Home >> Daily News >> Myanmar News >> Energy >> Daewoo to spend $5.6bn to export Myanmar gas to China
|26 August 2009
Daewoo to spend $5.6bn to export Myanmar gas to China
A consortium led by South Korea's Daewoo International will invest about $5.6 billion to develop Myanmar gas fields as part of a 30-year natural gas supply deal with China, Reuters quoted a group member assaying Tuesday.
The investment comes just a week after China signed a $41 billion liquefied natural gas import deal with Australia, underscoring its strong appetite for a broad range of commodities from gas and uranium to iron ore and coal.
The Myanmar gas development plan, which has been mooted since 2004, will allow the consortium to supply natural gas to China's top state oil and gas firm, China National Petroleum Corp (CNPC), with a peak daily production of 500 million cubic feet, or about 3.8 million tonnes annually.
The supply, due from 2013 from the Shwe and ShwePhyu fields in Myanmar's A-1 offshore block and Mya field in A-3 offshore block, amounts to around 7 percent of China's current gas consumption of 7.3 billion cubic feet per day, which is expected to grow rapidly.
Currently meeting only 3 percent of China's total energy needs, gas use is set to grow at a 10 percent compound annual rate to 18 billion cubic feet per day by 2020, according to Bernstein Research, transforming China into the third largest single market after Russia and the United States.
Daewoo has a 51 percent stake in the consortium and the other shareholders are India's Oil and Natural Gas Corp with 17 percent, Myanmar Oil & Gas Enterprise with 15 percent, India's GAIL with 8.5 percent, and Korea Gas Corp with 8.5 percent.
Daewoo will spend 2.1 trillion won ($1.68 billion) in initial investment for five years until 2014 and KOGAS would spend $299 million, the two firms said in separate statements.
A KOGAS official said total investment by the consortium would amount to about $5.6 billion, including $4.6 billion in initial spending.
The consortium will undertake production and offshore pipeline transportation, while land transportation to China will be jointly managed with China National United Oil Corp (CNUOC).
The investment still needs approval from the army-ruled Myanmar government, and CNUOC has yet to decide details of its investment for land transportation to China.
Chinese media have said the consortium and CNUOC planned to build oil and gas pipelines through Myanmar and into China's southwestern Yunnan province, bypassing the long journey around the Malacca Strait.
Myanmar will also be able to tap the pipeline running across its territory to promote economic development once the gas starts flowing.
Few Western companies will invest in Myanmar because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of U.S. and European sanctions.
China, typically wary of supporting or imposing sanctions and one of Myanmar's few diplomatic allies, has shown no qualms about investing in its neighbour, eager for its natural gas, oil, minerals and timber to feed a booming economy.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below