Myanmar's expansion of energy trade
Myanmar is strategically expanding its energy trade, leveraging its abundant natural resources and geopolitical position in Southeast Asia. The country is rich in offshore natural gas, petroleum, hydropower, and coal, boasting significant reserves and potential for electricity generation, particularly from hydropower. Despite being classified as a developing nation, where a large portion of the population relies on traditional fuel sources, Myanmar is initiating renewable energy projects, including solar and wind power, with international assistance.
Historically, Myanmar has had a complex energy governance framework, transitioning from state control to allowing foreign investment in the energy sector since the late 1980s. However, the country's political landscape is fraught with challenges following a military coup in 2021 and subsequent international sanctions. Myanmar's energy trade is influenced by its relationships with neighboring countries, particularly China, which depends on Myanmar for oil and gas supplies, and India, which is increasingly interested in securing energy resources amidst regional competition. Meanwhile, Myanmar maintains a delicate balance with Bangladesh, as energy disputes continue to shape their bilateral relations. Overall, Myanmar's energy trade expansion reflects its potential to play a significant role in regional economic dynamics.
Myanmar's expansion of energy trade
Official Name: Republic of the Union of Myanmar; also known as Burma.
Summary: Given its vast natural capital and economic growth in southeast Asia, Myanmar is increasing energy trade among neighboring nations and extending its geopolitical importance.
Myanmar, formerly known as Burma, is the second-largest country by geographical size in Southeast Asia and had a population of more than 57 million as of 2024. As a country rich in natural resources, Myanmar has large reserves of offshore natural gas, petroleum, hydropower, coal, and timber. The country’s natural gas reserves were 637 billion cubic meters in 2021. The hydropower potential of Myanmar reaches more than 100,000 megawatts. By 2022, more than half of Myanmar’s electricity supply was from fossil fuels, while hydropower comprised another 47.6 percent. Myanmar produced about 7,000 barrels of oil per day, 1,268 million metric tons of coal, and 16.78 billion cubic meters of natural gas in 2022.
Myanmar is a poor and developing country, however, and 75 percent of its population inhabit rural areas. Myanmar’s rural energy consumption depends mainly on fuelwood, charcoal, and biomass. With international aid, such as that of the Technical Cooperation Among Developing Countries program, Myanmar is at the early stages of developing renewable energy sources for rural households, such as solar power, wind power, and geothermal power. The government has introduced photovoltaic systems to rural areas for generating electricity from solar energy and has reduced the consumption of fuelwoods to protect forests.
Energy Governance and Industry
As one of the world’s first oil producers, Myanmar started its oil exports in 1853, under British colonial rule. During the reign of the Konbaung Dynasty, foreign oil companies such as Rangoon Oil Company and Burmah Oil Company dominated the Myanmar oil industry. With independence in 1962, the military came to power and the regime claimed ownership of Myanmar’s energy industry and created the Ministry of Energy and state-owned energy enterprises. Over the past fifty years, a series of agencies have been established to oversee energy sectors: the Ministry of Electric Power, the Ministry of Mines, the Ministry of Forestry, the Ministry of Science and Technology, and the Ministry of Co-operatives. At the same time, National State Enterprises were founded to operate Myanmar’s energy markets. The Myanmar Oil and Gas Enterprise was established in 1963 and is responsible for the upstream petroleum subsector. However, in 2023, the United States and other countries imposed sanctions on the state-owned company because Myanmar's military had committed atrocities against peaceful demonstrators. In 2021, the military's senior leader General Min Aung Hlaing launched a coup, returning the country to authoritarian rule. As of 2024, armed militias called the People's Defense Forces (PDFs) continued to fight against the regime.
Myanmar’s government kept foreign energy operators out until the late 1980s. Because of the liberalization of the oil and gas sector in Myanmar, in partnership with Myanmar’s national energy enterprises, foreign investors have been allowed to exploit natural resources under the Union of Myanmar Foreign Investment Law developed in 1988. By 2007, nine foreign companies were involved in 16 onshore blocks to explore new areas, to enhance recovery from existing fields, to reactivate fields where production has been suspended, and to produce. These companies included Daewoo of South Korea, China National Offshore Oil Corporation, China National Petroleum Corporation, Oil and Natural Gas Corporation of India, Sun Itera Oil and Gas of Russia, Danford Equities Corporation of Australia, and Gail and Rimbunan of Malaysia. In 2022, the United States invested $3.8 billion in Myanmar's energy sector.
Geopolitical Influence
Myanmar’s geopolitical position and resources determine its importance in southeast Asia. Myanmar is strategically located on the western access to the Strait of Malacca, which bridges the Indian and Pacific Oceans. More than half of the oil tankers in the world travel this route from the Mideast and north Africa to several of the world’s largest economies: China, Japan, South Korea, and Malaysia. Myanmar does not have good trade relations with Western countries because of economic sanctions on Myanmar’s military regime, such as those made by the United States, Canada, and the United Kingdom. However, Myanmar is a member of the World Trade Organization, the Association of Southeast Asian Nations, and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. Myanmar shares strong trade relations with its neighboring countries, especially with regard to energy and natural resources trade. With increasing economic development in this region, bordering nations are trying to improve ties with Myanmar’s military junta in order to compete with Myanmar’s natural capital.
China, with long-standing cultural and historical ties to Myanmar, has been providing Myanmar with development through different channels and at different levels. China’s investment accounts for 11.5 percent of Myanmar’s total foreign direct investment. As China’s economy grows, China needs to secure its oil and gas supply, and Myanmar is an extremely important supplier. First, 80 percent of the oil shipped to China now passes through the Strait of Malacca. However, this is a region known for terrorist threats and alternative political interests. In order to cut costs and reduce threats, China began building a pipeline from the Bay of Bengal via Myanmar to Yunnan Province in China. China’s state-owned companies are operating this multibillion-dollar Trans Myanmar-China Pipeline. The project was scheduled to be completed in 2013 but did not begin operation until 2017.
Unlike China, India does not have strong ties with Myanmar, largely because of India’s continuing support for the pro-democracy movement in Myanmar. However, relations have changed rapidly as India searches for energy security to support its economic development and China exerts its dominance in Myanmar. Importing gas from Myanmar has been a key priority for India.
Myanmar and Bangladesh have maintained positive relations throughout history. However, the two countries have had a longtime dispute over a gas-rich stretch of the Bay of Bengal. In 2008, after Myanmar began exploring for gas there, Bangladesh deployed four naval ships to the disputed waters. As Bangladesh continues to experience increasing energy demands from its manufacturing sector, energy conflicts between the two countries are likely to continue.
Bibliography
"Burma." The World Factbook, Central Intelligence Agency, 30 July 2024, www.cia.gov/the-world-factbook/countries/burma/. Accessed 6 Aug. 2024.
"Burma, Market Overview." International Trade Administration, 13 Mar. 2024, www.trade.gov/country-commercial-guides/burma-market-overview. Accessed 6 Aug. 2024.
Oh, Surim, et al. "Myanmar's Decision-Making Structure for the Introduction of Renewable Energy." Journal of Cleaner Production, vol. 413, 10 Aug. 2023, doi.org/10.1016/j.jclepro.2023.137254. Accessed 6 Aug. 2024.