Shell paves road to Myanmar success with its own bitumen

YANGON — Royal Dutch Shell is diversifying its operations in Myanmar, aiming to promote its brand and strengthen ties with the new civilian government.

The Anglo-Dutch oil company’s primary focus in the country is offshore resource development. Recently, though, it has been pushing to sell more finished products such as bitumen and lubricants. It hopes this will grease the wheels for its core oil and gas operations.

Shell provided 1,000 tons of high-quality bitumen to pave a road in the Pyinmana Myo Shuang district of Naypyitaw, the capital. In a country where most roads have yet to be paved, the new thoroughfare stands out. Shell sells bitumen, a byproduct of oil refining, across Asia, but this was its first sale in Myanmar.

The company entered Myanmar’s lubricant market back in 2013, and has since teamed up with local players to set up warehouses. According to a local newspaper, Shell expects the market to expand rapidly, thanks to surging demand for automobiles and industrial machinery. The company hopes to increase its market share from 5% now to 15% within a few years, the paper said.

Since Myanmar shifted to civilian rule in 2011, Shell has been striving to catch up with rivals that are already well-established in the market. Shell acquired stakes in seven of 20 major offshore resource concessions that became available in the spring of 2014 — the most of any foreign bidder. It began prospecting for oil last fall.

The country’s politics, however, continue to evolve. In March, the first civilian government in half a century came to power, led by Aung San Suu Kyi. And since the rule is that offshore resources must be developed jointly with state-run Myanma Oil and Gas Enterprise, it is crucial to have a good relationship with the government. Shell apparently hopes the government will see its other endeavors as contributions to the local economy.

Last August, Shell also announced a plan to help build a liquefied natural gas supply terminal in an industrial park in the southeastern city of Dawei. The park project is being led by a Thai company.

Myanmar has plentiful oil and gas reserves but exports most of what it extracts to Thailand and elsewhere. The government sees LNG as a promising domestic energy source, and is counting on foreign companies to build the necessary supply infrastructure. Shell’s involvement in the Dawei project is seen as another attempt to stay on the government’s good side.

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