New gas discovery announced at Shwe offshore area

POSCO International has made a gas discovery at the A-3 block in Shwe offshore area, according to a company update. 

The Mahar structure will reportedly be able to produce around 38 million cubic feet per day (mmcfd) of gas. Reserves were found at a depth of 3,937ft. 

Currently, POSCO is evaluating results from a 2,297ft well drilled at the Kissapanadi structure, also in A-3.

Drilling of a third exploration well at the Yan Aung Myin structure is planned for March.

Two to three exploration wells are to be drilled at Mahar and any other structures where gas reserves are discovered in late 2021. The company is to create a detailed development plan after further assessment of drilling results. 

POSCO began its most recent round of exploration drilling at A-3 in November 2019, having contracted Denmark’s Maersk to complete the work. 

That same month, the company finalised the front-end engineering design (FEED) contract for phase 3 of the Shwe offshore development with US-based McDermott. 

In mid-October, it was also announced that South Korea’s Hyundai Heavy Engineering (HHI) and its contractor, France’s Doris Engineering, had also been awarded a FEED contract for Shwe phase 3. It is not known whether the contract with HHI has been finalised yet. 

Outlets have reported that McDermott and HHI will now prepare designs for phase 3, which POSCO will evaluate before selecting one company to serve as engineering, procurement, construction, installation and commissioning (EPCIC) contractor for the project.

POSCO is the operator of Shwe offshore area, with a 51% interest in both the A-1 and A-3 blocks. Other partners include ONGC (17%), MOGE (15%), GAIL (8.5%) and KOGAS (8.5%).

The company announced its first commercial-scale gas deposit at Shwe in 2004, and target production of 500mmcfd was reached 10 years later.

According to POSCO, in 2019, sales volumes were 216.2 billion cubic feet. 

Most of the gas produced at Shwe is exported to China via the Southeast Asia Gas Pipeline. Around 20% of output is reserved for domestic use. 

Source: POSCO International