Following a visit by a South Korean delegation to Myanmar between 9 and 12 June the South Korean government announced that it has reached an agreement with Myanmar Oil & Gas Enterprise (MOGE) to jointly exploit two gas blocks–B-2, located onshore northern Myanmar, and A-7, located offshore the Arakan coast in the Bay of Bengal. Following the agreement it is believed that MOGE will allow South Korean firms to operate in the block. According to IHS Global Exploration and Production Service (GEPS), the B-2 block has a total area of 19,066 sq. km and is jointly operated by MOGE and Russia’s Silver Wave Energy. The last known activity was in March, when Silver Wave spudded the Shwe Pinle 3 exploration well. Block A-7 has a size of 8,224 sq. km in water depths of up to 2,000 metres in the Rakhine Basin. The block contains one dry well drilled in 1976, although it is believed to have significant potential for hydrocarbons.

Significance:Since March the South Korean government has been stepping up co-operation with the junta in Myanmar in a wide range of areas including trade and investment, training, and technology, both as a strategy of accessing energy and mineral resources and to advance its regional soft power and diplomatic position. In the energy sector this strategy has met with some success. South Korean companies such as Hyundai Heavy have gained large contracts for offshore engineering works while Daewoo International is leading the upstream component of the Shwe gas project. The current agreement is unusual as foreign companies have not frequently been invited to invest onshore, where discoveries are generally reserved for domestic consumption. However, the need for investment in onshore acreage due to MOGE’s very low onshore output levels might be opening up new opportunities, perhaps reflected by Chinese company North Petrochem Corp. Limited’s (NPCC) recent award of Block F in the onshore Central Burma Basin. The unilateral termination of the production sharing contract on Block A-7 with Silver Energy in early June–because the company could not fulfill its commitments–may have paved the way for South Korea to reach the agreement, although the South Korean delegation appears to have even broader ambitions, following reports that the two sides also holding discussions over joint exploration of eight additional blocks