Thai state energy company to hedge Burma position

Wednesday, 11 August 2010 19:36 Mizzima News

Chiang Mai (Mizzima) – In just over than a week after signing a major deal concerning the extraction of natural gas in Burma, a subsidiary of Thailand’s principle energy supplier has announced its intention to divest itself of some its Burmese holdings in order to diversify its risk portfolio.

PTT Exploration and Production, a fully controlled subsidiary of state-run PTT, announced on Tuesday in Bangkok that it planned to offload shares in five gas-exploration projects involving Burma.

The assets concerned are the M3, M4, M7, M9 and M11 blocks in the Gulf of Martaban. At present, PTTEP is the sole shareholder for all five blocks.

However, even after selling some shares in the blocks, PTTEP will retain its position as the blocks’ operator.

“Though we are selling some stakes to other investors and MOGE (Myanmar Oil and Gas Enterprise), PTTEP’s stake in the five blocks will be maintained at no less than 50 per cent for management control,” chief executive Anon Sirisaengtaksin said.

The announcement follows a deal signed on July 31 in the Burmese capital of Naypyidaw, news that met with strong criticism from rights organisations who accuse the sale of energy resources as critical in propping up Burma’s ruling military government.

Earth Rights International, in its recent publication, Energy Security: How Total, Chevron, and PTTEP Contribute to Human Rights Violations, Financial Secrecy, and Nuclear Proliferation in Burma, contends that revenue from the gas industry finds its way into Singaporean bank accounts of junta leaders, even while the country’s investment in the education and health sectors remains abysmally low.

However, there is no indication that PTTEP’s intent to offload a portion of its Burma assets was affected by such objections.

It is expected that one region in which the Thai company will look to hedge itself is Vietnam, where BP has announced it is selling assets to offset costs associated with the recent Gulf of Mexico oil spill.

Anon also gave notice that PTTEP sales, owing to surging demand, are projected to be three to four percentage points higher than expected for this year.