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The government of Myanmar is further opening up to international business by signing a deal with two foreign energy companies, Statoil (NYSE:EQNR) of Norway and ConocoPhillips (NYSE:COP) of the United States, which will invest more than $300 million to explore and drill for oil and gas off the coast of the Southeast Asian country.
An anonymous official of Myanmar's Ministry of Energy (MOE), quoted May 4 by the Myanmar Times, said that on April 30, the two companies signed a production sharing contract (PSC) for a deepwater field called AD-10 off the coast of Myanmar in the Bay of Bengal. The field has an area of 9000 square kilometres in depths of up to 2000 meters.
"Statoil and ConocoPhillips have committed to investing $323.65 million, as well as $5 million as a signature bonus and $200,000 as a data fee for AD-10," the MOE official said of the two energy giants.
Statoil is exploring and drilling for oil and gas in more than 30 countries. ConocoPhillips' production and energy reserves make it the world's largest independent exploration and production company.
The companies directly involved in the deal are subsidiaries of Statoil and ConocoPhillips. They are Statoil Myanmar Private Ltd, registered in Singapore, and ConocoPhillips Myanmar E&P Pte. Ltd.
Commenting on the contract, Erling Vagnes, a senior Statoil vice president, said in a statement that AD-10 "is a large and virtually unexplored area in a basin with a proven petroleum system and thick sedimentary deposits. ... With this award, we have accessed ... another frontier acreage with significant upside."
Now, he said, the two companies must conduct assessments of how their work might affect the region's environment and the people who live there. The studies must be completed within two years, after which both Statoil and ConocoPhillips have six years to explore and drill for gas and oil.
Myanmar's contracts with Statoil and ConocoPhillips are only the latest demonstrating the once-secretive country's desire to open itself to the rest of the world, at least commercially. In 2013 it conducted a round of bidding for exploration and production rights to 20 out of 30 oil and gas blocks.
That led to the signing of 19 PSCs. The one such document that remains to be finally ratified is for shallow water block M-7, for which the Australian companies ROC Oil Co. and Tap Oil won the bidding.
The Myanmar Investment Commission says that during the fiscal year that ended in March, the country attracted $8 billion in foreign direct investment, more than 35 percent of it in Myanmar's energy sector. The country hopes to attract $6 billion more in foreign investment in the current fiscal year.
Myanmar once was a tightly closed society under military rule, but in August 2011 it made a transition to civilian republican government. Since then many Western countries have removed trade limits imposed on the country.
Among the current Western projects in the country is work by the US company APR Energy and Singapore's Asiatech Energy, which intend to build new fossil-fuel power plants in Myanmar. Their aim is to help President Thein Sein keep his promise to bring electricity to the country's entire population. Now only about 30 percent of the country has electric power.