Posted in Legislative Analysis, Political Institutions on Aug 29, 2019

In respect of petroleum supplies, this Bill aims to:

  • improve self-sufficiency in the domestic market and exports to the foreign market
  • help the country’s socioeconomic development
  • enable domestic companies to participate and cooperate in petroleum industries more effectively

See our Bill summary here: https://www.theananda.org/en/blog/view/petroleum-testing-processing-bill

Legal framework

Following Independence, Myanmar’s petroleum industry was operated by private companies, but in early 1962 it was nationalised.

There is not yet a legal framework to regulate the petroleum industry in Myanmar. The State-owned Economic Enterprises Law 1989 regarded oil and gas exploration, trading and production of related products as state-owned economic enterprises to be run by the government. As a result, Myanma Oil and Gas Enterprise (MOGE), Myanma Petrochemical Enterprise (MPE) and Myanma Petroleum Product Enterprise (MPPE) remain under the Ministry of Electricity and Energy (MOEE).

Myanmar’s petroleum industry

According to data released by EITI (Extractive Industries Transparency Initiative), Myanmar has oil reserves of 138 million barrels and gas reserves of 9 trillion cubic feet.

The same report states the extractive sector (oil and gas, minerals and gems) contributes 6% of GDP, and 20% of government revenue, accounting for nearly half of exports in 2015-2016. Within the extractive sector, the contribution of oil and gas was significantly greater than other commodities.

Myanmar Investment Commission (MIC) stated that from 1988 to 2017, 39.36% of foreign direct investment (FDI) was in the oil and gas sector. According to data from the Directorate of Investment and Company Administration (DICA), in this fiscal year the sector has so far accounted for 27.59% of FDI (up to the end of July).

National energy policy

The government has a national energy policy drawn by the National Energy Management Committee in 2014. It is associated with the sufficiency of the country’s energy use. The nine-point policy aims to:

  • find potential energy resources with the minimum impact on the natural and social environment
  • promote the private sector and/or privatise State Energy Organisations by instituting laws, rules and regulations
  • conduct energy resource exploration works in line with international standards.

The current bill claims to be in accordance with the energy policy, specifically dealing with testing, drilling and processing petroleum.

Bills

The Petroleum Testing, Drilling and Processing Bill was submitted in 2018 but the Hluttaw did not discuss it. The 2019 Bill is a new version of the previous one, and is more systematic through the reduction of some clauses. In addition, since the Bill incorporates a clause for public information about contracts, it appears to provide a constructive step to counter criticism from the general public and civil society organisations about lack of transparency. However, the bill has other weak points.

The first one concerns the access to information by the public. Although the bill says the MOEE will release the contract to the public, it also has the right to use operational data secretly. This calls into question the level of genuine willingness on the part of government to promote transparency.

The second issue is concerned with the formation of an Inspection Committee to examine impacts of the industry on people’s rights. It is unknown how the Inspection Committee will be formed, who will be included in the committee, and how they will be able adequately represent people’s concerns. We should ask whether this committee will be well-placed to protect and compensate people for loss and damage if it has a vested interest in the promoting the industry. As the very first attempt to frame the oil and gas industry in legal terms, this Bill has significant room for improvements.

Reference

NRGI – “How and why the Myanmar government should publish petroleum and mining contracts”

https://eiti.org/myanmar

https://www.dica.gov.mm/en/topic/fdi-actual-inflow