Japanese energy company Eneos is the latest player to pull out of Myanmar’s upstream oil and gas industry, announcing on Friday that it was exiting the producing Yetagun gas project in response to “social issues", amid criticism that the project’s revenues are flowing to the nation’s military junta.
The move comes after Malaysian energy giant Petronas and Japan’s Mitsubishi Corporation in February said they were withdrawing from the offshore Yetagun project.
“We are examining and discussing with our business partners about all possible measures toward closing the business based on the situation to address social issues and business potential,” an Eneos spokesperson told Reuters.
Japan’s business daily Nikkei, earlier on Friday had reported that Eneos would exit amid criticism the project was funding Myanmar’s military government that seized power in February 2021 via a coup. Since then, the security situation in the Southeast Asian nation has deteriorated.
Nippon Oil, the predecessor of Eneos, in 1991 acquired its interest in Yetagun, and the offshore field came on stream in 2000.
At present, Nippon Oil Exploration (Myanmar) — a joint venture between the Japanese government, Eneos affiliated JX Nippon Oil & Gas Exploration and Mitsubishi — holds a combined 19.3% interest of the project.
Output at the Yetagun field has been declining in recent years. Natural gas from the field flows to neighbour Thailand by offshore and onshore pipeline infrastructure, but gas exports to Thailand stood at 16 million cubic feet per day last year, down 96% from its peak in 2007, noted non-governmental organisation humanrights.org.
“It seems that Eneos has been unable to find a buyer for its interest in the field, and the company will likely incur a loss from its withdrawal,” said humanrights.org.
Petronas in 2003 took over the Yetagun gas condensate project via the acquisition of a 26.67% operated stake from the UK’s Premier Oil.
Petronas, which has agreed to sell its now 40.9% participating interest in Yetagun, currently remains as operator on behalf of the Japanese consortium with 19.3%, Thailand’s PTTEP also on 19.3% and state-owned Myanma Oil & Gas Enterprise with 20.5%.
“[We have] signed agreements for the sale of our entities related to Petronas upstream operations in Myanmar. This commercial transaction is currently pending completion, subject to regulatory approval and fulfilment of conditions precedent,” Petronas told Upstream in February.
Mitsubishi at the time said it was in talks with its compatriot partners in Yetagun, after finding it too difficult to proceed from both technical and economic perspectives.
The offshore field was shut-in for part of 2021, with Petronas declaring force majeure as output fell below the technical threshold of the offshore gas processing plant.
Yetagun straddles blocks M-12, M-13 and M-14 in the Andaman Sea offshore Myanmar. The field had estimated reserves of 3.2 trillion cubic feet of gas and had been expected to produce until the end of this decade.