Transparency concerns led to energy minister swap

Transparency concerns led to energy minister swap

By Staff Writers   |   Sunday, 04 August 2013

Concerns over the transparency of new oil and gas concessions were behind the downfall of former Minister for Energy U Than Htay and his deputy, U Htin Aung, sources say.

U Than Htay was transferred to the Ministry of Rail Transportation by presidential order on July 25 and replaced by the railways minister, U Zeyar Aung. U Htin Aung was appointed Deputy Minister for Labour, Employment and Social Security and a replacement has not yet been announced.

Several sources contacted last week said the changes were made because of a number of controversial decisions over the awarding of exploration licences and production concessions.

One energy expert with more than 30 years' experience in Myanmar's oil and gas sector said both local and foreign energy companies had been upset about the decision to give two deepwater blocks, known as MD-7 and MD-8, to Thai company PTTEP earlier this year.

"These are considered to be some of the best blocks in the Gulf of Mottama but PTTEP got them without even having to compete in a bidding process," the expert said.

The blocks were not included in a list of 30 offshore fields that the ministry put up for tender in April after PTTEP announced in mid-January it had been awarded the rights to the two fields. The previous month, Chinese state news agency Xinhua quoted Thai Energy Minister Pichai Naripthaphan as saying that U Than Htay had "indicated support" for PTTEP's proposal for the MD-7 and MD-8 blocks when they met in Nay Pyi Taw on December 20.

"I have been told the ministry was going to announce they were awarding MD-7 and MD-8 to PTTEP when they announce the winners of these 30 offshore blocks to make it look as though the process was transparent," the energy expert said.

A former senior official at the Ministry of Energy confirmed that there had been problems in the awarding of blocks and extending existing contracts, as well as allegations of bribery in relation to other energy projects, including pipeline construction.

He said the reshuffle had also seen the deputy director general at the Energy Planning Department, U Zaw Aung, transferred to the Ministry of Mines on July 25. In his previous post U Zaw Aung was also director of planning at Myanma Oil and Gas Enterprise (MOGE) and oversaw a steering committee at the ministry that reviewed existing Production Sharing Contracts (PSC) and awarded blocks to foreign and local energy firms.

Several sources said the ministry had not announced the decision to award the blocks to the Thai company or its negotiations with MPRL EP to extend its contract to operate the Mann oil field in central Myanmar.

According to the sources, both the company and the ministry had been negotiating an extension that would not require it to compete with other firms. "I heard junior officials at [Myanma Oil and Gas Enterprise] are not happy about extending the contract with MPRL," one energy expert said.

A retired geologist from MOGE said initially there had been rumours that MOGE would not extend the contract for the Mann oil field, which expires this year, because of its good production levels, but it had indicated it planned to approve an extension without a tender.

MPRL EP is a British Virgin Islands-based company founded by U Moe Myint, a former pilot for U Ne Win. It also holds a number of offshore concessions.

A spokesperson for MPRL EP said that there were no negotiations taking place with the ministry about extending the Mann field contract.

"Negotiations are not ongoing, and the ministry and the Energy Planning Department have informed us there are no complaints from [within] the ministry" about the contract.

A source close to the Myanmar Investment Commission said no application had been submitted to extend MPRL's contract for the Mann field.

The Ministry of Energy did not respond to requests for comment.

Source: http://www.news.myanmaronlinecentre.com/2013/08/05/transparency-concerns-led-to-energy-minister-swap/