June 23, 2008 / 12:15 AM / 11 years ago

Daewoo consortium signs gas supply deal with China

SEOUL, June 23 (Reuters) - South Korea’s Daewoo International (047050.KS) said on Monday its Myanmar gas consortium had agreed to sell natural gas to China National Petroleum Corp.

Daewoo, which operates Myanmar’s A-1 and A-3 natural gas fields, said in a regulatory filing its consortium had signed a memorandum of understanding with CNPC on Friday over the sale and transportation of natural gas from the project.

Daewoo has a 51 percent stake in the fields, followed by India’s Oil and Natural Gas Corp (ONGC.BO) with 17 percent, India’s GAIL (GAIL.BO) with 8.5 percent and South Korea’s Korea Gas Corp (036460.KS) with a 8.5 percent and Myanmar Oil & Gas Enterprise with a 15 percent.

CNPC is the state-owned parent of listed PetroChina 0857.KS.

The deal comes after China surprised markets last week by raising its nationwide fuel prices by up to 18 percent in its biggest one-off hike. [ID:nL1914615]

Few western companies will invest in the former Burma because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of U.S. and European sanctions.

China, typically wary of supporting or imposing sanctions and one of Myanmar’s few diplomatic allies, has shown no qualms about investing in its neighbour, eager for its natural gas, oil, minerals and timber to feed a booming economy.

Daewoo said last year it had picked China as a preferred bidder for natural gas from a project in Myanmar, putting it at the front of a queue that also includes India and Thailand.

Myanmar officials have also said the gas will go to China and Beijing says it is considering building gas and oil pipelines into southwestern Yunnan province. This would improve access to its neighbour’s rich resources, eyed by many energy-hungry nations across Asia.

Myanmar has at least 90 trillion cubic feet of gas reserves and 3.2 billion barrels of recoverable crude oil reserves in 19 onshore and three major offshore fields.

Altogether, 25 offshore blocks are under exploration, 12 of them in the Gulf of Martaban, six off the Tanintharyi coast and seven off the Rakhine coast.

CNPC controls listed PetroChina, which has come under pressure from activist shareholders because of its parent firm’s investments in Sudan.

The supply of gas from the project will be adjusted every quarter based on international energy prices, Daewoo said. (Reporting by Miyoung Kim; Editing by Keiron Henderson)

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