Alain Lepage, the Yadana gas project director for Total,
said all
major contracts have been signed with contractors including
the US
firm McDermott ETPM Far East for the offshore platforms,
Italy-based
Saipem Asia Sdn Bhd for offshore pipeline laying, France's
SPIE CAPAG
for the onshore pipeline, Mitsubishi/NYK of Japan for
offshore
pipeline materials and Italy-based Ilva for onshore pipeline
materials.
Total, together with Unocal Corp and PTT Exploration and
Production
Plc (PTTEP), which is developing the Yadana gas field
in Burma's Gulf
of Martaban, signed a 30-year contract with PTTEP's parent
company the
Petroleum Authority of Thailand (PTT) in 1995, to supply
525 million
cubic feet per day (MMCFD) of natural gas to Thailand
beginning on
July 1, 1998.
Speaking at a dinner on Thursday sponsored by the Society
of Petroleum
Engineers, Herve Chagnoux, Total business development
manager for
Thailand and Burma, said under the production sharing
contract signed
in 1992 between the gas developers and the Burmese government,
the
Burmese government's take when the gas production reaches
full stream
will be roughly $200 million per year before the costs
of the gas developers.
This estimate, he said, does not include profit sharing
from the
possible equity participation of Myanmar Oil and Gas Enterprise
(MOGE), Burma's state oil company. MOGE has an option
to take a 15 per
cent share in the project and might take up the rights
after the
exploration and development process.
Chagnoux noted that the project has been granted a three-year
corporate income tax exemption and gas production is projected
to
reach its full committed capacity of 525 MMCFD within
15 months of
start-up. For the first 12 months, Total expects to produce
2,000
MMCFD of gas.
Total will announce by the end of this year the upward
revision of the
gas reserves in Martaban's M-5 and M-6 blocks, which include
the
Yadana and Badamyar fields, and the progress of negotiations
on
additional gas supply for PTT. At present, the gas reserve
is
confirmed at 5-6 trillion cubic feet, sufficient for production
of
650-750 MMCFD.
The Yadana gas project has been the subject of heavy international
scrutiny by human rights and environmental activists critical
of
Burma's military-led government.
''We are not a political entity. We are neutral. We're
investing in
this 30-year project which will benefit the country,"
Chagnoux said
when asked about the criticism.
For gas production, Total will establish two wellhead platforms
capable of digging 14 holes and pumping up to 525 MMCFD
of gas for
delivery through a 403-kilometre pipeline to PTT at the
Thai-Burmese
border.
''The fact only two platforms are required for production
confirms the
potential of the Yadana field," said a Bangkok-based oil
company
executive.
The Martaban sea is only 45 metres deep at Total's Yadana
platforms
and the company will only have to drill 1,320 metres below
the seabed
to reach the gas.
Total said the $1 billion investment comprises $300 million
for the
construction of offshore platforms and $700 million for
the pipeline
system and other onshore costs.
Until now, financing for the project has been entirely
funded by
shareholders' money, he said, although negotiations are
underway with
several export credit agencies. The Total executive did
not rule out
other funding possibilities.
Next month, SPIE will begin installation of the 63-kilometre
onshore
pipeline system, a task oil executives said will be technically
challenging since it runs through a mountainous and remote
area of
Burma. The pipeline will cross two major rivers before
climbing from a
height of 80 metres to 900 metres over the last 10-kilometre
section
to Ban-I-Tong on the Thai-Burmese border.
The installation of the 346-kilometre offshore gas pipeline
will
commence in January 1998 at a target rate of four kilometres
per day.
According to Chagnoux, the onshore pipeline route was selected
over
two other alternatives after the consortium considered
it the best
ecological alternative despite being six kilometres longer.
A socio-economic study undertaken by the consortium found
that the
pipeline route will pass 13 villages whose populations
comprise 68 per
cent ethnic Burmese, 24 per cent Mon and 8 per cent Karen.
The route
passes just south of Mon state.
Total, Unocal and PTTEP, which hold 36.75, 33.25 and 30
per cent
stakes in the Yadana gas project, will reduce their shares
to 31.2375,
28.2625 and 25.5 per cent, respectively, when the Burmese
national oil
company exercises its 15 per cent share option.
To prepare for installation of the pipeline, the consortium
has had to
construct several new facilities including a harbour,
an airport,
bridges and roads. These infrastructure projects, completed
in July,
were built to facilitate the transport of thousands of
tonnes of
pipeline 2,000 kilometres from the consortium's pipeline
coating base
in Malaysia.
Total is also participating in a consortium with Unocal,
Mitsui of
Japan and Myanmar Enterprises, for a project to utilise
gas from the
Yadana field for domestic use in Burma. The projects include
fertiliser, power and gas separation plants and the construction
of a
pipeline to Rangoon.
The details of the so-called 3-in-1 project, estimated
to cost
$600-750 million, are still being negotiated, he said.