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Suu Kyi calls for Moge snub in licensing round

Myanmar's hopes of attracting more Western interest in its upcoming licensing round have been dealt a blow after opposition leader Aung San Suu Kyi urged nations to bar their companies from forming joint ventures with her country’s state-owned oil and gas company until it improves its business practices

The plea comes as Myanmar (Burma) gears up to offer 18 onshore blocks in a new round to be launched later this year.

Speaking at the recent annual International Labour Organisation conference in Geneva, Suu Kyi said that the Myanma Oil and Gas Enterprise (Moge), with which all foreign participation in the energy sector takes place through joint venture arrangements, lacks both transparency and accountability at present.

"The (Myanmar) government needs to apply internationally recognised standards such as the IMF code of good practices on fiscal transparency. Other countries could help by not allowing their own companies to partner Moge unless it was signed up to such codes," she said.

Suu Kyi says the key to helping her resource-rich country along the path to democracy after nearly 50 years of military rule is responsible investment.

Myanmar has granted China National Petroleum Corporation (CNPC) pipeline concessions that will enable Middle East energy supplies to a take short-cut on the route to China, cutting out the extra expense and journey time of using the Malacca Strait.

The content of the deals cut with CNPC are not made public, which highlights the lack of transparency in Myanmar. And that lack of transparency leads to all kinds of suspicions that shore up trouble for the future, says Suu Kyi.

But, speaking about French major Total, one of two big Western oil firms with investments in Myanmar, she said that Total was a responsible investor in the country, even though there was a time when her National League for Democracy (NLD) party did not think they should be encouraging the military regime by investing in Myanmar. US supermajor Chevron also has operations in the country.

“They were sensitive to human rights as well as environmental issues and now the nation has come to a point in time when it would like investors who are sensitive to such issues,” Suu Kyi said, adding she was not going to persuade Chevron or Total to pull out.

As sanctions are lifted, investment should be responsible and help the process of democratisation, she said.

"Burma is a land with a lot of energy resources. We do not want to dissipate it. I would like to see a sound effective energy policy in Burma and this should be related to the kind of extractive investments that we invite in."

However, Hans W Vriens, managing partner of Singapore-based consultancy Vriens & Partners, told reporters that Suu Kyi’s statements are unbalanced. He said that on the one hand she applauds Total, but he asked how does she propose to encourage further investments in the sector without Moge, which is by far the most professional government-backed company.

“The NLD has no policies. Aung San Suu Kyi will have to transform from democracy icon and come up with specific policy proposals,” Vriens told reporters. He conceded that it will not be easy as the NLD was destroyed after Suu Kyi’s party overwhelmingly won the 1990 general elections, which were not recognised by the military dictatorship.

The upcoming licensing round follows the country's largest oil and gas offering in August, in which half of the 18 onshore blocks were awarded to foreign companies. The government has signed agreements with all but one of the seven foreign firms involved.

Following years of Western investment sanctions, Asian companies, especially from China, Thailand and India, have dominated foreign investment in Myanmar's oil and gas sector.

The country’s resources are officially estimated at 125m barrels of oil and 28 trillion cubic feet (cf) natural gas – equivalent to more than a quarter of Australia’s proved gas reserves.

Moge hopes the nation will produce 2.3bn cf a day (cf/d) by 2020, including 644m cf/d for domestic supply, up from 1.2bn cf/d in 2010, according to BP’s Statistical Review of World Energy.

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