This is because global oil prices have fallen, leading to a decline in gas prices and production at four of Myanmar’s offshore gas projects and numerous other fields onshore, he said.
“About 30pc of nation’s foreign income is received from the sales of natural gas. Natural gas prices decline when the global oil price falls. However, any change in natural gas prices normally takes effect in the next year after new contract prices are set. Now that oil prices have fallen, we will certainly feel the impact on revenue next year,” said Smart Group CEO U Kyaw Kyaw Hlaing.
The decline also comes at a time when production levels at existing wells are decreasing and tenders for drilling at new gas fields have stalled.
Income from the natural resources sector contributes to around 10.9 percent of Myanmar’s total income, making it a major source of revenue for the country. In 2019-20, income from the Myanmar oil and gas sector totalled K2 trillion. This however, was down from a high of K2.3 trillion in 2018-19 as a result of declining production levels.
According to forecasts, the sector is expected to generate less than K2 trillion in the upcoming year, as production contracts at the Yadana offshore project, which started production in 1996, and Yetagun offshore project, which started in 1990, enter their final stages.
The export gas prices for 2020-21 at the Yadana, Yetagun and Zawtika fields were calculated at US$6 per million British Thermal Units (mmbtu) compared to $8.88 per mmbtu in 2019-20. Gas produced from these fields are exported to Thailand. Meanwhile, the average export price at the Shwe gas field is being calculated at $5.20 per mmbtu compared to $7.40 per mmbtu the year before. The benchmark crude oil price used for setting the gas contract price is $20 per barrel.
Tax revenues from the natural gas sector have also decreased, falling to K169 billion in fiscal 2019-20 due to lower production revenue from the Zawtika offshore project and lower exchange rate. The forecast amount had been K234 billion, said U Maung Maung Win.
The ministry expects tax revenues from the gas sector to amount to K334 billion in the coming fiscal year. – Translated