What Does Myanmar Coup Mean for Oil and Gas?

From an oil and gas context, the coup is ill-timed for Myanmar, with prospects in the sector starting to turn a corner amid growing foreign investor interest and efforts.

That’s according to oil and gas analysts at Fitch Solutions Country Risk and Industry Research (Fitch Solutions), who made the statement in a report sent to Rigzone on Wednesday. The analysts, who noted that the country’s previous military regime proved unconstructive for oil and gas, said that the situation will likely put most ongoing projects in the upstream sector on hold while firms study the situation for more information and clarity.

“Exploration programs being led by the likes of Total, Woodside Petroleum and Posco International are crucial for Myanmar’s future energy supply security, although are likely to see progress halted for the time being as firms monitor developments,” the analysts stated in the report.

“None have announced definitive plans at this juncture, although any hint at a return to more nationalistic resource policies or a revert to a state-oriented contract regime will prove highly off putting for these potential investors, at a time when riskier oil, gas markets are already starting to be overlooked by most,” the analysts added.

“Large infrastructure projects, such as proposed refineries and LNG-to-power projects, even if not cancelled, also face added risks of stalling over the near term due to a combination of lack of funds, social unrest, and further lockdowns due to a renewed outbreak of Covid-19 following mass protests,” the analysts went on to state.

In the report, Fitch Solutions noted that Myanmar announced a state of emergency on February 1 for up to one year via the military-owned news channel Myawaddy News, following a coup by the Myanmar military. The outcome sees Myanmar back under a military leadership less than a decade from the end of the last military regime in 2011, Fitch Solutions highlighted, adding that the event appears to have been triggered by the outcome of the general election that was held in November 2020.

“Aung San Suu Kyi’s National League for Democracy (NLD) secured a landslide victory with more than 80 percent of the votes cast, although this was immediately met by allegations of fraud and threats of repealing the constitution by the military-backed Union Solidarity and Development Party (USDP),” Fitch Solutions analysts said.

“Upon announcement of the state of emergency on February 1, the military seized power, detaining Aung San Suu Kyi, President U Win Myint and other senior government officials and placing power in the hands of army chief Min Aung Hlaing,” the analysts added.

To contact the author, email andreas.exarheas@rigzone.com