The company has the green light to explore two blocks (AD-9 and AD-11) in Rakhine State and one (MD-5) in Taninthayi Region, under the production-sharing contract signed with the state run Myanmar Oil and Gas Enterprise (MOGE) on February 5.
Shell Myanmar Energy will be the operator of the three blocks, holding a 90 per cent interest each. Tokyo-based Mitsui Oil Exploration’s subsidiary, MOECO Oil & Gas Asia Pte Ltd holds the remaining 10 per cent interest.
It is estimated they would spend two years to conduct feasibility study and six years for exploration.
MOGE will get US$61 million for signature bonus and $300,000 for data fee. The social and environmental impact assessments are also included in this foreign investment joint venture.
"The $61 million signature bonus is a record since the amount has never been more than $6-7 million before," said Kyaw Kyaw Hlaing, the chairperson of Myanmar Oil and Gas Services Society, a non-profit that aids in development of the Myanmar oil and gas industry.
According to a Xinhua News Agency report, in December last year, Myanmar signed similar contracts with three Indian companies and a Singapore-based company to explore oil and gas in the Mottama offshore blocks. The three Indian companies, the Oil India Ltd, Mercator Petroleum Ltd and Oilmax Energy Pvt Ltd, will make the engagement at the M-4 block and Taninthayi offshore YEB block at the expense of 120.9 million dollars in one year observation period and six months exploration period. Similarly, the Mottama offshore M-8 block will be explored by the Singapore-based Berlanga Myanmar Pte Ltd at a cost of $153 million on a one-year feasibility study and six-year operation.
Myanmar produced 6.1 million barrels of crude oil and 13.162 billion cubic metres of natural gas in the fiscal year of 2013-14, according to Central Statistical Organisation.
Recently, the Myanmar Investment Commission has permitted Unocal Myanmar Offshore Co Ltd (Bermuda), Stat Oil Myanmar Pte Ltd (Singapore) and Conoco Phillips Myanmar E&P Pte Ltd (Singapore) to operate oil and natural gas projects at offshore work sites in Rakhine State.
Unocal Myanmar Offshore Co Ltd will partner with Royal Marine Engineering Co Ltd (Myanmar) to explore oil and natural gas at Block A-5. The joint venture was approved on January 31.
MIC gave permission on the same day to Stat Oil Myanmar Private Ltd and Conoco Phillips Myanmar E&P Pte Ltd to operate oil and natural gas exploration projects on the A-10 block.
Eight local companies have reportedly been selected to partner with the foreign companies that have been approved to conduct offshore oil and gas exploration in Myanmar. These local companies are A1 Mining Co Ltd, United National Resources Development Services Co Ltd, Myanmar Petroleum E&P Co Ltd, Smart E&P Co Ltd, Parami Energy Development Co Ltd, Oil Star Management Services Co Ltd, Royal Marine Engineering Co Ltd, and Lin Win Co Ltd.
The Ministry of Energy announced the winners for 20 offshore oil and natural gas exploration blocks on March 26, 2014. Several of the world’s top petroleum companies were selected, including Shell, Chevron, Conoco Phillips, Total E&P, BG, Woodside Energy and Oil India.
There are over 160 local companies registered for cooperation with foreign investors in the oil and gas sector, according to the Ministry of Energy.