Myanmar’s crude oil production has plummeted from its peak, and will require new discoveries to reverse the trend, according to Than Htun, an adviser to Myanma Oil and Gas Enterprise.
But some oil industry figures worry that companies will give up oil exploration if the price stays low.
Average yearly production from onshore and offshore wells ran as high as 20,000 barrels per year in the 1980s. But production has since dropped to around 7500 barrels per year, Than Htun said.
He estimated the drop in average production since the 1980s at 50% to 60%.
Than Htun also doubted Myanmar would be able to increase production from its existing onshore wells.
“We’ll only see results when we find a new oil field,” the Myanmar Times on Wednesday quoted him as saying.
The Energy Ministry has permission to set up 16 new oil wells. But even new oil wells in areas like the Yay Nan Chat and Yay Nan Chaung oil fields are unlikely to be abundant, he said.
Low oil prices are not going to incentivise companies to embark on costly exploration. The price of a barrel of Brent Crude dipped below US$28 a barrel this week, having been over $100 in 2014.
Kyaw Kyaw Hlaing, chairman of the Myanmar Oil and Gas Services Society, expects oil prices to recover by 2017. But in the meantime he is worried that companies with concessions to look for oil in Myanmar might give up because of the low prices.
Oil deposits are found mainly in the middle and upper regions of Myanmar, like Sagaing, Magwe and Ayeyarwady. Several oil projects have started in these regions in recent years, but they are still at the stage of environmental and sustainability impact assessment.
There are 53 onshore oil blocks in Myanmar, of which 40 are producing oil. Of these 40 producing blocks, some involve private companies and others are solely operated by Myanma Oil and Gas Enterprise. Some 19 companies are involved in the 40 blocks that produce oil.
Myanmar is a net importer of oil, and a net exporter of natural gas. As the country and its firms require refined crude oil products to produce natural gas, the low oil prices are in some ways positive.
But the price of natural gas is also far lower that it was just a few years ago, which offsets much of the benefit to gas producers.
Myanmar has 51 offshore natural gas blocks, of which 38 are producing gas.
There are also 16 new natural gas blocks, which are at the stage of environmental and sustainability impact assessment. These new blocks should be able to start extracting gas at the end of 2016, and will active for between 20 to 30 years, Than Htun said.