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