Myanmar Petrochemical Enterprise Supports Domestic Oil Refining Sector Expansion

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Researched by Industrial Info Resources (Sugar Land, Texas)--After Myanmar's political shift from a military junta to a civilian government in March 2011, the country emerged as Asia's "Final Frontier" in the globalized economy. Myanmar is now attempting to accumulate capital and maintain political sovereignty, and is studying how to sustainably manage its energy resources.

Myanmar is Southeast Asia's second-largest exporter of natural gas, after Indonesia. Oil production reaches up to 10,000 barrels per day (BBL/d) from on-shore plants. The country's offshore fields are under development. Due to limited domestic refining capacity, Myanmar largely depends on imports to meet its requirements for energy and transportation fuels.

The Myanmar Petrochemical Enterprise (MPE) is a state-owned entity under the Office of the Ministry of Energy (MOE). MPE is responsible for production and distribution of petroleum products and petrochemicals. It operates three oil refineries, with a total processing capacity of 57,000 BBL/d; three liquefied petroleum gas (LPG) plants; and five fertilizer plants.

Domestic demand for refined fuel is currently at 80,000 BBL/d. The MOE website estimates the figure could easily reach 200,000 to 300,000 BBL/d in the near future. MPE has lined up a program that includes the renovation of its existing plants and the building of new oil refineries to increase production and meet growing demand for high-value petroleum products.

All three oil refineries were commissioned more than 30 years ago and require a certain extent of rehabilitation. MPE recently began to offer joint venture stakes to foreign investors for technical assistance and capital to upgrade all its operational oil refineries. The No. 1 (Thanlyin) Refinery is initially being offered for privatization to overseas investors that have the experience to improve and modernize the complex.

"The government has plans to go with joint ventures to upgrade existing refineries with foreign companies," said Win Maw, deputy director general of the Ministry of Energy. MPE is also considering the future transfer of its No. 2 (Chauk) and No. 3 (Thanbayarkan) refineries to local and overseas partnerships.

In addition to refinery upgrading projects, MPE announced plans for the construction of a grassroot oil refinery designed to process at least 56,000 BBL/d of imported crude. Studies are under way to produce refined fuel using Myanmar's share of crude being serviced by the Myanmar-China oil pipeline, which is situated along the central region of the country. Site selection for the refinery will be finalized upon approvals from local villages.

Another refinery still under negotiation is between MOE and Thailand's PTT (SET:PTT) for a 150,000 BBL/d complex at the planned Dawei (Tavoy) Special Economic Zone (DSEZ). Although the local community is attempting to interfere with the developments, preparations already began for DSEZ Phase I, which includes a deep sea port and associated infrastructure. Construction of the Dawei refinery is planned to commence during Phase II of DSEZ, which is expected to occur as early as 2015.

Proposals to build new oil refineries in Myanmar are not limited to MPE authority. A $2.5 billion refinery, funded by China's state-owned Guangdong Zhenrong Energy Company Limited, is planned for the Tenasserim province. The refinery is designed to process 100,000 BBL/d of imported sour crude to meet 60% domestic demand for refined products, upon completion in 2018. Three other private refineries are being conceptualized.

MPE believes the expansion of Myanmar's domestic oil refining industry could help ease the country's dependence on imported fuels, as well as contribute to sustainable development of the country.

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