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Myanmar’s Role in the Regional Energy Balance Dr. Thomas Parkinson 24 September 2013
The Lantau Group
We at The Lantau Group are experts in the economics of energy systems
1
Economic Consulting
Asset Valuation
Business & Regulatory Strategy
Competition, Markets, Regulation
Testimony
Market Analysis
Asia Pacific Energy Experts
Hong Kong
Seoul
(TLG Korea)
The founding partners
of TLG first worked in
the Asia Pacific region
as part of Putnam,
Hayes & Bartlett (PHB)
and later with Charles
River Associates
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Our partners and principals have consulted for leaders throughout the region
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Financial Institutions
International Aid Agencies
Government Ministries
Market and System Operators
Regulatory Agencies
Independent Power Producers
Leading utilities
Oil & Gas companies
The Lantau Group
Overview
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Regional energy balance by country
Game-changing role of LNG
Myanmar’s energy potential
Key question – consume or export?
The Lantau Group
Thailand and Vietnam are major electricity consumers within the Greater
Mekong Subregion
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Source: ADB, Greater Mekong Region Power Trade and
Interconnection
Electricity Consumption (GWh)
The Lantau Group
Thailand is heavily reliant on natural gas – while coal and imports will increase,
gas will continue to be the dominant source
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TWh
Hydro PumpedStorage
Gas Lignite
Coal Fuel Oil
Import Solar
Wind Other Renewables
Diesel Uranium
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Thailand’s gas is largely from the Gulf of Thailand, but imports from Myanmar
represent about 20 percent of total supply
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Khanom
Arthit
B12/27 Pailin
Bongkot
Muda
Cakerawala
Nam Phong
Ratchaburi NBK
SBK
Sirikit
Sai Noi
Ta Luang
NakornYadana
Thailand
BorderBaan ITong
Keng Khoi Khorat
Yetagun
LegendOnshore Pipeline 1
Onshore Parallel Pipeline
Onshore Pipeline 3
Onshore Pipeline 4
Perlis
1020 mmcfd (34”)750 mmcfd (16”)
1000mmcfd (40”)
700mmcfd (36”)
400mmcfd (24”)
1100mmcfd (42”)
1100mmcfd (42”)
500mmcfd (30”)
510mmcfd
Map of Thailand Gas Pipeline Network
KP 361
Unocal I, II & III
B8/32
1500mmcfd (42”)
1720mmcfd (34-36”)
1860mmcfd (42”)
210mmcfd (24”)
Erawan
Cha Chaeng
Sao
540mmcfd (28”)
BPK
1400mmcfd (42”)
660mmcfd (36”)
1200mmcfd (36”)
Sinphuhorm
Nam Phong
Myanmar Pipeline
RB – WN Pipeline
Under Construction
Map Tha Phut
Rayong
Wang
Noi
SongkhlaGas Field Node
The Lantau Group
By 2030, LNG is projected to comprise 60 percent of the total gas supply
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0
2,000
4,000
6,000
8,000
10,0002
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bb
tud
North_Contracted Northeast_Contracted
Gulf of Thailand_Contracted Myanmar_Contracted
Northeast_Uncontracted Gulf of Thailand_Uncontracted
Myanmar_Uncontracted Northeast_Yet-to-find
Gulf of Thailand_Yet-to-find LNG_Spot
LNG_Qatar LNG_Uncontracted
The Lantau Group
By contrast, Vietnam has a healthy mix of domestic coal, hydro and gas – but
is planning on imported coal, nuclear, LNG and imports for growth
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0
100,000
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300,000
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GW
h
Domestic Coal Wind
Hydro Gas
LNG PumpedStorage
Nuclear Fuel_Oil
Import Imported Coal
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The key near-term gas supply basins and pipeline networks are in the south
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The Lantau Group
LNG is projected to grow to 20-25 percent of the total gas by 2030
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500
1,000
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bb
tud
CuuLong_Contracted NamConSon_Contracted
Southwest_Contracted CuuLong_Uncontracted
NamConSon_Uncontracted Southwest_Uncontracted
CuuLong_YTF NamConSon_YTF
Southwest_YTF LNG
The Lantau Group
Overview
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Regional energy balance by country
Game-changing role of LNG
Myanmar’s energy potential
Key question – consume or export?
