsed the planned venture with Unocal Myanmar, and the Thai company is seeking final approval from its parent Petroleum Authority of Thailand (PTT) for the farmout, which is to be its first petroleum exploration venture outside Thailand.
Petro-Canada, which operates Block E, and Unocal, operator of Block F, traded 30% interests in the two tracts with each other. Pttep plans to take a 10% interest in Block F, for which it will make an initial $1.6 million contribution.
Unocal said Block F, in the Salin basin, is largely unexplored and has significant hydrocarbon potential.
Unocal Myanmar committed to conduct 2,000 line km of seismic surveys and drill four wells in the initial 3 year exploration period, spending at least $29 million.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
