Malaysia’s national oil and gas company Petronas is reviewing its business portfolio and operations because of the prevaling market conditions.
Petronas has already started cutting the workforce at its Yetagun gas condensate field off Myanmar, as output continues to decline at the mature producing asset.
The first round of layoffs took place last month and further retrenchments are expected later this year and in the first quarter of 2021.
Petronas told Upstream it is "currently conducting a review of its business portfolio and operations due to the challenging market conditions".
"The business review includes our upstream operations in Myanmar, whereby our subsidiary, PC Myanmar (Hong Kong) Limited (PCML) will be undertaking cost optimisation measures for its operations,' said Petronas.
"PCML has been engaging and sharing its plans with the relevant authorities in Myanmar, including the host authority, Myanma Oil and Gas Enterprise (MOGE).”
The Yetagun field produced upwards of 300 million cubic feet per day of gas at peak while output today has slumped to around 20% of that level.
The field, which was brought on stream in June 2000 by then-operator Premier Oil — delivering initial volumes of 70 MMcfd of gas to Thailand’s PTT — could now end its productive days as early as 2023.
Local employees are said to be those affected by the ongoing redundancies, according to the Myanmar Times, which claimed Petronas would be paying compensation in accordance with the relevant local labour legislation.
Once the mature gas field stops production, the acreage itself and facilities return to the Myanmar authorities, although there remains the issue of decommissioning liabilities.
Partners in the Yetagun project are operator Petronas, Thailand’s national upstream company PTTEP, Nippon Oil Exploration of Japan and local state-owned company Myanma Oil & Gas Enterprise.
Falling production from Yetagun and other legacy fields is already hitting Naypyidaw’s coffers. This will likely be exacerbated due to the latest commodity price slump that translates into lower realised gas prices from Myanmar’s offshore and onshore assets.
Export gas prices for the 2020-2021 fiscal year have been calculated at $6 per million British thermal units for the Yetagun, Zawtika and Yadana fields, down from $8.88 per million Btu in the 12 months prior. These three fields deliver volumes by pipeline to neighbouring Thailand.
Meanwhile, Posco’s offshore Shwe field that supplies pipeline gas to another neighbour — China — is expected to realise an average export price of $5.20 per million Btu in the current financial year compared to $7.40 one year prior, according to the Myanmar Times.
Updated to include comment from Petronas.