The Myanmar Ministry of Energy (Ministry) has commenced an auction for 30 oil and gas blocks in the Myanmar offshore areas. The auction invites bids for 11 shallow water blocks and 19 deep water blocks, to be conducted on a production sharing basis with the Myanmar Oil and Gas Enterprise (MOGE).
This auction follows the announcement of 59 bidders shortlisted for the second round of the Myanmar onshore oil and gas block auctions which commenced in January 2013.
Interested bidders are required to submit an expression of interest (EOI) by 14 June 2013, together with supporting documentation including latest annual report and financial statements and details of experience in offshore petroleum operations. Bidders will be shortlisted for the second round of the auction based on the strength of the EOI.
Shortlisted bidders will receive further information (including geological data) on the oil and gas blocks free of charge and be provided with the standard terms and conditions for production sharing contracts (PSCs) to be entered into with MOGE. A standard form of PSC with MOGE for both offshore and deep water blocks (dated 7 July 2012) have previously been made publicly available by the MInistry. However, it is not known whether a different form of PSC will be provided for this round of auction.
The shortlisted bidders can submit bids for up to three of the offshore blocks being auctioned (in respect of either or both shallow and deep water blocks) and must submit a PSC in final executable form as part of their final bid. The Ministry has indicated that no negotiations will be entered into with bidders in respect of PSCs and bidders are expected to submit their best and final offer in respect of the terms of the PSCs.
Bids will be evaluated based on the technical competency, financial capability, experience, expertise, technical know-how in petroleum exploration and track record in offshore petroleum operations, as well as the terms of the PSC proposed by a bidder.
Foreign bidders should note that they may only operate a shallow water block in cooperation with at least one local Myanmar partner, i.e. a Myanmar national owned company registered with the Ministry, and must operate deep water blocks without a local partner. A list of the Myanmar national owned companies registered with the Ministry (as at 5 April 2013) has been made publicly available by the Ministry.
In the ongoing onshore oil and gas block auction which also contains a requirement for foreign bidders to work with Myanmar national owned companies, foreign bidders were not required to select local partners prior to submitting EOIs, but consortium arrangements will need to be finalised prior to submission of final bids.
US reporting requirements
Interested bidders should also be aware that any "new investments" made by US persons pursuant to an agreement with MOGE may be subject to reporting requirements under General Licence No. 17 (July 11, 2012) issued by the US Treasury Department's Office of Foreign Assets Control (OFAC). For these purposes, "US Persons" is defined to include entities organised under US laws and their non-US branches, persons in the United States, US citizens and permanent resident aliens, wherever located.
The reporting requirements are already in force but currently undergoing public review. The U.S. State Department recently issued a revised and updated version of the reporting requirements for review by the Office of Management and Budget. Additionally, OFAC issued clarifications of the reporting requirements on March 18, 2013 through updated FAQs on its website.
Pending finalization, there are essentially two types of reporting requirements for US Persons:
(i) 60-day notification for "new investments" involving MOGE; and
(ii) annual reporting of "new investments" in Myanmar once their value exceeds $500,000 in the aggregate. With respect to land or real property, the acquisition of 30 acres or more in Myanmar also triggers the reporting requirements.
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