Taiwan's state-owned oil firm CPC Corp, one of the island's two major fuel providers, expects a more stable supply of resources from its April agreement with a mainland Chinese peer to explore in under-tapped Myanmar.
CPC's agreement to buy a 30 per cent stake in a Myanmar gas and oil field from mainland China's state-run Sinopec Group will "increase stability of supplies," the Taiwanese provider said in a statement.
Taiwan's industry, the backbone of its economy, depends on fuel imports as nuclear power and alternative energy contribute just a fifth of its total energy needs. Taiwan is always looking for new energy sources offshore to ensure supply and control prices.
Three of six wells at Sinopec's central Myanmar field, known as Block D, have shown potential for oil or gas, CPC said in a statement following the April 24 agreement.
"Everyone wants to explore in that area, so CPC might profit from the oil or gas, but that's a side issue," said Liu Chia-jen, petrochemicals analyst with KGI Securities in Taiwan. "CPC needs to lock in its energy supplies."
It is unclear how much any single firm can extract from Myanmar, a normally closed-off country that is just now slowly opening to foreign investment. Sinopec has had rights to Block D since 2004, and today at least seven countries are exploring for oil or gas around Myanmar.
According to the United States Energy Information Administration, Myanmar has total oil reserves of about 50 million barrels and a more significant 10 trillion cubic feet of gas, ranking it among the world's 40 top gas-producing countries.
Initial signs are good for Asian companies with a toehold, analysts say. Asia lacks the gas pipelines of other continents, making it expensive to transport gas discoveries, bringing a premium to anything found within the region.
"I'm not sure how aggressively Asian companies have been looking for it, but gas finds in Asia are potentially much more lucrative due to the much higher prices paid by Asian countries compared to the US and Europe," said Thomas Pugh, commodities economist with Capital Economics in London.
CPC can be particularly aggressive as its mainland counterparts have already prospected in Asia and are eager to engage Taiwan for political purposes.
Mainland-Taiwan relations have improved over the past five years after six decades of hostilities, and now officials in Beijing seek to use their economic muscle to lure Taiwan towards eventual political reunification. The two sides have been separately ruled since the 1940s, but the mainland claims sovereignty over the island.
CPC agreed in March to explore jointly with a mainland firm in Niger and, separately, to accept natural gas supplies from mainland China's chief offshore oil company CNOOC.
Tie-ups between oil companies in Asia are common, analysts say, and Taiwan has little to fear politically from working with mainland China in Myanmar because exploration would take place offshore and there is no record of two-way disputes over resources.
Source: South China Morning Post
May 11, 2013
Saturday, May 11, 2013 1 comment