Second Russian firm to explore oil, gas in Myanmar

YANGON, March 17 Sat Mar 17, 2007 8:31am GMT

YANGON, March 17 (Reuters) - Russia's Silver Wave Sputnik Petroleum Pte Ltd. has signed a deal with state-owned Myanma Oil and Gas Enterprise (MOGE) to explore and produce oil and gas in onshore B-2 block, official newspapers reported on Saturday.

The production sharing agreement was signed by MOGE Managing Director U Myint Kyi, Minister for Energy of Kalmykia Republic Boris Chedyrov and Silver Wave Energy Pte Ltd. chairman Min Min Aung, the Myanma Ahlin newspaper reported.

B-2 block, located in the Hukaung Valley in Kachin State, northwest of Myanmar on the border with India, is one of six onshore blocks reopened to foreign investors last year.

Silver Wave Energy is associated with the Kalmykia-based Silver Wave Sputnik Petroleum formed with the close associates of Myanmar's ruling military regime.

It was the second agreement with a Russian company for exploration of gas and oil in Myanmar.

In September 2006, JSC Zarubezhneft Itera Oil and Gas Company of Russia Federation and Sun Group of India jointly agreed with MOGE to explore for oil and gas in offshore Block M-8 in the Mottama Gulf off the Tanintharyi Coast.

Analysts say increasing Russian investment in Myanmar's lucrative oil and gas sector is a result of improving ties between the two nations.

Russia, along with China, has now become a major supporter and supplier of arms to Myanmar's junta since the West imposed sanctions in late 1988.

Last year, Russia and China blocked attempts by the United States to put Myanmar on the agenda of the United Nations Security Council.

"Russia needs a reliable ally in the Southeast Asian region following the Cold War. Myanmar is their best choice," a retired diplomat in Yangon told Reuters.

Official data show that Myanmar has at least 90 TCF of gas reserves and 3.2 billion barrels of recoverable crude oil reserves in the country's 19 onshore and three major offshore oil and gas fields.

Altogether 25 offshore blocks are now under exploration, of which 12 are located in the Mottama Gulf, six off the Tanintharyi coast and seven off the Rakhine coast.