The Yadana gas field is located offshore, around 60 kilometers from the
nearest landfall, extending underwater from the Irrawaddy Delta. The water is
shallow, around 40 meters, and the natural gas reservoir lies around 1,300
meters beneath the seabed. It was discovered in early 1980 by MOGE, which lacked
the technical and financial resources to delimit, appraise and develop it
because the country's oil industry was closed to foreign investment at the
time.
The Memorandum of Understanding signed in July 1992 by Total
and MOGE, Myanmar's state-owned oil and gas company, divided the
project into three phases:
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1. A technical survey of the field to determine whether development would be
economically feasible and the search for a long-term purchaser for the gas. |
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2. If Phase 1 were successful, design and construction of the gas
production facilities by the partners, and transmission by
MGTC. |
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3. Gas production by the partners, and transmission by MGTC. |
During the preliminary phase of the project, which covered the period from
1992 to 1994, the amount of reserves was confirmed, commercial negotiations were
conducted with the gas purchaser, Thailand's PTT, and technical solutions were
defined.
The final development plan was approved in February 1995, at the same time as
the gas purchase and sale contract was signed with PTT.
The offshore complex comprises:
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Two well platforms (WP1 and WP2 on the diagram) with seven wells
tied into each. |
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A production platform. |
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A living quarters platform. |
The total investment outlay for the project,
which took three years to complete, was around US$1 billion.
The gas is supplied under a 30-year production sharing contract (PSC)
that commenced on the date production began. Under this
type of contract, which
is widespread, the host country retains ownership of the resources and
installations. The investors are paid in cost gas (or in cost oil), a
percentage of the hydrocarbons produced, to cover their expenses, including
depreciation
of the installations. The remaining production, known as profit gas
(or profit oil), is divided among
the co-venturers and the host country. The Yadana PSC is very conventional;
it ensures a return for the investors that is in line with industry
standards.
The consortium that invested in the Yadana project was formed in several
stages. Total was the original, sole signatory of the PSC in June 1992,
but was joined by a Unocal subsidiary in early 1993. MGTC was then
formed in late 1994 by separate subsidiaries of Total and Unocal. Thailand’s
PTT-EP, the exploration and production subsidiary of gas purchaser
PTT, joined the offshore partnership and received shares in MGTC in
early 1995. Finally, on November 2, 1997 state-owned MOGE exercised
its option to acquire a 15% interest in the offshore partnership and
MGTC on the same terms as the other investors.
The respective working interests of the co-venturers in the offshore
production complex are 31.2375% for operator Total, 28.2625% for the
Unocal subsidiary (Chevron since 2005), 25.5% for PTT-EP, and 15% for MOGE. MGTC, the company
that built the pipeline assets and is responsible for carrying the
gas from the offshore production platform to the Thai border, is owned
by PTT-EP, MOGE and other Total and Unocal subsidiaries in the same
proportionate amounts.
Technical commissioning of the installations
took place in July 1998 and commercial production
began in early 2000. Output averaged 680 million cubic feet of gas per day in
2006, with PTT taking 630 million cubic feet per day and Myanmar the
balance.
