Pressure on oil firms mounts over Myanmar investments

Chevron, Total and Petronas are among the firms that partner state-owned Moge, which is now controlled by the military, write Reena Nathan and Kevin Foster

Major oil and gas companies operating in Myanmar (Burma) are coming under increasing pressure to ensure funds from their projects do not flow to the country's military, as violence worsens following last month's coup.

Chevron is the latest to find itself in the spotlight. Watchdog group Global Witness and 148 other organisations in Myanmar and globally have asked the US oil giant to prevent funds from reaching the military, which seized power and arrested the country's elected leaders on 1 February. "Chevron and other oil and gas companies are potentially helping to fund the Myanmar military through their joint-venture partnerships with the country's state-owned oil and gas company," Global Witness' Myanmar campaign leader Paul Donowitz says.

State-owned Myanmar Oil and Gas (Moge), which is now controlled by the military, owns minority stakes in Myanmar's four big offshore natural gas fields — Yetagun, Yadana, Zawtika and Shwe. These are operated by Malaysia's state-owned Petronas, Total, Thailand's state-owned PTTEP and South Korea's Posco, respectively. Chevron owns 28.3pc of Yadana.

Direct payments to Moge are for taxes under applicable laws and were disclosed under the Extractive Industries Transparency Initiative before Myanmar was suspended from the group last month, Chevron says. "Moge's entitlements from Yadana are limited to distributions of natural gas. Chevron does not participate in Moge's onward distribution of the gas it receives and does not make distributions directly to the Myanmar military," a company spokesman says.

Myanmar's parallel civilian government has also called on Petronas, Posco, PTTEP and Total to suspend revenue payments to the military. "The coup has left international oil and gas companies with operations in Myanmar with no option other than to suspend their relationships with the military junta — this includes Moge, now under the direct control of the unlawful and illegitimate state administrative council," it said in letters addressed to the firms this month. Total, which operates Yadana with a 31.2pc stake, is closely monitoring the situation in Myanmar.Its subsidiary, Total E&P Myanmar, "has been working with other international companies operating in Myanmar with the aim to promote responsible investment and locally support business practices that contribute economically and socially to the development of the country", it said last month.

China backlash

Moge also owns 49pc of the Burma Road oil and gas pipeline network, which supplies gas from the offshore Shwe field and crude from the Middle East to China(see map). Protestors against last month's coup have accused China of backing the military government, leading to several Chinese-owned businesses being vandalised and threats against the pipelines. The Burma Road pipelines — in which Chinese state-owned CNPC owns a 51pc stake — pumped 4.2bn m³ (11.5mn m³/d) of gas from the port of Kyaukpyu on Myanmar's Indian Ocean coast to China last year, or around 9pc of China's total pipeline gas imports. The pipelines also take around 200,000 b/d of Mideast Gulf crude to southwest China.

Military forces are imposing an increasingly bloody crackdown on protests against the coup, leaving over 300 dead as of 25 March, according to human rights group the Assistance Association for Political Prisoners (Burma). The protests and a widespread civil disobedience campaign have disrupted the economy and led to a fall of up to 40pc in Myanmar's oil product imports. Fuel prices have risen by 15pc across the country since the military takeover, the UN's World Food Programme says. Myanmar's economy could shrink by 10pc this year, the worst performance in east Asia, because of political instability, the World Bank says.

China-Myanmar crude infrastructure