Mr Yoshikazu Kobayashi, the leader of the research project 'Natural Gas Master Plan for Myanmar' from the Institute of Energy Economics, Japan (IEEJ), delivered this presentation in the launching ceremony of the publication. The ceremony was held in Nay Pyi Taw, Myanmar on 11 December 2018.

1. 1
ERIA Research Project
“Natural Gas Master Plan
for Myanmar”
11 December 2018
Thingaha Hotel, Nay Pyi Taw
Yoshikazu Kobayashi
The Institute of Energy Economics, Japan (IEEJ)
IEEJ © 2018

2. 2
IEEJ©2018
 ERIA Research Project “Natural Gas Master
Plan for Myanmar
- Supply and demand outlook
- Natural gas import
- Required investments
- Roadmap
- Conclusions
 Outline of LNG Producer Consumer
Conference
- Overview
- Major discussion issues
Contents of presentation

3. 3
IEEJ©2018
Natural Gas Master Plan for
Myanmar

4. 4
IEEJ©2018
1. Introduction
- Background, Objectives, and
Assumptions
2. Trends in the global LNG
market
- Natural gas and LNG demand
and supply in the world
- Natural gas and LNG prices
3. Myanmar gas policies and
strategies
- National energy policies
- Policies related to oil and gas
4. Natural gas supply outlook
- Current production
- Production outlook
Table of content
5. Natural gas demand
outlook
- Natural gas demand by sector
and by region
- City gas development in
Yangon and Mandalay
6. Natural gas infrastructures
- Existing natural gas
infrastructure
- Required investments to
restore north-south pipeline
connection
- LNG import
7. Roadmap until 2040
- Required actions in upstream
and downstream
8. Conclusions

5. 5
IEEJ©2018
 Domestic natural gas production is forecasted to decline.
- While several fields are being developed, the growth will only partially
offset the decline in production from existing fields.
 Natural gas shortage will need to be met by LNG, reduction of
export, or both.
Natural gas supply outlook
IEEJ estimate of domestic
production outlook
Natural gas export outlook
Sources: IEEJ. MoEE

6. 6
IEEJ©2018
 Natural gas demand in Myanmar has grown rapidly in recent years.
- Major growth driver is power generation sector.
 Yangon is by far the largest gas consuming region.
- Power and transportation are the major demand segments in Yangon.
- Most of the gas in Yangon is supplied from offshore fields while the gas
supply to northern regions are supplied from onshore fields.
Natural gas demand in Myanmar
Natural gas consumption in
Myanmar*
*Because of the difference of sources, the figures of the graphs may be different. Sources: IEA; IEEJ estimate
Natural gas consumption by
sector as of FY 2017*

7. 7
IEEJ©2018
 Demand is forecasted to grow by 2.5
times until 2040.
- Demand will increase from 454 mmcfd
in 2017 to 1,142 mmcfd in 2040.
- Demand from the power sector will
continue to lead the demand growth.
- Demand from the industrial sector is
also expected to grow significantly.
- Consumption for energy industry is
likely to decrease in the upstream
sector, but the demand for
downstream (refinery) will grow as
the new refinery will be in operation.
- Demand for transportation sector will
also grow at moderate rate as CNG
bus will continue to be used in
Yangon.
- Growth of in residential / commercial
sector depends on policy initiative.
Natural gas demand outlook
Natural gas demand outlook
in Myanmar
Sources: IEEJ estimate

8. 8
IEEJ©2018
 The largest potential demand is in industrial sector.
- Thilawah SEZ has a big potential of industrial demand.
 Demand for a new refinery is forecasted emerge from the mid-2020s.
 Transportation sector will see a moderate growth.
 Required investment for additional infrastructure (mainly for
industrial demand development) is USD 4.2 million.
City gas demand in Yangon
City gas (non-power) demand
outlook in Yangon
Sources: IEEJ estimate
City gas demand locations in
Yangon

9. 9
IEEJ©2018
 While currently gas is not used in Mandalay, the demand is expected
to emerge from the mid-2020s.
- Most of expected demand is in Industrial sector; residential commercial
demand will emerge from the 2030s.
 Required investments for additional infrastructure is USD27.0 million.
 Strong policy initiative is needed to realize city gas use in Mandalay.
City gas demand in Mandalay
City gas (non-power) demand
outlook in Mandalay
Sources: IEEJ estimate
City gas demand locations in Mandalay

10. 10
IEEJ©2018
 Myanmar has an extensive natural gas
pipeline network.
 However, pipeline networks in the north
and the south is divided because the
connecting pipeline is out of operation.
- Leakage problem by corrosion
 The restoration of the north-south
linkage will bring great economic and
supply security benefits
- Demand creation along the restored line.
- Flexible supply operation in case of
emergency
 Renovation of the interrupted parts will
cost USD 77.4 milllion
Pipeline connection
Pipeline network in Myanmar
Sources: MoEE

11. 11
IEEJ©2018
 Because of the lack of international import pipeline, Myanmar will
have to rely on LNG as an import source.
 The study assumes Myanmar will need to import LNG from 2023.
- Preparatory should be accelerated.
 Three LNG import projects are being planned in the south.
- All of them are Gas-to-Power projecbts
Natural gas (LNG) import
Expected LNG imports*
*Import requirement is estimated at different rate of realization of onshore developments; Sources: IEEJ. MoEE
Planned LNG receiving projects
Project
Import
capacity
(mtpa)
Installed
Generation
Capacity
(MW)
Region
Alone LNG to
Power
Project
0.4 356 Yangon
MeeLongGyaing
LNG to Power
Project
1.6 1,390 Ayeyarwady
Kanbauk
LNG to Power
Project
1.0 1,230 Tanyintharyi

