CORRECTED-Myanmar seeks to cut gas exports to Thailand to meet own needs

Thu Oct 4, 2012 5:51am EDT

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(Corrects CEO Tevin's company, paragraph 10)

* Myanmar needs gas for domestic demand, fuel new industry

* PTT says Myanmar can buy excess gas, but no renegotiation

By Aung Hla Tun

YANGON, Oct 4 (Reuters) - Myanmar wants to renegotiate natural gas export deals with neighbouring Thailand, a senior Energy Ministry official said, as the country maps out ways to tackle crippling domestic power shortages and reassure potential investors.

Myanmar's government is hoping to reach an agreement to retain 200 million cubic feet per day of natural gas from the 1 billion cubic feet per day it currently exports to Thailand, which comes mainly from offshore blocks, the official added.

"Under the original contract, we are entitled to buy 20-25 percent of the gas at the local price for domestic use," the ministry official told Reuters, requesting anonymity because he was not authorised to speak to the media.

Under a military junta that ceded power in March 2011, Myanmar agreed dozens of contracts with energy firms to export most of its oil, gas and hydropower output to neighbouring China and Thailand.

The current reform-minded administration has recognised the urgent need to deal with power shortages in a county where 75 percent of the population have no regular access to electricity. Experts say constructing new gas-fuelled plants is the fastest way to meet growing demand.

"There was not the demand inside the country in the past, so we didn't claim that (buy-back) right. But demand is growing speedily now due to changes in economic policies," the ministry official said.

With a foreign investment law expected to be approved by year-end and most Western sanctions suspended in recognition of Myanmar's liberalisation, the government is keen to harness its resources to fuel economic expansion.

But the existing power grid is dilapidated, cities have regular outages and investors interested in setting up factories in Myanmar would face uncertainty because of the limited number of power plants in operation.

Myanmar supplies about 30 percent of the natural gas Thailand consumes, mostly for power generation. The Myanmar government estimates gas reserves to range between 11 trillion and 23 trillion cubic feet.

Thailand imports Burmese gas through its top energy firm, state-controlled PTT Pcl. Tevin Vongvanich, chief executive of its PTT Exploration and Production Pcl unit, said the two countries were working to ensure there were mutual benefits from existing and future deals.

"Thailand and Myanmar are cooperating to meet domestic natural gas demand for both countries," he told Reuters on Thursday.

"What we produce that is beyond Thailand's needs, we will give to Myanmar. There has been no change or renegotiation of any existing contracts."

Tevin could not confirm there was a "buy-back" clause in contracts, as the Myanmar official stated.

According to its Central Statistical Organisation (CSO), Myanmar exported $3.5 billion worth of gas, mainly to Thailand, in the fiscal 2011/12 (April-March), compared with $2.52 billion a year before and $2.38 billion in 2008-2009. (Additional reporting by Amy Sawitta Lefevre and; Wilawan Pongpitak in Bangkok; Writing by Martin Petty; Editing by Alan Raybould and Miral Fahmy)

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