Business (October Issue)

Onshore Oil

Focus Energy, a small oil firm operating in Burma that is owned by a British Virgin Islands registered holding company, announced in October that it is to spend US $4 million on appraisal and development wells at the Kanni and Htaukshabin fields, that it jointly operates with the government-owned Myanmar Oil and Gas Enterprise, or MOGE. Meanwhile, Indonesian-owned firm Goldpetrol is to spend $8 million on drilling in MOGE’s Yenangyaung and Chauk fields.

In the mid-1990s, concerned at its declining onshore oil production, the government invited foreign companies to come in and operate existing and depleted MOGE fields and try to boost output (according to official figures, oil production peaked at around 30,000 barrels per day in the mid-1980s then gently dropped to fewer than 10,000 bpd by 1997). The contracts were mostly based on MOGE paying for oil produced from a particular field above that field’s decline profile. Alas, the ventures have been less than happy.

The two fields run by Focus Energy, which entered Burma in 1997, with daily output at about 2,500 bpd, now produce less oil than they did when they were run by MOGE, according to a recent article in the Myanmar Times.

Goldpetrol, which also entered Burma in 1997 and claims 2,000 bpd from Yenangyaung and another 540 bpd from its Chauk field, initially planned a combined output of 10,000 bpd by 2007.

American oil services giant Baker Hughes signed an MOU with MOGE in 1996 to boost the Mann field above its then production of 3,100 bpd. The firm was wildly over-optimistic with regard to how much it could produce above the field’s decline profile. Original projections assumed that output would be boosted by 3,000-6,000 bpd. In the event, production was increased only about 740 bpd above the decline profile. Then it took MOGE a long time to pay because the Ministry of Finance and Revenue, not MOGE, had authority to sign the checks.

In 2000, in a joint-venture with Myanmar Petroleum Resources, Baker Hughes spent millions on drilling in the field. Then pulled out leaving the operation to its erstwhile JV partner.

The General Malaise

Registering a company in Burma was a bureaucratic nightmare (though slightly easier than registering in Haiti or Zimbabwe, according to a survey earlier this year) even before the October 18 putsch. Then keeping a firm running is a challenge. The government seems to be determined to make it even harder.

In October 2003, the Ministry of Commerce started issuing company registrations that were valid for only two-year periods for Burmese-owned firms.