This week’s military coup in Myanmar could have a longer-term impact on the nation’s energy security if key gas field developments do not progress as scheduled, according to a report.
Projects such as PTTEP’s phased Block M-9 (Zawtika) and Woodside Petroleum’s Block A6 are forecast to account for around 40% of the country’s expected supply until 2030.
According to Saloni Kapoor, a research associate with consultancy consultant Wood Mackenzie, "incremental phases at Zawtika will provide upside to Myanmar’s energy mix", but an estimated 2 trillion cubic feet of gas supply is threatened if A6 does not progress as planned.
"This supply is critical to make up for declining volumes from legacy fields,” Kapoor added.
“We estimate that new upstream projects worth $2 billion up until 2030 are yet to take [the] final investment decision, including the A6 project which now risks further delay."
Kapoor described the corporate landscape in Myanmar as currently "dynamic", with five of the largest investors set to inject around $2.5 billion into projects over the next five years.
"However, ESG (environmental, social and governance) risk exposure now adds downside risk here, in which case that landscape could change quickly if investor sentiment is dampened," Kapoor added.
LNG schemes in spotlight
Some of the proposed liquefied natural gas projects could also be delayed, according to WoodMac consulting director Mangesh Patankar.
Potential casualties include the Ahlone LNG-to-power project — led by TTCL with Japanese partners — and the Thilawa LNG-to-power project led by the Japanese consortium of Marubeni-Sumitomo-Mitsui.
“Additionally, incremental countermeasures from the US could also make it difficult for LNG suppliers and shipowners to conduct business with Myanmar entities, which could negatively impact LNG imports into the country,” said Patankar.
In contrast, he believes that Chinese-led existing and future LNG import projects, such as the Mee Laung Gyaing large integrated LNG-to-power project, would be under less of a threat.
“We see less impact on these projects from the recent military coup, given China has always engaged with both the military and the Aung San Suu Kyi-led government," he said.
Threat of sanctions
Maplecroft senior analyst Kaho Yu said the US is expected to impose new sanctions on those involved in the coup, particularly military officials and associated entities.
Any new sanctions would make it more difficult for responsible companies to adhere to international best practice to keep operating in Myanmar due to reputational and ESG considerations.
“Any tough countermeasures from the US, such as sanctions, would drive Myanmar ever closer to China. Once the political turmoil settles down, we expect China to resume efforts to integrate Myanmar into its economic orbit," Yu said.
“The current political uncertainty will certainly lead to business disruption, but we expect Myanmar to remain a long-term destination for Chinese investment, particularly in the energy, mining and infrastructure sectors."
China's response to this week’s coup reflects that it is taking a ‘wait and see’ approach.
“For Beijing, it does not matter who rules Myanmar, as long as those in power are not anti-China,” he added.
Myanmar's military took control of the country in the early hours of 1 February and detained de facto leader and Noble Peace Prize laureate Aung San Suu Kyi.
The military said it was handing power to commander-in-chief Min Aung Hlaing because of what it claimed was "election fraud".
The coup followed weeks of increasing tensions between the military and the civilian government after the former alleged election irregularities in last November’s polls, which returned the National League of Democracy (NLD) to power with an even larger share of the vote.
The NLD won landslide victories in both the 2015 and 2020 general elections, which gave the party a clear majority, even though a quarter of the seats are reserved for the military.