PTTEP to take over as operator of Myanmar gas field
Thailand’s PTTEP will be taking over the operatorship of the Yadana gas field located offshore Myanmar following a recent decision by project partners, TotalEnergies and Chevron, to exit the project due to a worsening situation in the country following a military coup last year.
French TotalEnergies decided to exit its operations in Myanmar last February, condemning “the abuses and human rights violations taking place there.”
According to previous information provided by TotalEnergies, the French company has been a partner (31.24 per cent) and operator of the Yadana gas field (Blocks M5 and M6) in Myanmar since 1992, alongside its partners Unocal-Chevron (28.26 per cent), Thailand’s PTTEP (25.5 per cent), and the Burmese state-owned company MOGE (15 per cent).
Following TotalEnergies’ decision, Chevron also decided to follow suit and confirmed “a planned and orderly transition that will lead to an exit from the country”, leaving PTTEP as the likely candidate to take over the operatorship of the project.
After TotalEnergies’ decision to withdraw from the Yadana project, PTTEP said it has thoroughly considered taking a step as the successor operator in order to ensure the no interruption of natural gas supply and to reinforce long-term energy security, especially in the current circumstances, where other forms of energy are not the primary source for electricity generation.
As stated by the Thai company, considering the current situation in Myanmar, the certain timeframe for the change of operator, and its familiarity with the project, the company will help secure the continuity of natural gas supply and safe operation.
PTTEP informed that its nomination as the new operator has been done by the remaining partners in this project. The operatorship transfer, which is expected to be completed on 20 July 2022, requires full support from TotalEnergies to assure seamless transition and production continuity with the safety standard.
Under the Production Operating Agreement (POA), TotalEnergies’ share will be allocated proportionately to the remaining joint venture partners with no commercial value. After the effective date of TotalEnergies’ withdrawal, PTTEP will hold 37.0842 per cent participating interest, while a subsidiary of Chevron, Unocal Myanmar Offshore Company, will hold 41.1016 per cent, which is the largest participating interest in the project.
According to PTTEP, the Yadana project currently produces natural gas at the rate of approximately 770 million standard cubic feet per day (MMSCFD), approximately 220 MMSCFD. This accounts for 50 per cent of the country’s gas demand that is inevitably supplied for electricity generation in Myanmar.
Thailand also relies on this source of energy as around 550 MMSCFD of gas from the field is fed to 12 various power plants for electricity generation, serving the demand of 11 million people living in the west and central part of Thailand. The amount of this imported gas contributed to about 11 per cent of Thailand’s gas demand.
Offshore Energy has reached out to Chevron, seeking further details about its previously announced plans to exit the project.
A spokesperson for Chevron told us that the oil major is seeking to exit the field through a transaction, which serves to provide greater control over incoming JV parties.
“This was a commercial decision, based on a review of our portfolio, and given the current outlook,” the spokesperson said.
Furthermore, Chevron’s exit plan is independent of TotalEnergies’ withdrawal and the two companies’ timelines for an exit will differ.
“We do not have an exit date. An exit date will depend on several factors, including the progress of confidential commercial discussions, transfer of operatorship and the well-being of our employees,” the spokesperson explained.
Chevron is also engaging with TotalEnergies to understand how the French company, as the current operator, intends to ensure the continuance of safe and reliable operations.
Since TotalEnergies plans to distribute its share of the project to JV partners, Chevron intends to accept its share of this interest “in so far as it supports our objectives of achieving a safe and orderly transition.”
[The article has been updated with a statement from Chevron]