World beating growth lures India refiners to Myanmar fuel market
New Delhi: Indian refiners are seeking a foothold in neighbouring Myanmar to capitalize on growth prospects as the Southeast Asian nation emerges from a half-century of military rule.
Numaligarh Refinery Ltd., a unit of India’s second-biggest state-run refiner Bharat Petroleum Corp., plans to export gasoline to Myanmar. Indian Oil Corp., the largest refiner, is also keen on tapping the fuel retailing opportunity. An International Monetary Fund forecast for world beating economic expansion in 2016 points to growing demand for petrol and diesel in the nation.
“The growth opportunity in Myanmar is fabulous,” Numaligarh Refinery’s managing director P. Padmanabhan said in an interview in New Delhi. “We’re talking to the Myanmar government.”
Padmanabhan said Numaligarh Refinery eventually plans to supply 500,000 metric tons of gasoline every year, which is equivalent to about a quarter of the estimated 50,000 barrels a day of petrol Myanmar currently consumes. While the Asian Development Bank estimates the country needs $80 billion of power, transport, and technology projects through 2030, challenges in fuel retailing include industry fragmentation, shifting rules and illegal outlets.
The $67 billion economy of 54 million people offers untapped opportunities for foreign companies, after the US eased sanctions following elections last year.
It imports over 60% of its refined fuel, and three domestic refineries with a combined potential for 57,000 barrels a day operated at 30% capacity in 2015, according to BMI Research.
The forecaster estimates Myanmar’s fuel consumption will expand at an average of 6% yearly during 2016-2020, outpacing Cambodia, Vietnam and Thailand.
Numaligarh Refinery is prepared to truck supplies in while the company builds a pipeline through the Indian border to Tamu in Myanmar.
“If the price is very attractive in Myanmar, I’m willing to start tomorrow,” Padmanabhan said in the 10 August interview, adding he’s seeking to boost exports to other neighbours such as Bangladesh, Bhutan and Nepal.
The Assam-based refiner in March exported India’s first shipment of diesel to Bangladesh in about eight years. Padmanabhan said the target is at least 1 million metric tons of diesel exports annually to the South Asian nation.
Indian Oil chairman B. Ashok told Bloomberg in March the state-run company owns three refineries in the northeast that can supply fuel to Myanmar.
China is Myanmar’s largest trading partner, and China’s Guangdong Zhenrong Energy Co. and local partners are planning a $3 billion oil refinery. That underscores the competition India faces for access to the opportunities Myanmar is thought to offer. Bloomberg