Sherpa Hossainy's Blog

WE Holdings forms Myanmar JV

Posted in ASEAN, Investment, Myanmar, Yangon by Sherpa Hossainy on July 10, 2013

Aims to explore petroleum onshore project

Published in Myanmar Business Today (Vol 1, Issue 23) on July 11, 2013

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Singapore-based WE Holdings Ltd acquired a joint venture company in Singapore in a bid to assess potential petroleum, oil and gas, and related resources business opportunities in Myanmar, it said in a statement.

The JV, WE Dragon Resources Pte Ltd, was formed with Myanmar tycoon Nay Win Tun.

The company has entered into a non-binding memorandum of understanding with Nay Win Tun for a proposed collaboration to carry out petroleum operations projects in five target oilfields in Myanmar through a project company, the statement said.

Under the agreement, the project company will carry out petroleum operations projects, including the exploration of petroleum fields, drilling, petroleum extraction, and the recovery and trading of petroleum products, in Myanmar. The exploration activities will be carried out in Mandalay, Magway, Sagaing, Ayeyarwaddy divisions and Chin state.

The investment in WE Dragon will be funded by the company’s internal resources. WE Holdings and Nay Win Tun will each hold 50 percent of WE Dragon’s issued and paid-up share capital. The issued and paid-up share capital of WE Dragon will be increased to S$200,000 comprising 200,000 shares, WE Holdings said.

Strategically located near energy-hungry China and India, Myanmar has received keen interest from foreign investors since the United States and European Union lifted sanctions against the country. With a vast, untapped reserve of oil, estimated to be 50 million barrels, and 10 trillion cubic feet of gas, Myanmar has been inviting foreign energy companies to bid for exploration licences and oil blocks.

“As one of the oldest oil producers and the tenth largest gas exporter in the world, Myanmar promises immense opportunities. The country has been actively wooing foreign investors so as to unlock the potential of its huge oil and gas reserves, and we believe that we are well-placed to benefit from this trend,” WE Holdings said in the release.

The project company will also seek business opportunities and collaboration with small scale local owners of oilfields. The proposed collaboration is conditional upon the project company’s successful application of a large scale petroleum operations permit from the Myanmar government as well as the company and Nay Win Tun entering into definitive agreements regarding the collaboration, it said.

Nay Win Tun is the chairman of the Ruby Dragon Group of Companies, which has mining, manufacturing, agriculture, food and beverage, trading and hospitality businesses across Myanmar.

The company will also explore opportunities in the exploration, extraction/mining and trading of energy and metal resources and the production and trading of cement, sand and steel.

WE Holdings said it will now be seeking shareholders’ approval for the proposed new business prior to entering definitive agreements.

The proposed collaboration is subject to numerous conditions and there is no certainty or assurance that the parties will in due course enter into any definitive agreements.

WE Holdings recently proposed investment to own a stake in local Dragon Cement Co Ltd. Shares of WE Holdings Ltd jumped as much as 11 percent after the electronics manufacturer and distributor unveiled plans to invest in a Myanmar-based cement plant.

The company plans to buy a 20 percent stake for $20 million in Dragon Cement, a unit of the Ruby Dragon.

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