The lifting of several international sanctions in 2012 has led to a sharp rise in cars being imported and sold in the country. With motorcycles and mopeds still banned on Yangon’s roads, a city of over 5 million people, the effects of limited investment in transportation infrastructure are being felt with traffic jams that are now on par with other Asian cities such as Bangkok and Jakarta.

To cope with the rising demand for oil products, the government, through the Ministry of Energy and private sector companies, has been increasing fuel imports.

Myanmar’s three ageing state-owned refineries with a total capacity of 51,000 b/d, are all running substantially below capacity and are only able to supply a part of the country’s daily fuel requirements.

A source close to state-owned Myanma Petrochemical Enterprise, which operates the refineries, said that current operating rates were around 20,000 b/d.

Puma Energy Building Storage

Puma Energy, whose main shareholders are trader Trafigura and Angola’s state-owned Sonangol, was the first foreign company to be granted permission to develop oil storage facilities in Myanmar when in July 2013 it won a tender to construct a jetty at Thilawa and storage facilities for bitumen and petroleum products. It will have a capacity of 97,000 cu m.

The Puma Energy project is situated on 37 acres of land at Plot 3, according to a spokesman for the company.

“It will be the largest refined products import terminal in Myanmar, with the capability to receive products from MR-sized (50,000 dwt) vessels. Our storage facilities are one of the first in Myanmar to be constructed in accordance with international standards including BS Standards & American Petroleum Institute Standards,” he said in an emailed statement earlier this week. Phase 1 of the facility is expected to be completed by the end of March next year.

Local Companies Already Active

Max Energy, a major domestic fuel retailer, is one of them and company sources said it had plans to develop a storage terminal that would be able to store up to 40,000 cu m of clean petroleum products and would use a shared jetty.

This terminal could be ready by the end of the year, a source at the company said. It currently leases tank space at the port and uses floating barges to store imported oil products.

The company has around 4,000 b/d of oil product sales and is looking to increase this through its network of 30 service stations across the country.

“In the last 3-5 years, gasoline demand is up,” the source said, adding that they aimed to increase the number of retail stations at the rate of “5-10 stations a year.”

The imported fuels come mainly from Singapore, the source said.

In addition, the local IGE Group of companies, which has around 18 retail stations under the PPCL brand along with a number of joint venture service stations, is also planning to build its own terminal and jetty at the port, having won one of the 37 lots offered by MPA, according to industry sources and local media.

Big Growth Potential

While there have been some upgrades at the refineries in recent years through foreign assistance, including help from India, in the short term rising oil products demand is most likely to be met through higher imports, sources in the country said.

“Product demand is there and it is a growing [shortage],” an industry source said. “Myanmar [shows] great growth potential.”

However, there are a number of hurdles still when doing business in Myanmar as the political and economic environment remains complex. Participants both inside and outside the country are waiting to see what happens after the elections that are to be held in November.

Data on oil product demand, sales or imports is hard to come by as it is not released on a regular basis by the government.

In August, a source close to the Ministry of Energy said that the government sector’s monthly sales of gasoil amounted to 6 million gal/month or around 4,600 b/d.

Gasoline imports by the ministry are less regular. Production of naphtha at the three state-owned refineries stood around 7 million gal/month or 5,400 b/d, he added. Private sector sales of diesel are higher, around 16 million gal/month or 12,300 b/d, while sales of gasoline around 13 million gal/month or around 10,000 b/d, the source said.

Higher Imports

Separately, local media, citing data from the Myanma Port Authority, reported in July that fuel imports rose 47.7% year on year to 3.47 million mt, or 74,628 b/d, for the financial year that ended in March 2015.

Recently, the Myanma Petroleum Products Enterprise, which is part of the Ministry of Energy, awarded a tender to import 752,000 barrels of gasoil over October 2015 to January 2016 into Yangon to Trafigura, traders said.

MPPE, a major retailer and wholesaler of oil products in Myanmar, has four main fuel terminals, 24 sub-fuel storage facilities, and 12 oil stations throughout the country.

In July, MPPE issued a tender to establish an oil products joint venture, in which it would have a 51% stake, to engage in import, storage, distribution and sales of oil products, rehabilitate its storage facilities, and expand the oil business.

Infrastructure Planned At Tilawa Port

The new oil storage infrastructure is largely planned for the port of Thilawa, 23 km (14 miles) southeast of Yangon, and spearheaded by a number of local and foreign companies.

MPA has allocated plots for the storage infrastructure.

At the end of July, an oil storage terminal was opened as part of a build-operate-transfer agreement between the MPA and the Green Asia Port Terminal (Thilawa), owned by private local company, Green Asia Services, the Global New Light of Myanmar daily reported.

This involved the MPA leasing 420 acres or just over half a square mile of land comprising 37 lots in Thilawa to 14 private companies through BOT for oil depots, tanks and terminals.