Thailand’s PTT Exploration and Production (PTTEP) has announced an asset swap with China National Offshore Oil Corporation (CNC) for interests in Myanmar. PTTEP will swap its 20% stake in offshore Blocks M-3 and M-4 in Myanmar for CNC’s Blocks A-4 and C-1, according to the Thai company’s president Maroot Mrigadat. The deal is part of PTTEP’s plan to diversify risk and expand its portfolio so as to increase its reserves base to account for Thailand’s growing domestic consumption. The company has added that in future it may invest jointly with CNC in other countries.

PTTEP remains active in Myanmar, despite the political unrest within the country and Western calls to impose sanctions and ban new investment in the country. PTTEP owns a 100% stake in offshore Block M-9 located in the Gulf of Martaban. The block is still under exploration, with PTTEP planning to invest some $1USbn over the next five years with the aim of bringing the block onstream in 2011. Myanmar’s government has previously estimated the block’s reserves at 226.5bn cubic metres (bcm). This could significantly add to the country’s reserves, which the BP Statistical Review of World Energy, June 2007 estimated at 540bcm at end-2006.

While the US and the European Union (EU) have called on countries to boycott Myanmar, Thailand and other Asian countries that benefit from Myanmar’s growing gas production have been reluctant to do so. Myanmar’s gas production has increased significantly over recent years, from 1.7bcm in 1999 to 13.4bcm in 2006, according to the BP Review. Most of Myanmar’s export revenues come from selling gas to Thailand, a trade which doubled in 2006 to $2US.2bn. In 2006, Myanmar accounted for around 20% of Thailand’s gas supply, most of which is supplied by the Yetagun and Yadana fields, in which PTTEP holds shares. However, Thailand is facing increased competition for Myanmar’s gas exports and assets from China and India. These countries’ national energy firms, particularly those from China, have a pragmatic record in dealing with regimes that Western international oil companies (IOCs) have had to stay out of due to political issues. In Myanmar, however, Western IOCs Total and Chevron are so far holding on to their assets, despite increased pressure from shareholders and their national governments.