NewsBase Myanmar Special Report

Published: April 2013  

Since the election of a nominally civilian government in March 2011, Myanmar has emerged from political isolation and started attracting the attention of investors hungry for new markets and opportunities.

With the lifting of sanctions, Western oil and gas companies now have an unprecedented opportunity to enter Myanmar. The rewards could be enormous, given that the country has large tracts, both on and offshore, that have seen little to no exploration thus far. In an age where the industry considers there to be no more “easy oil,” the Southeast Asian country's undiscovered potential is enticing.

Yet Myanmar's isolation also means the Westerners will have to forge an unknown path if they wish to establish a foothold in the country. Reform and a semblance of democracy may have prevailed, but old hazards remain with many of those connected to the former regime remaining a powerful force in Myanmar.

Two decades of international sanctions took their toll on the economy, and their lifting has seen a rapid shift in Myanmar's political and energy spheres.

For a time, China was Myanmar's only truly visible supporter on the world stage, with Beijing reaping the associated benefits. That relationship is being transformed, however, as Naypyidaw embraces new trading partners.

Thai companies have capitalised on Myanmar's isolation, sealing long-term resource contracts. With competition from regional and international rivals increasing, investors from Thailand will need to be nimble on their feet if they want to avoid being displaced.

Myanmar's establishment of a new democratic order in 2011 was a huge step forward in the country's development. Yet old problems, such as corruption and arbitration challenges, persist.

History has shown the harm of relying too heavily on oil and gas revenues for wider economic development. Myanmar is not necessarily destined to fall into this trap, but the risks cannot be ignored.

As a hydrocarbon province with established production and little to no reliable data, questions abound over whether there is much left to find and whether the country is, in fact, played out.

The lack of reliable seismic data is a serious concern for the oil industry, but the country's geological diversity should be cause for some cautious optimism.

Developing Myanmar's poorly maintained infrastructure will be key to opening up larger oil and gas development programmes.



Myanmar's political reforms have paved the way for an easing of sanctions on the country. However, while levels of foreign direct investment are set to rise, there remain risks and challenges to investing in the Southeast Asian country, especially in the oil & gas sector:

- China's relationship with Myanmar is shifting and while the Asian giant will figure prominently in the latter's future, Beijing's level of influence has waned.

- Thailand, though eager to invest in Myanmar, must confront growing competition from established Asian rivals as well as a new wave of investors from the West.

- Corruption, arbitration challenges and local protests could continue to prove obstacles to Western energy investment.

- Myanmar runs the risk of creating an economy that is overly dependent on oil and gas revenues.

- A lack of seismic data means there is uncertainty about the country's potential.

- Investments must be made in Myanmar's infrastructure to unlock its upstream potential.

http://www.researchandmarkets.com/research/57qlxp/newsbase_myanmar