YANGON -- Major energy companies are in a rush to develop Myanmar's offshore gas fields.
The Myanmar government last spring opened more of the fields to foreign investors in the hope of boosting natural gas exports to neighboring countries, including China, and acquiring much-needed foreign currency.
The once-reclusive country may soon emerge as a big energy supplier to the rest of Asia.
From April through November, Myanmar approved about $800 million worth of foreign direct investment in its oil and gas fields, according to data released this month by the Ministry of National Planning and Economic Development.
Analysts estimate the 12-month total will surpass $1.2 billion while the government races to approve more investments as the fiscal year winds toward its March end.
That would be more than double the $560 million or so invested from fiscal 2011 through fiscal 2013. Many of the investments that make up this figure are being poured into offshore natural gas fields.
It was 1963 when the country's then socialist government formed Myanma Oil and Gas Enterprise and began exploring the country's oil and gas fields in earnest. But the state-run company could develop only small inland oil fields at the time due to a lack of technological and engineering capabilities.
In the 1990s, the military junta, which had little foreign currency, decided to open up some promising offshore gas blocks to foreign businesses, setting off a wave of full-fledged natural gas field development.
However, by spring 2011, when the country stepped toward democracy, only two offshore gas fields had launched full-scale production. U.S. and European economic sanctions help to explain this lack of production.
The Yadana gas field was developed by French energy company Total, U.S.-based Chevron and Thailand's PTT Group, while Yetagun field development was led by Malaysia's Petronas.
As Myanmar opened itself to the West and those sanctions were eased, more energy majors scurried to get into the country. By 2013, South Korea's Daewoo International started tapping the Shwe gas field, off the coast of western Myanmar, and the PTT Group was producing and exporting natural gas from the Zawtika field, in the Andaman Sea.
Last spring, Myanmar held an international auction for rights to develop 20 offshore gas field blocks. Chevron, Eni of Italy, Royal Dutch Shell and 10 other energy majors won rights.
In addition, India's state-run Oil India and the U.K.-based Ophir Energy last year signed production-sharing contracts with Myanma Oil and Gas Enterprise; the two will likely begin exploring offshore gas fields through joint ventures with the state-run enterprise in 2015.
Testing an offshore gas well costs about $84.1 million, according to experts.
Given current trends, foreign energy companies are expected to continue investing more than $1 billion a year in Myanmar oil and gas fields for the foreseeable future.
The Myanmar government estimates that the country is sitting on about 570 billion cu. meters worth of natural gas reserves -- most of them untapped. In a global ranking, that would put Myanmar around No. 40.
And there could be more. "Only around 20% of the offshore gas fields have even been surveyed," a representative of a Myanmar natural resource development company said. "It is highly likely that we will discover new gas fields over the next few years."
Myanmar's current account deficit has been on the increase, its rapid economic growth boosting demand for imported consumer goods and industrial machines. Furthermore, its currency, the kyat, has continued to weaken. Since natural gas accounts for 30% of the country's exports, the government is increasingly relying on it to earn foreign currency.
Another reason why the government is willing to sell concessions to foreign companies is that natural gas development has a considerable knock-on effect, creating business for the country's engineering and construction companies. The government is widely expected to auction off even more offshore gas blocks in2015.
Myanmar has geopolitical advantages that could help it survive plummeting crude oil prices. It shares its northern border with China, which gulps natural gas. In addition, Myanmar can potentially provide natural gas to more of its other neighbors.