Enough gas directed to local market – for now

The government does not intend to increase the amount of natural gas allocated to the domestic market this year from the current supply of 300 million cubic feet per day (mmcfd) despite increasing demand, according to an official of the Ministry of Energy.

“The domestic supply cannot be increased this year. It will be the same amount of 300 mmcfd for all domestic use,” the official, who spoke on condition of anonymity, told The Myanmar Times.
The disclosure is likely to be seen as a setback for some sectors of business and industry which had lobbied for increases but at discounted prices, with current supply levels seen as holding back economic growth prospects.

Future electrification efforts will require increases in natural gas production or imports to fuel plants that are currently planned or under construction, according to industry experts.
“The Ministry of Electric Power and private firms’ current supply of natural gas is fine for the moment. But gas supply is still a limitation for electrification plans,” said U Aung Thu Tun, power systems director of Zeya & Associates. The firm is one of the larger industry players currently running a 50-megawatt gas-fired station in Hlawga, Yangon Region.

“Although current supply is enough, future gas turbines coming online may require imports until 2019,” he said.

Myanmar is currently producing 2 billion cubic feet per day (cfd) of natural gas from offshore projects and 55 million cfd (mmcfd) from onshore fields. The bulk is allocated for export, with Thailand taking about 1.3 billion cfd and China 465 mmcfd. Domestic supply has stayed at 300 mmcfd since 2013.

New offshore gas fields – Shwe and Zawtika – started exporting last year and are committed to increasing production this year.

A Myanma Oil and Gas Enterprise official said there is currently enough gas supply for domestic use, given the price firms are able to pay.

“The problem is that businesses in all sectors can’t afford higher prices. That’s why we take less gas from the offshore fields,” he said.

The official said Myanmar has the right to obtain 225 mmcfd from Yadana and 100 mmcfd from each of Shwe and Zawtika.

“We are only taking 180 to 190 mmcfd from Yadana, 80 mmcfd from Zawtike and only 25 mmcfd from Shwe,” he said. “It’s much lower than we could obtain.”

The official said Myanmar has actually been allocated too much gas from the Shwe Gas project, adding that under the contract it must pay for the unneeded supply it had agreed to take.

“We are negotiating this, as the country cannot afford the excess and the new gas-fired turbines that will need it are still being built,” he said.

Earlier this month the Ministry of Energy released detailed figures of gas supply for domestic use. The announcement of the figures, from April to November 2014, was a rare disclosure of such data.

According to the ministry, some 78 percent of gas for the domestic market went to power stations, 15pc for industry and 7pc for CNG stations for transport.

Domestic demand for natural gas is constantly increasing and will rise further as the Ministry of Electric Power brings more gas-fired power stations on line.

Four privately run gas turbines in the Yangon area started operations in 2013 and there are power stations planned for the cities of Mawlamyaine and Thaton in Mon State, Kyaukphyu in Rakhine State and Myingyan in Mandalay Region.

Giving a more detailed breakdown, an official said that 286 mmcfd went to domestic use in December 2014, including 191 mmcfd that went for electricity production, 21 mmcfd for CNG stations, 19 mmcfd for state-owned fertilizer factories, 25 million for private industries, and 16 million for state-owned industries.

Domestic natural gas demand was pegged at 700 mmcfd in 2013 according to ADB’s New Energy Architecture Report released that same year.

Source: Myanmar Times

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