The Lantau Group
Gas production in SE Asia appears to be keeping pace with consumption
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9000
2001 2002 2003 2004 2005 2006 2007 2008 2009
Pe
tajo
ule
s (
PJ
)
Source: OECD, World Natural Gas Statistics
Consumption
Production
The Lantau Group
Malaysia, Indonesia, and Thailand are the major regional consumers
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1000
2000
3000
4000
5000
6000
7000
2001 2002 2003 2004 2005 2006 2007 2008 2009
Co
ns
um
pti
on
(P
J)
Brunei
Myanmar
Philippines
Vietnam
Singapore
Thailand
Indonesia
Malaysia
Source: OECD, World Natural Gas Statistics
The Lantau Group
These three countries are also the largest regional producers
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1000
2000
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5000
6000
7000
8000
9000
2001 2002 2003 2004 2005 2006 2007 2008 2009
Pro
du
cti
on
(P
J)
Brunei
Myanmar
Philippines
Vietnam
Singapore
Thailand
Indonesia
Malaysia
Source: OECD, World Natural Gas Statistics
The Lantau Group
Thailand and Singapore are already net consumers – and others are heading
in that direction
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500
1000
1500
2000
2500
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0 500 1000 1500 2000 2500 3000 3500
Production (PJ)
Co
ns
um
pti
on
(P
J)
Source: OECD, World Natural Gas Statistics
Malaysia
IndonesiaThailand
Singapore
Philippines
Vietnam
Brunei
Myanmar
The Lantau Group
PetroVietnam Gas Corporation projects a growing supply gap
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Pe
tajo
ule
s (P
J)Gas Supply Base Case Demand High Case Demand
Source: PetroVietnam, Vietnam Gas Industry & LNG Report, November 2010
Supply Gap
The Lantau Group
Similarly, Peninsular Malaysia faces a supply gap
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2011
2013
2015
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Pe
tajo
ule
s (P
J)JDA West Natuna B Existing Domestic
New Domestic Gas Demand
Source: Tenaga National Berhad, Gas Requirement for Power Sector in Peninsular Malaysia, 2008
Supply Gap
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Even Indonesia will struggle to maintain its current production levels
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2000
4000
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10000
12000
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Pe
tajo
ule
s (P
J)Contracted Export Contracted Domestic DemandPotential Domestic Demand Existing SupplyProjected Supply Potential Supply
Source: bpmigas, Indonesian Crude Oil and Gas Market, June 2010
The Lantau Group 19
Liquefaction Regasification
Operating
Constructing
Planned
Possible
LNG regasification is filling the production gap
Rayong
Vung Tao
Bataan
Batangas
Arun
Lumut
Singapore
Satu/Dua/Tiga
Brunei
Bontang
Donggi-
Senoro
Tangguh
Abadi
Semarang
Nusantara
Source: TLG;
www.globalnginfo.com
Kanowit
Lampung
Melaka Pengerang
The Lantau Group
“Legacy” gas prices are increasing throughout the region
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Source: TLG compilation from various online sources and associated analysis
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2000
2001
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De
liv
ere
d G
as
Pri
ce
($
/GJ
) Malaysia
Thailand
Indonesia (Average)
Indonesia (Marginal)
Philippines
Singapore
The Lantau Group
In SE Asia, LNG prices are pegged to oil prices via an “S-curve”
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Source: Andy Flower, Key Trends in LNG Markets in Asia, May 2011
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Oil Price ($/bbl)
LN
G P
ric
e (
$/G
J)
The Lantau Group
Delivered LNG prices are well above the delivered cost of legacy gas
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Indonesia Malaysia Thailand Phiippines Singapore
De
liv
ere
d G
as
Pri
ce
($
/GJ
) LNG (Thailand @ $100/bbl oil)
Source: TLG compilation from various online sources and associated analysis
LNG now sets the marginal value of gas throughout SE Asia
The Lantau Group
Overview
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Regional energy balance by country
Game-changing role of LNG
Myanmar’s energy potential
Key question – consume or export?
The Lantau Group
Even from space, it is clear that Myanmar currently lags its neighbors in energy
consumption
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Source: NOAA, National Geophysical Data Center
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But it’s also clear that Myanmar is blessed with considerable resource potential
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The Lantau Group
Consistent with the resource base, current generation is predominantly hydro,
with some gas
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Source: Ministry of Electric Power
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MOEP projects even greater hydro potential of 108,000 MW
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Source: Ministry of Electric Power
Ayeyarwaddy
Chindwin
Thanlwin
Sittaung
The Lantau Group
Department of Geological Survey and Mineral Exploration also projects far
more coal reserves (>400 million tons)
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Source: Department of Geological Survey and Mineral Exploration (DGES)
The Lantau Group
In addition, Myanmar has considerable non-hydro renewables potential
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• Wind
• Solar
• Geothermal
• Biomass
• Tidal
The Lantau Group
Overview
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Regional energy balance by country
Game-changing role of LNG
Myanmar’s energy potential
Key question – consume or export?
The Lantau Group
Myanmar’s development problem is how best to deploy its people and energy
resources to support economic growth
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GDP
The Lantau Group
Utilizing these resources will give rise to alternative choices – which will define
their opportunity costs
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Natural
Gas
Fertilizer
Baseload
Generation
Export
Value of gas set by
import or export
prices for fertilizer
Value of gas set by
alternative baseload
cost (e.g., coal)
Value of gas set by
export price (which will
compete with LNG)
Making choices that maximize the value of the resources – and avoiding
distorting subsidies – will maximize the long-run contribution to the economy
The Lantau Group 33
Rigour
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Tom Parkinson
+852 2521 5501 (office)
www.lantaugroup.com
www.lantaugroup.com
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