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Myanmar to promote international energy cooperation

Investors in the international oil and gas industry will be pleased by the latest announcement from the Myanmar National Energy Management Committee. It has been decided that the nation will be promoting international energy collaboration as part of a new national plan.

This news has received mixed responses, but from a business perspective it appears to be a positive step for the nation. Myanmar seems to be moving towards privatisation and encouraging foreign investment, which could prove to be very lucrative for the international energy community.

A nine-point plan

The announcement included a new set of nine energy policies for Myanmar. These were drafted by energy experts from a number of countries, showing how committed the nation is to encouraging foreign investment.

The policies range from those aiming to encourage more international cooperation and investment to those looking to promote sustainability and energy conservation within Myanmar. Interested parties should bear all of them in mind, as some could conflict with business wishes.

For example, the first point states that Myanmar will rely on local resources. This could mean that the country is planning to cut back on its coal-fired power plants, as it does not currently produce enough coal for its needs, so relies on imports. This could be a sign that the country wants to become more self-sufficient.

Myanmar's aims

If this is the case, and the nine-point policy is intended to make Myanmar more of an independent player in the international energy industry, what does this mean for investors? This could be a very positive step for the nation as it moves towards producing more of its own raw materials rather than relying on international imports.

However, it has clearly shown that it wants foreign firms involved in this process. The government of Myanmar is moving away from a model of state-owned business, and towards greater privatisation. To this end, it wants international firms to help boost its industry, particularly in the oil and gas sector.

The country produces plenty of both resources. It is estimated that it has access to reserves of approximately 50 million barrels of oil and 280 billion cubic metres of natural gas, which it has worked hard to access in recent years.

In the fiscal year 2013-14, for example, Myanmar produced 6.1 million barrels of crude oil and over 13.1 billion cubic metres of natural gas. With international investment, these totals could easily increase, which would be very lucrative for both Myanmar and the companies involved in its energy industry.

Already, foreign sources make up around 30 per cent of the investment in Myanmar's oil and gas industry. In October 2014, the total figure of this international investment stood at around $15.2 billion (roughly £10 billion). However, the announcement of the nine-point policy shows Myanmar clearly wants to encourage this even more.

If the rules and regulations drafted out in the nine-point policy come into effect, it will become much easier for firms to invest in Myanmar's energy industry. This could lead to increased autonomy for the country, as it moves from reliance on imports to collaboration with foreign businesses.

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