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Myanmar military coup risks over $1 billion of upstream investment

The political uncertainty in Myanmar could hit Woodside Energy and Total’s multibillion-dollar A-6 project.

Myanmar military coup risks over $1 billion of upstream investment

Nay Pyi Taw, February 2 - Neftegaz.RU. The apparent overthrow of the Aung San Suu Kyi administration by the Myanmar military threatens more than $1 billion of potential upstream investment in the Southeast Asian nation, Energy Voice analysed.

Significantly, foreign companies, including French Total, Australia’s Woodside Energy and Thailand´s PTTEP, are close to sanctioning projects, which could be derailed by the political uncertainty and heightened reputational risk.

Readul Islam, an Asia upstream specialist at Rystad Energy, told Energy Voice:
  • The situation is fluid at the moment. I would expect whoever ends up with the reins of power will be quick to reassure Myanmar’s business community that it will be business as usual
  • As Myanmar’s legacy offshore fields enter their sunset years, this isn’t the time to scare away new offshore investment
  • Even if the offshore industry is convinced that power isn’t being grabbed at any costs using a scorched earth policy, confidence will be shaken
  • The main Myanmar upstream projects we had foreseen entering development by 2023 are POSCO’s Shwe Phase 3, PTTEP’s Aung Sinkha and Total-Woodside’s A-6 Project
Rystad Energy had forecast a potential spend of nearly $1.3 billion on these projects to the end of 2023.
Now companies may hesitate to sanction new investment in Myanmar and most of the partners in these key development projects have other options within their portfolios that they could divert cash to if needed.

Woodside Energy, which started a 3-well offshore drilling campaign last month, said it is closely monitoring the evolving political situation.
The company said it has more than 100 direct employees and dependents in Myanmar.
But it also has «a number of people» indirectly employed for the current drilling campaign, which is using the Transocean Dhirubhai deep-water KG2 drillship.

Crucially, the political uncertainty could hit Woodside and Total’s multibillion-dollar A-6 Project, which was targeting the start of front-end engineering and design (FEED) work this year, for what would be Myanmar’s 1st ultradeep-water gas field.

Myanmar’s ruling National League for Democracy scored a resounding victory in November’s election, the 2nd since the military began to withdraw from civilian politics in 2011.
The expected political continuity meant that upstream development expenditure would likely more than double to over $1 billion by 2023 compared to 2020’s spend.

That all changed yesterday when the armed forces said it had carried out the detentions of Suu Kyi and other senior politicians in response to “election fraud”, handing power to military chief General Min Aung Hlaing and imposing a state of emergency for 1 year.

Author: Damon Evans

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