Changes in petroleum law could give Myanmar a boost in oil and gas investments

Changes in a petroleum law in Myanmar could help the Southeast Asian country attract investment in to the oil and gas sector, while reducing the growing strain on depleting domestic oil and gas reserves, according to a report by Fitch Solutions Macro Research.

With Myanmar among the few under-explored upstream markets in Asia and interest in developing its below-ground prospects remaining high among firms, improving the law could revive exploration interest in Myanmar's oil and gas blocks.

A new draft of the country's decades-old petroleum law has reportedly been tabled in November 2018 for parliament's review. Among the changes expected is the restructuring of the existing production sharing contract (PSC) terms, which had been drawn up under the previous military administration, with the intention of maximising benefits for the state at the expense of investors, according to Fitch.

The focus will likely be given to strengthening mediocre incentives for upstream investors, which together with low oil prices, have been fingered for driving the significant recent decline in oil and gas investment in Myanmar.

For instance, on top of heavy taxation on profits and royalty obligations, average government-take of the revenues generated under each oil and gas PSC is as high as 77 per cent in Myanmar. This is higher than more established upstream markets in Asia such as Australia and Indonesia, said Fitch.