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Summary

  • Last week, I returned to Burma to research my latest book. And my, how times have changed.
  • That's the dichotomy of Burma today: Invest early and deal with the risks as your money doubles or triples in value... or rises 10- or even 100-fold.
  • Or wait, and lose out on one of the last opportunities to invest in nascent capitalism.

The country's not much when you look at it. The political situation is in disarray and confusion, and despite attempts at democratic reform, the military still maintains a tight rein over the people.

But if you look beyond the veneer, the oil and gas market in Burma could represent a valuable yet timely opportunity in an economy that has, until recently, been suppressed by government scrutiny.

Back in the summer of 2012, I was one of the first Western financial writers to enter the newly open economy that, only months earlier, had been under 40 years of lockdown by a government controlled by the military.

I remember hopping into a cab near the riverfront in Rangoon, Burma, to notice a rusted, gaping hole in the floorboard, leaving the pavement exposed beneath my feet. By that point in the trip, however, I'd become accustomed to the bedraggled nature of Burma's fleet of ancient cabs, including VW buses from the 1970s that spew exhaust into the cabin.

Last week, I returned to Burma to research my latest book. And my, how times have changed.

Granted, the place remains one of the poorest countries on the map. That's just not something you fix overnight. But capitalism is conspicuously alive. All the cabs are new Chinese Chery compacts or modern Nissan and Toyota wagons. There are even new Mercedes and BMW dealerships that have opened in the last few months.

All of which means investment opportunities in the oil and gas market in Burma are clearly abundant for those who understand that the biggest gains always accrue to the earlier arrivers.

In 1853, Burma drilled her first oil well - six years ahead of the United States - making the country now known as Myanmar one of the world's first oil producing and exporting nations.

For the better part of six decades, Burma's bounty of natural resources - including an estimated 3.2 billion barrels of oil - lay locked behind a wall of secrecy, mismanaged by a military dictatorship.

Now the situation has changed, allowing democracy and capitalism to gain a perch. And they've cleared the way for a host of exploration, production and oilfield services companies from around the globe to claim their piece of the oil and gas market in Burma.

Which means energy is one of the primary industries we want exposure to as Burma re-emerges after decades hidden from view.

65% of Myanmar's Reserves Are Largely Untapped

Seventeen oil-rich basins dot Burma's onshore and offshore geography. Of those, most are either lightly explored or completely unexplored. Many of the country's gas fields are essentially plugged because of inadequate infrastructure to get the stuff to market. Basically, then, Burma's energy industry is one giant opportunity - particularly given that the country's immediate neighbors, India and China, are both desperate to access the new energy resources

China is already tapping into the country's reserves, and is spending $2.6 billion building pipelines across Burma from the Bay of Bengal to China's Yunnan province. That pipeline will cut nearly two weeks off the transit of Middle Eastern oil destined for the Middle Kingdom, and will allow tankers to avoid the pirates plying the Strait of Malacca.

It will also give oil and gas production companies in Burma an easy, direct link to one of the world's thirstiest energy consumers. India, meanwhile, recently showed up in Burma after a 25-year absence, and is now eager to put its own taps into the country's reserves.

As an investor in emerging and frontier markets for the last 20 years, I have searched for exactly the kind of opportunity that Burma's energy industry represents. I know, though, that some are nervous about putting their cash to work in a country where democracy is still finding a foothold.

That's the dichotomy of Burma today: Invest early and deal with the risks as your money doubles or triples in value... or rises 10- or even 100-fold. Or wait, and lose out on one of the last opportunities to invest in nascent capitalism.

I Wasn't Willing to Wait…

I've never been one to sit out on these kinds of opportunities. That doesn't mean, however, that I'm imprudent. I look to mitigate risks by finding the small, stable foreign companies that are entering the country because they see the same opportunities I do, and I enter the market through them.

I found one such investment on my last trip to Burma: Singapore-based oil services firm, Ezion (OTCPK:EZIDF, Singapore: EZI). It runs a fleet of "liftboats" that production companies rely on to commission, repair, maintain and decommission offshore oil platforms. It was moving into Burma to exploit the boom in drilling and production.

So, I recommended the shares to my Sovereign Investor readers. Those shares are now up nearly 225%.

Ezion won't be the only winner in Burma. A host of companies are now moving into the economy to take advantage of the consumer class that is now emerging there - and, as I saw firsthand, it is clearly emerging. That's the next big investment opportunity. And I already have my eye on a couple of potential plays...

Until next time, stay Sovereign...

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.