Myanmar oil & gas sector poised to see business traction

Photo by khunaspix. Image ID: 100301036 (freedigitalphotos.net)

Oil and gas, the mainstay industrial sector in frontier market Myanmar, is expected to witness business and investment traction with over two dozen fresh blocks set to be awarded next year.

Myanmar awarded about 20 oil and gas blocks in 2013 to international companies and nearly 26 more will be awarded in 2016, according to local media reports.

However, the sector, which has nearly 160 local registered players, lags in firms providing services and logistics given the growth projections.

Former director general in the ministry of energy U Soe Myint says, in the oil and gas related sector, most of the foreign companies eyeing the Myanmar market are related to trading.

“There are many works to be done in services such as technical works, drilling, laboratory and transport services. Currently, most of the businesses are done on trading,” he said.

Myanmar needs to make good use of not only exporting gas but also work on business relating to services in the sector, he said.

With many of the investors eyeing the country, Myanmar needs to make reforms on the regulations and administration, said U Aye Lwin, secretary general of the Union of Myanmar Federation of Chambers of Commerce and Industry.

With general elections in Myanmar round the corner (November 8), many investors are in a wait-and-watch mode hoping the change in government will pave way for administrative and regulatory reforms.

At the recent exhibition focussed on manufacturing and the oil and gas industry, foreign company participants showed eagerness to tap the new market of Myanmar. At the same time, they were prepared that investments in Myanmar will yield returns only in the long run.

Among the 90 exhibitors, who participated at the Yangon expo, there were several who were focussed on the services sector and were eyeing potential alliances with Myanmar firms or looking at setting up shop in the country.

For instance, Uniteam Training, that provides training solutions for the marine, oil and gas and industrial sectors, has been in Myanmar for over 20 years. It is looking at forging alliances with new players who will be awarded blocks.

Myanmar awarded blocks to foreign companies like Chevron, Statoil, Total and Shell which spurred the local training industry.

Germany’s Vokel, that provides threading solutions to the automotive, and oil and gas industry, caters to Myanmar through its Thailand office. “However, it is our aim to set up a business here with employees in Myanmar,” said Alexander W Reul of Volkel.

Companies like Taicin L.S. Co Ltd from Taiwan, manufacturer of industrial products, are looking out for distribution partnerships to access the Myanmar market. This is Taicin’s second attempt to explore the market through the exhibition route.

Hydac Technology Pte Ltd from Singapore too is looking at stepping into the Myanmar market.

“We are still at a very early stage on how to go about in the Myanmar market. We have contacts with Myanmar companies that have subsidiaries in Singapore,” said Thomas Lek, general manager of Hydac Technology Pte Ltd.

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