(Adds 30-year contract in first and sixth paragraph)
BEIJING, Dec 25 (Reuters) - A Myanmar gas consortium led by South Korea’s Daewoo International (047050.KS) has signed a 30-year agreement to sell natural gas to China, China’s Xinhua news agency said on Thursday.
Under the agreement, which cements a preliminary deal in June, China’s top state oil and gas firm China National Petroleum Corp (CNPC), will buy gas from the Shwe field in Myanmar’s A-1 offshore block, which has reserves of 4-6 trillion cubic feet (113-170 billion cu metres), Xinhua said.
Daewoo has 51 percent in the consortium, the China National United Oil Corporation (CNUOC). The other shareholders are India’s Oil and Natural Gas Corp (ONGC.BO) with 17 percent, India’s GAIL (GAIL.BO) with 8.5 percent, Korea Gas Corp (036460.KS) with 8.5 percent and Myanmar Oil & Gas Enterprise with 15 percent.
CNPC and Myanmar Oil & Gas Enterprise plan to build oil and gas pipelines through Myanmar and into China’s southwestern Yunnan province, bypassing the long journey around the Malacca Strait for oil cargoes and solving the problem of getting the gas to market, Chinese media have reported. [ID:nPEK331703]
Myanmar will also be able to tap the pipeline running across its territory to promote economic development once the gas starts flowing, which is expected to happen in 2013, Xinhua said.
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.
The Daewoo consortium also has gas reserves estimated at 5 trillion cubic feet in the A-1 block’s Shwephyu field and 2 million tcf in the Mya field in the A-2 block, with a combined proven reserve of 5.7-10 tcf, Xinhua said, citing experts.
Myanmar produced 7.62 million barrels of crude oil and 13.393 BCM of gas in the fiscal year 2007-08, according to Myanmar’s Central Statistical Organisation, Xinhua said.
Foreign investment in oil and gas tripled in 2008 to $474 million and accounted for 90 percent of foreign investment, it said.