The military junta toppled Aung San Suu Kyi's government in 2021 (AFP/STR)
Fri, January 21, 2022
The exit of energy titans TotalEnergies and Chevron from Myanmar's billion dollar gas industry has been hailed by rights groups, but analysts say it will not significantly weaken the generals and may even enrich the military in the short term.
Both firms had faced pressure to cut financial links with the junta that toppled Aung San Suu Kyi's government last year and has since killed more than 1,400 people in a crackdown on dissent, according to a monitoring group.
The French firm and US oil major Chevron will withdraw from the Yadana gas field in the Andaman Sea, which provides electricity to the local Burmese and Thai population.
Myanmar's gas industry -- which Human Rights Watch says generates $1 billion a year -- has so far evaded swingeing sanctions imposed by the United States and EU on lucrative military-owned timber and jade enterprises.
Friday's "announcement is certainly significant," Manny Maung, Myanmar researcher at Human Rights Watch told AFP.
"But there is a lot more pressure needed to defeat this junta for good.
"Governments no longer have an excuse to delay imposing targeted sanctions on oil and gas entities... to prevent any other unscrupulous entities from entering the market."
TotalEnergies and Chevron's departure will deprive the junta of hundreds of millions of dollars a year in foreign revenue as the economy it presides over tanks from months of unrest and a mass walkout.
TotalEnergies alone paid around $176 million to Myanmar authorities in 2020 in the form of taxes and "production rights", according to the company's own financial statements.
Naw Susanna Hla Hla Soe, a minister in a shadow government dominated by lawmakers from Suu Kyi's party which is working to topple the military said the news sent a "very strong message" to the junta.
"Other companies must follow Total's example to put even more pressure on the generals," she added.
- 'No confidence' -
If the French and American titans were willing -- belatedly -- to bow to rights groups and activist pressure, there are others with fewer qualms about making money in junta-run Myanmar.
"It will be harder to force the hand of Asian investors because their human rights commitments and the stakeholder pressures on them are lower," Dr Htwe Htwe Thein at Curtin University in Australia, told AFP.
Others say it is possible the junta will profit short-term from any change in ownership.
The withdrawal of TotalEnergies is "a big vote of no confidence in the regime", International Crisis Group's Myanmar senior advisor Richard Horsey told AFP.
But the junta would likely be able to "sell the departing operators' stakes", he added -- which would inject much needed hard currency into the state coffers.
The military would also be able to "attract and negotiate favourable terms and signature payments from operators in jurisdictions beyond the scope of Western sanctions".
TotalEnergies will not exit immediately -- it said in a statement it will continue to operate the site for the next six months at the latest until its contractual period ends.
"As things stand... Means likely cash windfall for the regime unless ways are found to prevent that, which must be priority," Horsey said on Twitter.
And the generals' economic portfolio stretches far beyond gas, and includes interests in mines, banks, agriculture and tourism, providing the military with a colossal -- and closely guarded -- fortune.
The jade industry alone -- dominated by military-owned business -- provides the military with billions of dollars a year in off-the-books revenue, analysts say.
There also remains the question of how easy TotalEnergies and Chevron will find it to exit junta-ruled Myanmar, said Htwe Htwe Thein, citing Norway's Telenor, which announced it was withdrawing in July, but whose exit has been held up by the military.
"Total may suffer the same fate," she said.
bur-rma/je
Oil majors TotalEnergies and Chevron withdraw from Myanmar
By Benjamin Mallet and Florence Tan
PARIS (Reuters) -Oil majors TotalEnergies and Chevron Corp, partners in a major gas project in Myanmar, said on Friday they were withdrawing from the country, citing the worsening humanitarian situation following last year's coup.
Royal Dutch Shell Plc, in its first public acknowledgment of the move, also said on Friday that it no longer held exploration licences in Myanmar as of last year.
Myanmar has been in turmoil since the army overthrew the elected government in February 2021 and detained its leader Aung San Suu Kyi. The junta has used brutal force https://www.reuters.com/world/asia-pacific/death-toll-since-myanmar-coup-tops-1000-says-activist-group-2021-08-18 to put down protests.
