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Myanmar firm to build oil refinery in Dawei SEZ

The project, which will have the capacity to process 8 million metric tonnes per annum (mmta), will constitute as “important project involving a huge investment.

They will probably cooperate with foreign companies because it is impossible to implement the whole project by a Myanmar company alone,” said U Tin Htoo Naing.

Infrastructure such as a port will have to be constructed specially for the project. “They have to build the port so that oil tankers will be able to dock,” he said. “If the refinery is successfully completed and launched, it would lay a good foundation for energy security in the country. Fuel prices will also gradually fall,” said U Tin Htoo Naing.

Currently, Myanmar imports all its fuel needs, including petrol, diesel and jet fuel. According to the Myanmar Petroleum Trade Association, Myanmar imports some 600,000 tonnes of petroleum monthly.

In a recent report on the outlook for Myanmar’s fuel sector, Fitch Solutions Country Risk and Industry Research said “Myanmar continues to suffer from a chronic deficit in refining capacity and this necessitates huge dependence on imported fuels.

In 2018, Myanmar spent a total of US$3.9 billion on petroleum imports, equivalent to 5.4 percent of GDP and the highest on record.”

Going forward, “Myanmar’s import burden will only rise further as its economy and fuel demand continues to expand. Even after factoring in near-term headwinds arising from the COVID-19 pandemic, Myanmar will be among the fastest growing fuel markets in Asia-Pacific, with domestic consumption of refined fuels expected to grow at an average rate of 5pc over the next five years,” Fitch reported.

The Ministry of Electricity and Energy said in June that it is making plans to build one new refinery capable of processing up to 5 million tonnes of crude oil near the government’s Petrochemical Complex (Thanbayarkan) in Magway Region.

There are currently just two oil refineries in Myanmar : No.1 Refinery (Thanlyin) in Yangon Region which was constructed in 1955 and No.2 Refinery (Chauk) in Magway Region which was constructed in 1954. The No.1 Refinery (Thanlyin) is now shut down as officials attempt to gauge its commercial viability.

Meanwhile, final-stage agreements on land lease contracts for the Dawei SEZ with developer Italian-Thai Development Company Ltd (ITD) are on hold due to COVID-19 travel restrictions and there will be more delays in implementation, according to U Myint San, vice chair of Dawei SEZ Management Committee, said
earlier this month.

The land lease agreement was submitted to ITD in November 2019 with a six-month deadline to sign, but the company has asked for a three-month extension in view of the pandemic.

Mooted in 2018, the Dawei SEZ is expected to be the largest SEZ in South East Asia – about eight times larger than Thilawa SEZ – and over ten times larger than Kyauk Phyu SEZ when complete. It has an area of about 50,000 acres and about 200 sq km.

However, development of the basic infrastructure in the areas has yet commence due to repeated delays.

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Source : Myanmar Times

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