A Canadian energy company is preparing to begin offshore drilling in Myanmar’s Andaman Sea in partnership with the military-controlled state oil and gas enterprise, raising fresh concerns over foreign investment in a sector that provides revenue to the country’s ruling junta.

Canadian Foresight Group (CFG), led by chairman Songning Shen, has held discussions with officials from Myanma Oil and Gas Enterprise (MOGE) and junta-appointed Tanintharyi Chief Minister Zaw Naing Oo over plans to commence drilling at offshore Block M15 by the end of this year, according to The Irrawaddy.

CFG controls an 80 percent interest in the block under a production-sharing agreement signed with Myanmar authorities in March 2015.

The M15 block covers roughly 13,000 square kilometres near Kadan Island in the Andaman Sea. The area is believed to contain up to 95 trillion cubic feet (TCF) of natural gas, forming a major part of a larger 109 TCF gas discovery announced by Myanmar’s military regime in June.

The scale of the potential reserves makes the project significant for Myanmar, which has been struggling with declining foreign currency earnings and severe economic pressure since the military seized power in 2021.

BBC Burmese has estimated that revenues generated from the project could provide foreign exchange earnings equivalent to around 40 percent of Myanmar’s total foreign currency reserves, highlighting the potential financial importance of the development for the junta.

The proposed drilling also places Canada’s Myanmar sanctions policy under renewed scrutiny.

MOGE, which oversees much of Myanmar’s oil and gas revenue, has been sanctioned by several Western governments over its role in providing financial resources to the military. Critics say revenue from the sector can ultimately help sustain the junta’s military operations.

Canada, however, has not imposed direct sanctions on MOGE.

Justice for Myanmar, an advocacy group monitoring the military’s business networks, has repeatedly called on Ottawa to sanction the state oil and gas enterprise, including through a campaign launched in 2023.

The development could therefore put CFG’s planned investment under closer scrutiny, particularly as international pressure mounts on companies involved in Myanmar’s extractive industries.

For Myanmar’s military authorities, meanwhile, the offshore project offers the prospect of a major new source of hard currency at a time when sanctions, conflict and economic isolation have sharply constrained the junta’s access to international finance.

The planned drilling at Block M15 could consequently become more than an energy project, it may also emerge as a test of how Western-linked businesses navigate investment in Myanmar’s sanctioned and military-controlled economy.

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