Myanmar’s Untouched Natural Gas Reserves

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If I could put all of my money into Myanmar, I would. Myanmar is in the same place China was in early 1979, when Deng Xiaoping said “we have to do something new”. Myanmar is now opening up and it’s the next economic frontier in Asia.

Jim Rogers, commodities guru and co-founder Quantum Fund

 In 1962 Myanmar (or Burma as it was then called) was the single richest country in Asia.

It was fast on its way to becoming the second developed nation in Asia after Japan.

The country was abundant in rubies, oil, and valuable timber. It also had the largest qualified and educated workforce in Southeast Asia.

The main temple in Myanmar’s Royal City of Yangon even has a diamond the size of a fist sitting on top of the central spire!

In a way, due to its natural resources Myanmar was the El Dorado of Asia. El Dorado was the mythical South American city nicknamed the ‘Lost City of Gold’.

According to legend, El Dorado was abundant with gold. The tribal chiefs and tribe members all wore gold. Gold earrings, gold pendants, gold plaques, and gold crowns.

Attracted by the tales of riches, Spanish fortune hunters (conquistadores) risked their lives trekking through uncharted territory. But it was a futile search.

While local tribes used gold for ceremonial purposes, the amount of gold discovered by the Spanish conquistadores was nowhere near the amount promised by the legends.

It turned out El Dorado was a myth…it didn’t exist. But Myanmar isn’t a myth. It exists, and more than that, it potentially hosts the world’s fifth largest conventional natural gas field…

Under-explored Energy Oasis

That’s what makes Myanmar and the opportunity to invest in this ‘Real El Dorado’ an exciting story.
Already, Myanmar has 20 trillion cubic feet (tcf) of natural gas reserves. That’s worth around $106 billion at today’s natural gas prices. The great news is most of these reserves are still in place as Myanmar has only exported its gas for the past 15 years.

But that could be just the beginning.

Since the 1970s explorers have only drilled a total of 19 offshore exploration wells. This is an almost completely unexplored zone.

Experts suggest that in addition to the current 20 tcf of reserves, there could be another 80 tcf of undiscovered natural gas worth around $424 billion.

Add this to Myanmar’s other potential reserves and the slow freeing up of the economy, and it’s no wonder that commodities guru Jim Rogers would like to ‘put all of [his] money into Myanmar.

You shouldn’t take Rogers’ view lightly. He co-founded the Quantum Fund in 1973 with another legendary investor, George Soros.

He helped steer the fund to a 4,200% total return before he ‘retired’ at the age of 37.

So when Rogers says Myanmar is a great opportunity, I listen. But before we go any further let’s turn back the clock.

At the Epicentre of Growth

Myanmar has been ruled by a military dominated government since 1962.

The military rule has had a devastating impact on Myanmar’s economy. Due to its isolation from international trade, it has bypassed globalisation and missed out on many of the benefits of improved technology.

To illustrate this, only 10% of the population has access to mobile communications.

Compare that to Australia where almost all the population has access to mobile communications, and most of them use it.

In fact, a common saying about Myanmar is that once you land at the airport, you have to wind your watch back by decades.

But things are changing.

Recent once-in-a-lifetime changes to the military constitution means that ground breaking reforms could be on the way.

This would allow explorers to exploit these undiscovered oil and gas fields and lead to a boom for Myanmar’s repressed economy.

The possibility is so big that the growth potential for Myanmar today could be on a par with China’s economic growth from 1979 through to today. It’s that big.

And with today’s technology, Myanmar’s growth should happen much quicker than China’s amazing growth.

Marc Holtzman, chairman of Meridian Capital, a leading billion-dollar private equity firm, has been to Myanmar eight times over the last few years. He says the reforms taking place are ‘real this time, the genie is out of the bottle.

And the McKinsey Global Institute, a top-tier global management consulting firm, estimates that Myanmar’s economy could grow from US$50 billion today to US$200 billion by 2030.

That’s a compound annual growth rate of 9.68% – greater than China’s current growth rate of 7.5%. That would do wonders to help lift many of Myanmar’s 65 million people out of poverty.

But that’s not all. It’s also important to consider geography. Myanmar borders both China and India. Those two country’s populations combined represent 40% of the world population.

In fact, as the following map shows, more people live in the circled area than live outside it. It just so happens that Myanmar is almost at the epicentre of this circle:


Source: Reddit.com
Click to enlarge

This alone offers a great opportunity in terms of providing export markets for its natural resources.

So, I hope you can see the scale of the opportunity at play. An economy that’s set to quadruple in size over the next 16 years, one in which commodities guru Jim Rogers would invest all his money if he could.

While I don’t advise you to take Rogers’ advice literally (as in don’t put all your money into Myanmar) you should definitely take a look at the opportunities on offer as Myanmar opens up to the world.

Jason Stevenson,
Contributing Editor, Money Morning

Ed note: The above article is an edited extract from Diggers and Drillers.

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Jason Stevenson

Jason shares his extensive knowledge of Australia’s mining sector as Money Morning’s dedicated resource analyst. Whether it’s iron ore, gold, copper or lithium, you can rely on Jason to give you in-depth analysis of the biggest and most important sector of our economy. Jason provides in-depth research to Resource Speculator, Australia’s premier resource investment advisory. If you’d like to know more about Jason’s financial world view and investing philosophy then we recommend you join him on Google+. It’s where he shares investment insight, commentary and ideas that he can’t always fit into his regular Money Morning essays.

Jason Stevenson is Money Morning’s resource analyst.

He believes that the best way to make money is, and always has been, to back Australia’s best explorers, miners and refiners.

Before joining the team at Money Morning, Jason worked at boutique firms which advised fund managers and high net wealth clients where to invest.

Now he brings that expertise to Money Morning, where he provides readers with his take on the Aussie resource sector. Whether it’s iron ore, oil and gas, gold or lithium, you’re guaranteed in-depth analysis of Australia’s biggest and most important sector.

Jason is also the analyst for the leading resource investment advisory Resource Speculator. This is where he shares the best mining prospects and natural resource plays he finds on the ASX.

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Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@moneymorning.com.au