By Aung Hla Tun

 
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YANGON, Dec 12 (Reuters) Military-ruled Myanmar has delayed a decision on what to do with gas from its two biggest offshore blocks, pending findings from new appraisal wells to be completed by May, a senior official said today.

''We are planning to dig four more appraisal wells in A-3 to get more accurate data about its reserves so it will help us make the right decision,'' a top Energy Ministry official said when asked about sales of gas from Blocks A-1 and A-3.

''We have already told Daewoo about our idea and they will dig these appraisal wells. I think we will finish digging these wells around end April,'' the official, who declined to be identified, told Reuters.

Three gas hungry neighbours -- India, China and Thailand -- have been bidding to buy gas from A-1 off the western coast of Rakhine through a pipeline, but the government has yet to make a final decision.

US-based international certification agency GCA estimates the A-1 and A-3 offshore fields have combined proven reserves of 5.7 to 10 trillion cubic feet (TCF) with up to 8.6 TCF recoverable.

However, a Seoul-based spokesman for South Korea's Daewoo, the major stake holder and developer of A-1, told Reuters the sale decision could be made by early 2007.

''We are currently considering a number of bidders and the deal will be finalised by end of this year or early January''.

A Myanmar source close to Daewoo told Reuters the Korean company had proposed building a liquefied natural gas plant in Myanmar as the best option.

The Energy Ministry official said Yangon was weighing all options on how to sell the gas.

''For an LNG plant to be viable, the reserves must be as big as possible. We are still weighing up the pros and cons of all possible options. We will try to choose the one that will be the most beneficial for our country and for the consortium as well.'' Some analysts say the Myanmar military government is more likely to choose the LNG option as an escape from the dilemma of having to choose one of two energy thirsty giant neighbours, both of which have been clamouring to buy.

''They are facing a dilemma because of the serious approaches by two important giant neighbours -- China and India. That's why they are stalling over the final decision,'' a retired Myanmar diplomat told Reuters.

''Daewoo's idea will sort out this problem.'' The Energy Ministry official agreed.

''The LNG option will surely offer us more flexibility. By selling gas through a pipeline, the gas must go to a fixed destination. By selling as LNG, we can sell it to anyone anywhere -- in the spot market too,'' he said.

Myanmar produced nearly 378 billion cubic feet of gas and 7.484 million barrels of crude oil in the 2004-2005 (April/March) fiscal year, government data show.

The country earned about $1 billion during that period from the export of 335,524.5 million cubic feet of gas, mainly to neighbouring Thailand.

REUTERS SHB HT1535

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