31 March, 2014
Legal News & Analysis – Asia Pacific – Myanmar – Energy & Project Finance
The Myanmar Ministry of Energy has announced the winners of its offshore petroleum blocks bidding round.
1. Announcement Of Bidding Round Results
On 26 March 2014, Myanmar’s Ministry of Energy (“MOE”) through its 100% state owned entity Myanma Oil and Gas Enterprise (“MOGE”) announced the winners of its tender to explore oil and gas in Myanmar’s offshore blocks. The offshore areas on offer consisted of both shallow and deep water blocks, with ten of each being awarded.
The results come almost a year after the invitation to tender was announced last April. A total of 75 companies had expressed interest in the blocks and, out of the 61 firms shortlisted, only 30 submitted formal proposals.
It was expected that this tendering round would result in the allocation of 30 blocks; however, only 20 were allocated in yesterday’s announcement. It is not yet clear why MOGE has excluded the other ten blocks (which were included in the original invitation to tender) or whether winners of these blocks will be announced at a future date.
The announcement means that candidates will explore Myanmar’s deep waters in the Bay of Bengal which may contain large quantities of hydrocarbons. Candidates are afforded greater certainty in respect of their petroleum activities in the Bay of Bengal by the United Nations ruling (International Tribunal for the Law of the Sea, 14 March 2012) which has resolved an on-going maritime dispute between Myanmar and Bangladesh.
2. Selected Candidates
The successful candidates include Chevron, the Woodside and BG consortium (awarded four blocks), the Shell and Mitsui consortium (awarded three blocks), and the Statoil and ConocoPhillps consortium. The full list of selected candidates is as follows:
| No | Block/ Area | Selected Candidate |
| Shallow Water Blocks | ||
| 1 | A-4 | BG Asia Pacific Pte. Ltd. (“BG”) and Woodside Energy (Myanmar) Pte. Ltd. (“Woodside”) |
| 2 | A-5 | Chevron (Unocal Myanmar Offshore Co. Ltd.) |
| 3 | A-7 | BG and Woodside |
| 4 | M-4 | Oil India Limited (“OIL”), Mercator Petroleum Limited (“Mercator”) and Oilmax Energy Pvt. Ltd. (“Oilmax”) |
| 5 | M-7 | ROC Oil Co. Ltd. and Tap Oil Ltd. |
| 6 | M-8 | Berlanga Holding B.V. |
| 7 | M-15 | Transcontinental Group (TRG) |
| 8 | M-17 | Reliance Industries Ltd. |
| 9 | M-18 | Reliance Industries Ltd. |
| 10 | YEB | OIL, Mercator and Oilmax |
| Deep Water Block | ||
| 11 | AD-2 | BG Exploration and Production Myanmar Limited and Woodside |
| 12 | AD-3 | Ophir Energy Plc |
| 13 | AD-5 | BG Exploration and Production Myanmar Limited and Woodside |
| 14 | AD-9 | Shell Myanmar Energy (Pte) Ltd. (“Shell”) and MOECO |
| 15 | AD-10 | Statoil and ConocoPhillips |
| 16 | AD-11 | Shell and MOECO |
| 17 | MD-2 | Eni Myanmar B.V. |
| 18 | MD-4 | Eni Myanmar B.V |
| 19 | MD-5 | Shell and MOECO |
| 20 | YWB | Total E&P Myanmar |
3. Post-Announcement
The candidates will now enter into discussions with the Myanmar government in relation to the terms and conditions of the production sharing contracts (“PSC”) to be entered into between the candidates and MOGE.
According to the original invitation to tender published by MOGE:
- the successful candidates for the shallow water blocks are required to partner with a minimum of one Myanmar national owned company registered at the Energy Planning Department; and
- there must be no local partnership in respect of the deep water blocks.
Whether these local participation requirements remain as originally published remains to be seen.
Yesterday’s results follow an announcement awarding 13 onshore blocks in October 2013. It appears that the PSCs for those blocks have not yet been signed and selected candidates should be mindful of the fact that relevant ministries will have a total of 33 PSCs to negotiate and execute.
For further information, please contact:
Richard Nelson, Partner, Herbert Smith Freehills
David Clinch, Partner, Herbert Smith Freehills
Robert Merrick, Partner, Herbert Smith Freehills