Great Gas Generation
On Dec. 8, Daewoo International (President Jeon Byung-il) announced that it succeeded in producing the ultimate target figure of gas production per day, which is approximately 500 million cubic feet (equivalent to about 83,000 barrels of crude oil), in a Myanmar natural gas field starting from Dec. 1. As of 2010, Korea consumes roughly 1.53 trillion cubic feet of natural gas annually.
The company has the right to operate the “Shwe project” in a Myanmar gas field, and the first production of 70 million cubic feet of gas a day was achieved in June 2013. Since then, it has increased production gradually, and now its production amounts to 500 million cubic feet of gas a day, which is the maximum goal. The gas has been supplied not only to Myanmar’s domestic market but also to China, including Yunnan and Guizhou provinces through to Guangxi Zhuangzu province in the southernmost part of China.
Daewoo International is expected to earn an operating profit of nearly 250 billion won (US$226 million) from the Myanmar gas field this year. From next year, with production stablizing, it will continue to generate its annual pre-tax profits of 300 to 400 billion won (US$271 to $361 million) for the next 25 to 30 years. This will make the Myanmar gas field the main source of revenue for the company.
Choi Jong-bin, executive director of the Oil and Gas Production Division at Daewoo International, said, “The price of gas in Myanmar is linked not only to oil prices but also to the price index in the U.S. Considering the effect on the exchange rate from the strong dollar, the profit is highly likely to reach 300 billion won, even if oil prices in Dubai drop to a 60 dollar level by the end of next year.”
Meanwhile, Daewoo International is actively developing other sources of oil and gas besides the Myanmar gas field. It is the first Korean private company that acquired gas exploration rights for the 6-1S block of the East Sea continental shelf from the Korean government in September 2011. Currently, test drilling is in progress to measure the exact volume of gas reserves in the region.
The company is also planning to begin exploratory drilling in the AD-7 block of Myanmar’s offshore area jointly with Australian energy company Woodside in 2016. In addition, it is also set to develop unconventional resources, like a tight oil gas field, after it acquired a stake from Canada’s Bellatrix Exploration Ltd. for drilling blocks in the Baptist area, which is located about 200 km northwest of Calgary, in August 2013.
All this work is helping Daewoo International to emerge as the leader of oil and gas development.