For the first time since 2004, both the price Brent Crude and US crude have fallen below $30 a barrel. Many oil and gas production centres are floundering amidst the current crisis, yet one South East Asian nation is experiencing record growth in its energy sector.
Over the past 24 months, significant foreign direct investment (FDI) has poured into Myanmar. During the 2014/2015 financial year, over $8bn was injected into the country by international investors – 35% of the total went into Myanmar’s rapidly expanding energy sector.
Major international oil and gas companies, such as Eni, Chevron, Statoil, Shell and Total have already initiated the search for hydrocarbons in the country. The latter company has witnessed recent success in the form of a sizable natural gas well, discovered in one of the 50+ offshore blocks that are currently being explored. It is estimated that Myanmar has over 10 trillion cubic feet of proven natural gas reserves, and oil reserves of approximately 50 million barrels.
A number of important pipeline projects have been commissioned over the past 12 months. During the first quarter of 2015, the Sino-Myanmar pipeline was officially commissioned – both natural gas and oil pipelines run for 771km, from the offshore oilfields off the west coast of Myanmar, to the southern Chinese city of Kunming.
Due to the current level of activity within Myanmar’s energy sector, many investment opportunities are emerging for international, and regional, industrial gas companies. Possible demand for nitrogen and carbon dioxide could spike if enhanced oil recovery (EOR) techniques are utilised in Myanmar. In June of 2015, gasworld reported the market entry of the Japanese gas producer, Iwatani. The company announced its intent to launch at least one air separation unit (ASU), before 2020. One the largest players already active in the country is Yangon Industrial Gases (YIG) – a partner of Thai-based Bangkok Industrial Gases (BIG) which itself is a joint venture between Air Products and Bangkok Bank.
With the construction of the new oil and gas pipelines, purging and leak testing applications could further increase demand for industrial gases. Myanmar’s domestic production capacity comprises of a small number of merchant ASUs, with a maximum capacity of 30 tpd. Additional capacity will be required in the near future to meet the growing demand.
There are also opportunities with regards to engineering and construction projects in Myanmar. In August 2015, Shell announced a joint agreement to develop an LNG terminal in the Tanintharyi region, in the South of the country. The impending addition of LNG infrastructure in Myanmar will almost certainly draw the attention of major industrial gas companies, specifically if they already have a vested interest in the LNG business.
Due to the expected increase in demand for industrial gas, and the pure investment potential, gasworld Business Intelligence expects the country’s industrial gas market to experience strong growth over the next five years. Annual growth rates of between 7% and 10% can be expected – this should see the market reach a total value of between $34m and $42m by 2020.
gasworld Business Intelligence