Is Oil Money Leak­ing Away?

When pub­lic de­bate heats up Mizzima reviews the land­scape of opin­ion and prints the most poignant quotes in favour and against.

Mizzima Business Weekly - - CONTENTS -

This week: Is Myan­mar’s oil money flow­ing out of the coun­try?

YES

Ac­cord­ing to the ra­tio of in­vest­ment ra­tio Myan­mar Oil and Gas en­ter­prise gets 25 per­cent and the for­eign company gets 75 per­cent of rev­enue. And the for­eign com­pa­nies sell oil and gas as min­i­mum price. It is un­clear to us how much the peo­ple ben­e­fit from the 25 per cent the gov­ern­ment gets. Dr Aye Maung, Chair­man, Rakhine Na­tional Party.

For­eign com­pa­nies have to invest a lot of money be­fore they find oil or gas and they can not guar­an­tee the re­turn on in­vest­ment they want. Some­times they drill and ex­plore many blocks and just find one well. It is rather un­cer­tain if they will make a profit. U Win Oo MP, Pyithu Hlut­taw, Union Sol­i­dar­ity and De­vel­op­ment Party, Ye­byu Town­ship, Taninthary­i Re­gion

UN­SURE

Hon­estly, I don’t know. We don’t get to see the con­tracts be­tween com­pa­nies and the min­istry. They are not trans­par­ent, so we are not able to find out if it is fair or not. U Han­thar Myint, CEC mem­ber, Na­tional League for Democ­racy.

In Shan state we don’t have oil and gas so I don’t know ex­actly. Most of the ex­plo­ration is done in Rakhine and Mon State , Aye­yarwaddy and Thanithary­i Re­gion. Sai Aik Pao, Shan Na­tion­al­i­ties De­vl­op­ment Party chair­man

and Shan State min­is­ter for Forestry and Min­ing

NO

Myan­mar gov­ern­ment gets a big­ger share of the revenu than for­eign com­pa­nies. Ac­cord­ing to the terms and con­di­tions of Myan­mar’s Pro­duc­tion Shar­ing Con­tracts, the gov­ern­ment takes a roy­alty per­cent­age of 12.5 per cent. A max­i­mum of 50 per cent of the re­main­ing 87.5 per cent can be used for cost re­cov­ery. The Myan­mar Oil and Gas En­ter­prise au­dits this. The 43.5 per cent that is left – 50 per cent of 87.5 per cent – is di­vided again. MOGE gets 60 per cent and the oil company 40 per cent. From that 40 per cent the gov­ern­ment takes another 15 per cent. U Kyaw Kyaw Hlaing, Pres­i­dent of the Myanma Oil and Gas Ser­vice So­ci­ety and Chair­man of the SMART Group of Com­pa­nies

The terms and con­di­tions preva­lent in Myan­mar’s Pro­duc­tion Shar­ing Con­tracts (or PSCs) en­able the State to en­joy a gov­ern­ment take of ap­prox­i­mately 75-80% - con­trac­tors take of 20-25% - which is no­tably greater in com­par­i­son to the world­wide av­er­age gov­ern­ment take of 65-70%. PSCs in Myan­mar also in­volve an Ef­fec­tive Roy­alty Rate that is almost two times greater than the world-wide av­er­age. A gov­ern­ment par­tic­i­pa­tion or “back-in” op­tion is also made avail­able to the State as part and par­cel of the PSCs in Myan­mar which pro­vides the State with a “carry of costs” dur­ing the very high risk early stages of an oil & gas project (such as the ex­plo­ration phase). Such con­di­tions, in com­par­i­son to the rest of the world, en­able Myan­mar to en­joy ex­tremely fa­vor­able terms, ben­e­fits, and ul­ti­mately, prof­its from in­vest­ments made in the oil & gas sec­tor of the na­tion. U Sithu Moe Myint, Deputy Coun­try Man­ager, MPRL E&P Pte., Ltd

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