Seoul, Jan 15: South Korean and Japanese firms are leading the race to buy gas from Myanmar in the

Seoul, Jan 15: South Korean and Japanese firms are leading the race to buy gas from Myanmar in the form of liquefied natural gas (LNG), possibly leaving pipeline hopefuls China and India in the cold, industry sources said on Monday.

In a sales process that closed in early December, state-run Korea Gas Corp. (KOGAS) and Japanese trading house Marubeni Corp. bid for the gas at around $7 per million British thermal units (mmBtu), nearly twice as much as other competitors, a South Korean government source said.

The source said a decision had been made to proceed with an LNG development as that would give operators more flexibility.

A spokesman for project operators Daewoo International Corp. said the company was in talks to choose a finalist, but it would not comment on who had made the highest bids. The company had said it hoped to name a winner early this year before beginning work on the up to $3 billion project.

The government source said that leaders of military-ruled Myanmar had put back a final decision on how to develop the vast reserves, indicating it may still be weighing the financial benefits against closer political ties with big neighbours.

A senior Myanmar Energy Ministry official said in December that the government had postponed a final decision until four more appraisal wells could be completed by May.

KOGAS is the world's biggest buyer of LNG, supplying all of South Korea's demand, and holds a 10 percent stake in the fields.

Heated Competition

Marubeni, Japan's number-five trading house, has been aggressively buying up overseas power plants in Asia and the Middle East, including a $3.4 billion deal last month to buy U.S. Mirant Corp.'s Philippine assets together with Tokyo Electric Power Co (TEPCO) ''It is true that our company is bidding. But we do not know the result yet, or when it will come out,'' said a spokesman of Marubeni, declining to give further details.

Despite the country's political isolation and Western sanctions, Myanmar's offshore natural gas fields have become a hotly contested commodity, with China, India and Thailand all hoping for a pipeline development to deliver a stable, secure source of the cleaner fuel to their fast-growing economies.

It also supplies Thailand through one pipeline and raised eyebrows last year when it signed energy cooperation pacts with both China and India, although it has promised them nothing.

The A-1 and A-3 fields have estimated combined proven reserves of 5.7-10.0 trillion cubic feet (TCF), with up to 8.6 TCF recoverable, one independent assessment showed, enough to meet all of South Korea's demand for some seven years.

A source at natural gas utility GAIL India, which has a 10 percent stake in the gas block, said a costly LNG development may not prove viable if appraisal drilling shows the reserves are not as large as hoped.

Myanmar says it has the world's tenth-largest natural gas reserves at around 90 Tcf, on par with Australia, although independent estimates put the reserves at around one-fifth that.

India's Oil and Natural Gas Corp. (ONGC) holds a 20 percent stake in the fields.

Reuters