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New deal highlights potential of Myanmar's Rakhine Basin

A recent announcement from Myanmar's Energy Ministry has revealed that four blocks in the Rakhine Basin are to be explored by international firms. BG Group from the UK and Australia-based Woodside Petroleum Ltd are planning to invest over $1 billion in looking for oil and gas in the area.

This is big news for the Rakhine Basin, which is thought to have a lot of potential for the oil and gas industry. The region is emerging as a key area for the sector in Myanmar, and it is beginning to attract a lot of foreign investment, as the announcement from BG Group and Woodhouse Petroleum shows.


The new investment

The two companies now own interests in the deepwater offshore blocks AD-2 and AD-5, as well as the shallow water blocks A-4 and A-7 of the Rakhine Basin. These were won in the 2013 Myanmar Offshore Bid Round, but the firms have only just signed production sharing contracts (PSCs) that will allow them to start exploring.

Woodhouse Petroleum holds operated equity interests of 55 per cent in block AD-5 and 45 per cent in A-7, while BG Group will take responsibility for operation in the other two areas. The firms are committed to a long-term project in the region, as they estimate exploration and observation could take between five and seven years altogether.

However, it is clearly worthwhile doing so if there is a chance of finding oil or gas. As such, the companies are investing a minimum of $545.5 million in the shallow water blocks and at least $535.1 million in the deepwater areas, for a total of over $1.08 billion.


An emerging region

The firms would not be committing to such an expensive, long-term project were it not for the fact that the Rakhine Basin has a lot of potential in the oil and gas industry. Several firms have already staked a claim in the region, which Woodside Petroleum’s executive vice president of global exploration Phil Loader called "an emerging oil and gas province that fits very well with Woodside’s proven capabilities in deepwater exploration and development".

The company already had PSCs for two blocks in the basin before the recent announcement. Exploration is currently ongoing in offshore blocks A-6 and AD-7, making Woodhouse Petroleum the largest acreage holder in the area with interests covering a combined 46,000 sq km.

However, it is far from the first firm to take an interest in the region. The Shwe natural gas project - which is being developed by six firms from Myanmar, China and India - has been producing gas since January 2014. It is thought to have a maximum capacity of over 14 million cubic m per day.

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