European firms to take part in Myanmar block auction

Myanmar is soon to hold its first oil exploration licensing round since the easing of US sanctions against the country. According to Ken Tun, the head of local oil company, Parami Energy, European companies are “definitely interested and will participate in the next round.” However, the same cannot be said to be entirely true of US companies, who although interested, may likely wait until further reforms have been passed.
In Myanmar’s previous bidding round last year, only one western company took part: Geopetrol of Switzerland won exploration rights for one of the 18 blocks up for grabs – the others that were won all went to Asian companies.
It is believed that the 2012 licensing round will open up 6 new blocks as well as see the return of roughly 10 blocks from last year’s event.
Although recent reforms made by the government are a promising sign, corruption is rife with some organisations ranking Myanmar as one of the most corrupt countries in the world. The nation’s famous politician, Aung San Suu Kyi, has asked outside companies to not agree to joint ventures with the state-run Myanmar Oil and Gas Enterprise until it has improved its business practices. Some companies may be put off by the fact that the state-run entity holds a stake in all available exploration blocks, meaning that any foreign investors would have to become its partner.
Companies based in the US would also have to compile annual reports covering human rights, worker’s rights and environmental issues if they invest more than US$ 500 000 in the country.