SINGAPORE (Reuters) - European oil firms will participate in Myanmar’s first oil exploration tender since the easing of Western sanctions, but U.S. companies might wait for more concrete reforms, the head of a local oil firm said.
The tender will be the first opportunity in at least 15 years for U.S. oil firms to participate in Myanmar’s energy sector after Washington relaxed sanctions this month to allow for new investment in the country, which is quickly emerging from nearly half a century of military rule.
Myanmar, one of the world’s first oil producers, has opened up to the outside world with astonishing speed since a civilian government took office last year — releasing hundreds of political prisoners, permitting greater media freedom, legalizing protests and undertaking peace talks with ethnic rebel groups.
“Europe are definitely interested and will participate in the next round. The United States is showing interest but I do not know what type of vehicle they will use to get in,” Ken Tun, the chief executive of Myanmar’s Parami Energy, said during a visit to Singapore.
Western oil firms were conspicuously absent from last year’s energy tender, Myanmar’s biggest, with only Switzerland’s Geopetrol winning the rights to explore one onshore block out of 18 offered. Asian companies took the rest.
Myanmar is expected to offer six new onshore blocks in the 2012 tender and re-offer nine or 10 blocks from last year’s offer, Tun said. The government has yet to confirm details.
“For the next round, I’m targeting two to three blocks. As a local operator, I can do that,” said the 38-year-old executive.
Parami Energy, one of only a few privately-owned oil and gas firms in Myanmar, will team up with Vietnamese-Russian oil venture Vietsovpetro to bid for blocks.
The two companies agreed this week that Parami would take a 51 percent stake and be the operator in any block awarded to them, Tun said. Vietsovpetro is a joint venture between state oil and gas group Petrovietnam and Russia’s Zarubezhneft.
Tun said Parami was also in separate talks with a Western oil major to team up on a bid for at least one additional block. He declined to elaborate on those discussions.
Despite Myanmar’s rapid reforms, Western oil firms may hesitate to jump into a country Transparency International ranks as one of the world’s most corrupt. Nobel Peace Prize winner Aung San Suu Kyi last month urged foreign investors not to form joint ventures with the state-owned energy company until it improves its business practices.
Myanma Oil and Gas Enterprise holds a majority stake in all onshore and offshore blocks, which means all energy firms investing in Myanmar become partners with the state-run company.
U.S. companies, including oil firms, also face new rules from Washington that require them to submit annual reports on issues such as human rights, workers’ rights and environmental stewardship if they invest more than $500,000 in Myanmar.
Foreign firms must also set up joint ventures with local companies before investing in Myanmar’s oil and gas industry.
There are only a handful of domestic privately-owned oil and gas exploration companies, led by MPRL E&P and Silver Wave.
Parami, which started as a cement business in 2004, is a newcomer to the oil and gas industry and holds a minority stake in an onshore block recently awarded to India’s Jubilant Energy JUB.L.
Editing by Michael Urquhart