Exclusive - Myanmar has no plans to export new gas finds

NAYPYITAW, Myanmar Fri Jan 27, 2012 1:59pm GMT

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NAYPYITAW, Myanmar (Reuters) - Myanmar will keep natural gas from new projects beyond 2013 for domestic consumption, a shift of policy aimed at powering its development, the country's energy minister said on Friday.

Myanmar has opened up to the outside world with astonishing speed since a civilian government took office last March after five decades of army rule. The prospect of the end of Western sanctions has prompted a surge of interest from investors.

Speaking to Reuters in his first interview with foreign media, Minister of Energy Than Htay pegged the country's natural gas reserves at 22.5 trillion cubic feet, almost double the 11.8 trillion estimated by oil major BP (BP.L) in its 2011 statistical review. (www.bp.com/statisticalreview)

"Now we are developing, we need more energy, so we won't sell our natural gas abroad. We will use it ourselves," Than Htay said in an interview in the capital, Naypyitaw.

Existing plans to supply gas to China and boost exports to Thailand would be honoured, he said.

Opposition has been growing to the sale of Myanmar's oil and gas resources to China and the decision on exports demonstrates new sensitivity to the demands of voters, who want the country to use its energy assets to develop infrastructure and tackle chronic power cuts.

Myanmar's neighbours -- from China and India to Thailand and Bangladesh -- have been sizing up Myanmar's natural gas fields, hoping they can feed their own fast-growing energy needs.

Just last month, Bangladesh Prime Minister Sheikh Hasina told Myanmar's president she would like to buy natural gas from the former Burma.

Than Htay said the country was spending "$700 million or $800 million (509 million pounds)" a year to import petroleum products. He said Myanmar, a country of an estimated 60 million people, used about 60,000 barrels of oil equivalent per day and was only able to meet about a third of that itself, needing to import two-thirds.

A pipeline to pump 400 million cubic feet of gas a day to China is on schedule to start in 2013. Myanmar already supplies 1.2 billion cubic feet to Thailand daily, the minister said, and would add another 300 million cubic feet per day from the early stages of a project at the Zawtika gas field.

DAWEI DOUBTS

Than Htay said foreign interest in the energy sector was clearly growing as it became likely that Western sanctions could be lifted.

"Very recently, the day before yesterday, Norway's foreign minister came and visited and discussed with me participation by the Norwegian state oil company, Statoil (STL.OL)," he said.

"Also, from Brazil, from Belarus, many companies, especially Japanese companies come and discuss daily to participate in Myanmar's energy sector," he said.

Statoil was looking at an offshore development, he said. Russia's Gazprom (GAZP.MM) was interested in deep sea blocks, as was Total SA (TOTF.PA), which has been in the country for some years.

"Our policy for the onshore blocks is that it must be according to international bidding. But for the offshore blocks, it will be the direct negotiating business," Than Htay said.

He ruled out supplying natural gas to an ambitious deep-sea port and special economic zone in Dawei that has the potential to transform a section of southern Myanmar into Southeast Asia's biggest industrial complex.

Italian-Thai Development Pcl (ITD.BK), the company developing the first $8.5 billion phase of the Dawei project, had hoped natural gas piped from nearby fields would provide an alternative fuel after the government this month halted construction of a 4,000 megawatt coal-fired power plant, citing environmental concerns.

The minister said three other special economic zones would be developed more quickly than Dawei, citing in particular two: Thilawa, south of the commercial capital, Yangon, and Kyaukphyu, on the Bay of Bengal, where the China-Myanmar pipeline starts.

He said the government was now considering supplying electricity to the Kyaukphyu zone.

The head of the Italian-Thai unit leading the Dawei project brushed aside the minister's comments, insisting the development would go ahead.

"It's at the point of no return. They can say whatever they want but the final decision will depend on the special committee chaired by Myanmar's president," said Somchet Thinaphong, managing director of Dawei Development Co Ltd.

"This project is huge and is getting a lot of interest from foreign investors."

(Writing by Alan Raybould; Additional reporting by Aung Hla Tun in Naypyitaw, Khettiya Jittapong, Manunphattr Dhanananphorn and Pisit Changplayngam and Martin Petty in Bangkok; editing by Michael Urquhart and Keiron Henderson)

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