TotalEnergies and Chevron, along with other firms, were part of a joint venture operating the Yadana gas project off Myanmar's southwestern coast, and the MGTC transportation system carrying gas from the field to the Myanmar/Thailand border.
They have now become the latest Western companies to decide to pull out in the wake of the coup.
"The situation, in terms of human rights and more generally the rule of law, which have kept worsening in Myanmar since the coup of February 2021, has led us to reassess the situation," TotalEnergies said in a statement.
"As a result, (it) has decided to initiate the contractual process of withdrawing from the Yadana field and from MGTC in Myanmar, both as operator and as shareholder, without any financial compensation for TotalEnergies."
A spokesperson later added that despite civil resistance movements, "the junta is settled in power and our analysis is that, unfortunately, it is there to stay."
Since the coup, Myanmar security forces have killed more than 1,400 people and arrested thousands, local non-governmental organisation Assistance Association for Political Prisoners said. The junta disputes the figures.
TotalEnergies did not quantify the financial impact of the withdrawal, but said Myanmar represented a minor part of its revenue.
"Financial considerations have never been crucial in this matter. Our operations in Myanmar amounted to $105 million in 2021, equivalent to less than 1% of the company's income," said the TotalEnergies spokesperson.
Myanmar amounted to 0.6% of TotalEnergies' total oil and gas production in that period.
A Chevron spokesperson said: "In light of circumstances in Myanmar, we have reviewed our interest in the Yadana natural gas project to enable a planned and orderly transition that will lead to an exit from the country."
"As a non-operator with a minority interest in the project, our immediate priority remains the safety and well-being of employees, safe operations and the supply of much-needed energy for the people of Myanmar and Thailand."
Total was the biggest shareholder in the project with a 31.24% stake, while Chevron holds 28%. PTTEP, a unit of Thai national energy company PTT, and Myanmar state-owned oil and gas group Myanmar Oil and Gas Enterprise (MOGE) hold the remainder.
Shell, an equity holder in offshore Block A7 with partners Woodside Energy and Myanmar Petroleum Exploration and Production Co, said it had relinquished its exploration licences in Myanmar last year.
"Exploration blocks have been relinquished, therefore there is no production, revenue nor related payment to government," a spokesperson told Reuters.
SANCTIONS?
Rights groups welcomed TotalEnergies' move and said more companies - and sanctions https://www.reuters.com/business/media-telecom/un-rights-chief-urges-asean-move-myanmar-dialogue-2021-07-07 on Myanmar's oil and gas - should follow.
"TotalEnergies has finally taken heed of the calls of Myanmar people, local and international civil society to stop the flow of funds to the terrorist junta," said Yadanar Maung, a spokesperson for activist group Justice for Myanmar.
"It is now essential that international governments move ahead with targeted sanctions on oil and gas to deny the junta funds from the remaining oil and gas projects."
TotalEnergies said that before deciding to pull out of Myanmar, it had been in a dialogue with French and U.S. authorities for months to consider putting in place targeted sanctions that would confine financial flows to escrow accounts without shutting down gas production.
"TotalEnergies has not identified any means for doing so," it said.
Total and Chevron last year suspended some payments from the project that would have reached the junta, earning some praise from pro-democracy activists.
The group said it had notified its partners in Myanmar of its withdrawal, which will become effective at the latest at the expiry of a six-month contractual period.
Located in the Gulf of Martaban, the Yadana field produces around 6 billion cubic metres per year of gas, about 30% of which is supplied to MOGE for domestic use and 70% exported to Thailand.
"This gas helps to provide about half of the electricity in the Burmese capital Yangoon and supplies the western part of Thailand," TotalEnergies said.
The spokesperson for TotalEnergies said PTT would be a 'natural' choice for its Myanmar assets, adding it was already in contact with the company over this. PTT unit PTTEP said it was "carefully considering" what to do next.
The military-run Myanmar government did not immediately respond to a request for comment. MOGE officials declined to comment.
TotalEnergies told Reuters the withdrawal process did not require the approval of Myanmar authorities.
(Reporting by Sudip Kar-Gupta, Benjamin Mallet in Paris, Florence Tan in Singapore and Chayut Setboonsarng in BangkokWriting by Ingrid Melander and Gwladys Fouche; Editing by David Goodman, Jan Harvey and Matthew Lewis)
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