12. 12
IEEJ©2018
Roadmap
2018 2020 2025 2030 2035 2040
Upstream development Development of M-3 Start production of M-3
Development of A-6 Start production of A-6
Development of new onshore fields Start production of onshore fields
Exploration Discovery
Appraisal
Development Start production of newly discovered fields
Pipeline network Comprehensive pipeline
Development Plan
Renovation .development of pipeline based on the Plan
FS for North-South pipeline
Connection
Construction of North-South Pipeline
Pipeline network expansion
in southern states
LNG Gas to Power Negotiation of the three
proposed project
Installation FSRU-1
Installation FSRU-2
Installation FSRU-3
Installation FSRU
Kyaukpyu
City gas network Accumulation of Demand
in Thilawah
Construction
Gas power plant
in Thilawah
Development
network in Thilawah
Demand development
in Northwestern Yangon
Planning of New Yangon City
Build pipeline network
for New Yangon City
Industrial demand development
in MIZ and Myotha Industrial Park
Build Pipeline network
to downtown Mandalay
Abbreviation: LNG = Liquefied Natural Gas, FS = Fesibility Study, MIZ = Mandalay Industrial Zone, FRSU = Floating Storage and Regasification Unit
Table: Roadmap for the Development of Myanmar’s Natural Gas Market
Sources: IEEJ

13. 13
IEEJ©2018
 Enhance the role and capacity of government.
- The government should lead the effort to create demand by initiating and
coordinating the infrastructure development projects.
 Encourage and accelerate domestic upstream development.
- Domestic production is the most reliable supply source.
- All projects at the development stage should be developed in a timely
manner and exploration efforts should be continued.
 Improve the resilience of the pipeline network.
- Myanmar’s pipeline network is in a vulnerable condition.
- A comprehensive review of the domestic pipeline network and renovation
of critical parts of the existing network should be undertaken.
 Reform the energy pricing system.
- Gradual but steady reform of the pricing system will be required to ensure
investments.
 Grow human capital to utilize LNG.
- Training the country’s experts will facilitate the future LNG imports.
Conclusions

14. 14
IEEJ©2018
Overview of LNG producer
Consumer Conference

15. 15
IEEJ©2018
 The 7th LNG Producer – Consumer Conference was held in Nagoya
(central part of Japan) on 22 October 2018.
 More than 1,000 participants from 28 countries
 Ministerial session, CEO session, and four topical sessions
- For the detail, see conference web-site (https://www.lng-conference.org/)
Overview

16. 16
IEEJ©2018
 “1st LNG revolution”
- Expansion in liquefaction capacity in the
U.S., Australia, and Qatar
- Demand surge in emerging markets;
demand recovery in traditional markets
- The recent surge of LNG supply capacity
brings revolutionary effect to the market.
 LNG trade expands much faster than
natural gas trade.
- LNG evolves from a minor means of
natural gas trade to a major one.
 Air pollution control as another
springboard for LNG demand
- China’s Blue-sky policy has caused a
significant LNG demand growth.
- Other countries such as India will follow.
“The First LNG Revolution”
LNG supply in the world
Source: IEA

17. 17
IEEJ©2018
 Challenges in Asia LNG market
- Huge upfront capital investments
- Price competitiveness
- Inflexible supply contract
 Importance of Prod-Cons dialogue
- Engagement with emerging buyers
- Knowledge creation through dialogue
 Japan’s initiative
- Financial support for LNG facilities
- Encouraging more flexible LNG trade by
removing destination restriction
 US efforts in Asian LNG market
- Energy infrastructure development under
Liberal and Open Indo-Pacific initiative
- Declaration of no risk of export revocation
How to develop LNG demand in Asia?
LNG demand outlook in Asia
Source: IEEJ

18. 18
IEEJ©2018
 Need for a price benchmark to
rationalize prices
- Persistent linkage to crude oil price
- Activated spot market is needed
through removal of destination
restriction
 Review of the existing LNG trading
custom by anti-monopoly authority to
remove destination restriction
 Standardization of LNG contract
- Facilitating active cargo transactions
 Growing roles of portfolio players
- Provision of flexible supply by holding
various supply and demand outlets
- Arbitrage inter-regional price
differentials
More flexible and transparent market
Natural gas prices in the world
Source: METI, EIA

19. 19
IEEJ©2018
 Diverging interests between sellers and buyers
- Sellers want long-term contracts to secure revenue certainty and
financing.
- Buyers prefer shorter-term and more flexible contracts to adapt demand
uncertainty.
 Imperatives of continuous Producer – Consumer dialogue
- Overcoming the gap of interests between sellers and buyers
- Optimal risk allocation among parties involved in the LNG project
 Providing a model project template for a downstream project
- Typical pattern of risk allocation
- Standard templates for required contracts / documents for LNG receiving
project may facilitate investments
 Several good news for supply capacity expansions
- Qatari plan to expand its capacity to 110 mtpa; FID of LNG Canada
How to promote investments?

20. 20
The IEEJ was ranked second in the field
of energy research in the 2017 Global
Think Tank Ranking conducted by the
University of Pennsylvania.
(ranked third in 2016 and first in 2015)