Myanmar: Better gas technology, infrastructure crucial to solving power problem

Myanmar: Better gas technology, infrastructure crucial to solving power
problem

Myanmar, one of the fastest growing economies in the world, is nevertheless
notorious for its insufficient supply of power. Despite several State and
regional Master Plans and programs, just one third - or 3.7 million out of
the 10 million households in the country - enjoys access to electricity.
Meanwhile, the government's losses, accumulated on the back of unsustainably
low electricity tariffs since the previous administration, continues to
mount, and that perpetuates the shortage despite a State mandate for Myanmar
to achieve universal electrification by 2030.

Kyaw Kyaw Hlaing, chair of the SMART Group of Companies, a local oil and gas
conglomerate, reckons the present power shortage problems are par for the
course in a country that is developing much faster than its government or
existing infrastructure can keep up with. "This country will not grow if
things are easy, but only when there are challenges to overcome. And Myanmar
faces many challenges on the power supply front," he said at the 2017
Myanmar Green Energy Summit last week.

The way Kyaw Kyaw Hlaing sees it, the private sector could make better use
of its time and money by accepting the present business conditions and
investing towards a better economy in the future instead.

"Electricity tariffs are heavily subsidised and must be raised. The decision
makers know this very well. But raising tariffs is a political issue, not
just an economic one. No government wants to anger the public. As such, if
you want to operate or invest here, don't question the existing policies or
complain. It would be better to look forward," he said.

Gas exporter

There is plenty to be done on that front. Myanmar is actually among one of
the largest gas exporters in the world, with abundant onshore gas fields as
well as some 1.8 million sq miles of resource-rich waters in which to
explore for gas. That is double the size of the UK. Currently, the bulk of
the country's gas supply comes from four offshore gas fields -Yadana,
Yetagun, Shwe and Zawtika - which are operated by France's Total, Malaysia's
Petronas, South Korea's Daewoo and Thailand's PTTEP, respectively.

"There will be many more discoveries because we also have a total of 27
other international oil companies working for 29 production sharing blocks
in the country. Reliance from India, CNPC from China, Chevron from the US,
Statoil from Norway and ENI from Italy, name them and they are all here,"
Kyaw Kyaw Hlaing said.

Just last month, gas was discovered by Australia's Woodside Petroleum at
Block A-6, off the coast of Southern Rakhine, at water depths of up to 4,570
meters. It was the deepest gas well ever drilled in Myanmar, and the third
finding in the same area over a period of five years. The two earlier
discoveries, at 200 meters and 2,034 meters respectively, were made in 2012
and 2015. Now, Woodside is planning to drill fourth well at Block A-6.

In fact, Myanmar currently produces about 1.9 billion cubic feet of gas
annually, yet the country consumes just around 300 million - 400 million
cubic feet of what is produced, while the remaining 1.5 billion cubic feet
is exported. Why is the country exporting so much gas when its own energy
needs are not met? "The reason is it takes almost ten years from the day gas
is discovered to the day it can be delivered and sold in Myanmar, and this
is gas produced in shallow waters," Kyaw Kyaw Hlaing said.

For fields in deep waters, such as the recent Woodside discovery at Block
A-6, it will take more than a decade before the gas discovered there is
commercially viable in Myanmar. This is because production wells must first
be drilled and off-take agreements negotiated with buyers before the gas
actually reaches the power plant. As such, most of the gas produced is
exported instead.

Notably, Myanmar also lacks the facilities needed to transport and deliver
gas in its liquefied form, which is a means used by other countries to speed
up gas deliveries. "Myanmar has no deep sea port and building a new
liquefied natural gas terminal could take two to four years. Existing
pipeline infrastructure is also aging. Even if Total can supply 200 million
cubic feet of gas, the pipelines will not be able to manage this. We will
have to build new pipelines as well," he said.

Depleting supply

In that light, Myanmar should focus more on developing new sources,
technologies and infrastructure to help speed up the delivery process. "We
used to have a lot of cheap onshore gas fields like Payagon, Apyauk,
Nyaungdon, Shwepyithar and Pyay. That is why the government agreed to the
low tariffs in the first place. But those wells have been depleted and the
low-hanging fruits are gone," Kyaw Kyaw Hlaing said.

Meanwhile, gas at the Yadana offshore field, which has been in production
since 1998 and currently supplies gas to most of Yangon's power stations,
will dry up by 2021.

How then, will Myanmar meet its rising energy needs?

While there could still be gas left in the onshore fields, advanced
technologies, such as horizontal drilling, may need to be deployed. However,
these are new and expensive technologies. Meanwhile, to drill at new fields,
more fiscal support is needed. "If we can find a way to produce more gas
onshore then the costs will be cheaper compared to offshore. But we will
need to change the fiscal terms for this and that will take time," he said.

In the meantime, Myanmar must look towards other forms of energy to fill the
present power gap. Kyaw Kyaw Hlaing reckons renewable and clean sources of
energy such as solar and wind power have huge potential. "In our Master
Plan, coal plays a big part in the future energy mix of Myanmar. But Myanmar
does not produce any coal so we will have to import large amounts of it to
run a power plant here. This is not sustainable. Energy security is also
national security, so we should not rely on importing coal," he said.

Hydropower, too, has its limits. "There are heavy social and environmental
consequences involved in hydro-power plants. Moreover, hydropower is only
useful in the rainy season, when less power is needed. During the summer
months, when electricity usage goes up, there is no water anyway. So,
harnessing renewable energy is our best bet," he said.

Investors lobbying for better power supply in Myanmar should take note.

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Link to Original Article:
http://www.mmtimes.com/news/better-gas-technology-infrastructure-crucial-sol
ving-power-problem.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com