Woodside is reported to have cancelled a tender for seismic work at Blocks A-6 and AD-7 after the results were insufficient towards determining the commercial viability of the projects.

Sources also told Reuters that the tender was cancelled because Woodside was unable to receive joint venture approval.

As such, the company has deferred further drilling at the wells to next year as it re-appraises the situation. It added that it has completed all its planned drilling activities for the year.

In August, Woodside and its partners announced that they had discovered the presence of gas at a deep water exploration well in Block A-6 of the Southern Rakhine Basin in the Bay of Bengal.

Gas was tested to be flowing at 50 million cubic feet per day upon discovery at the Pyi Thit-1 appraisal well at Block A-6 at depths of more than 3,500 meters in June. Subsequently, another test well, Pyi Thar Yar-1, was drilled at Block A-6.

Last year, Woodside announced it had found gas at the Shwe Yee Htun-1 well in Block A-6 and at an exploration well in nearby Block AD-7.Woodside executives said the wells potentially held millions of barrels oil equivalent.

The company holds a 40 pc stake in Block A-6 and is the joint operator of the block and operator of the Pyi Thit-1 well. The remaining 40 pc is held by French national oil company Total and 20pc by local firm MPRL E&P.

Its partner in Block AD-7 is South Korea’s Posco Daewoo Corp. Posco Daewoo has said there is no change to plans for AD-7.

In total, Woodside is operating in at least six offshore blocks in Myanmar. It is working together with BG Asia Pacific in Blocks A-4 and A-7, The Myanmar Times understands.

Normal for the business

Industry insiders said Woodside’s move is normal in the oil and gas business. “They [Woodside] found natural gas during exploration. But it may not be commercial. It depends on them.. If the company thinks it is not commercially viable or they don’t want to continue or they can’t afford more investment, they can stop. It is a common thing in oil and gas exploration and production. It is not a matter of profit or loss,” an official from the Ministry of Electricity and Energy (MOEE) told The Myanmar Times.

“It is up to the companies to decide that drilling is not commercial. Another company may study the well and they may think it is feasible. It depends on the activities. One firm can also sell data to another firm or negotiate to cooperate. Others may find what another can’t find. There are such situations.” the official said.

Leonard Oh, executive chair of Myanmar Offshore Supply Base, which will be building an offshore supply base (OSB) in Mon State, agrees. “A delay I drilling is quite normal as every oil company has a spending budget and will err on the conservative side,” he said.

The way he sees it, exploration drilling is akin to “calculated gambling. Hence, in today’s volatile market, we will build our OSB according to demand and not allow market speculation to determine its size.”

For the first six months of the year, Woodside reported operating revenues amounting to US$1.87 billion, down some 3.6pc from the same period last year. It reported earnings of US$552 million for the period, which is up 40pc year over year.

Shares of Woodside closed October 16 at A$29.57 each, down from a 52-week high of A$33.97 each in March.

For more details : https://www.mmtimes.com/news/woodside-delays-drilling-southern-rakhine-commercial-reasons.html