Myanmar and Big Oil
Chevron to stay in mire of Myanmar
ChevronTexaco plans to
hang on to the $700m (£371m, ¤546m) gas field in Myanmar acquired as part of
last week’s $18.4bn Unocal deal, despite protests by human rights groups opposed
to Western companies propping up the country’s repressive military regime.
A source close to the company told The Business that analysts were wrong to predict that Chevron would sell out as part of the $2bn worth of divestments planned from Unocal’s portfolio. The source said: “The plan as I understand it is to keep Myanmar. All the problems Unocal had with Myanmar have been solved.”
Deutsche Bank said in a research note last week: “Our expectations would be a swift sale of this $700m asset, perhaps to the Chinese.”
Unocal last month settled law suits launched against it in 1996 on behalf of 15 Myanmar villagers who claim the company turned a blind eye to abuses ranging from murder to torture as it constructed the Yadana gas pipeline.
Unocal said it would provide funding for health care, education and human rights projects in the pipeline region.
But John Jackson, director of Burma Campaign UK, said on Wednesday that the settlement would not exonerate the company: “ChevronTexaco have bought themselves a major headache. Unless they state that they will sell off the Burma operations as soon as possible, they will come under pressure from investors and human rights groups.”
Oil Lures West to Troubled Myanmar
August 23, 2007
Governments both East and West are often critical of Myanmar's human rights abuses, but the country's energy production is rising, and nations are quietly doing lucrative business with its junta leaders.
Although the U.S. leads the chorus of criticism and has slapped economic sanctions on the country, giant oil company Chevron Corp. and an upscale tourist operator are among American enterprises doing business in the Southeast Asian nation.
"Clearly what many governments and corporations say and what they practice are completely different things," says Ka Hsaw Wa of EarthRights International, a nonprofit group that documents human rights and environmental abuses.
While the ruling military junta has brutally repressed political dissent and keeps pro-democracy leader and Nobel Peace laureate Aung San Suu Kyi in detention, the country is the 16th largest natural gas exporter in the world and new discoveries suggest it may harbor one of the largest gas yields in Southeast Asia.
It was recently announced that undeveloped fields in Myanmar's Bay of Bengal could yield between 5.7 and 10 trillion cubic feet of tappable gas.
This past week, Myanmar reported it agreed to increase its natural gas exports to Thailand and could raise production from just one field by 25 percent.
"Over the long term this is going to increase," said Vichitr Kuladejkhuna, an energy analyst with Singapore-based DBS Vickers Securities. "There is significant potential for future development."
Thailand joined in tough criticism leveled at Myanmar _ also known as Burma _ at the annual meeting of Association of Southeast Asian Nations last month. But the sharp rhetoric has done little to curb the business deals that activists claim enrich and empower the country's generals.
Barely a week after the ASEAN conference, Thai Prime Minister Thaksin Shinawatra quietly visited the country to meet the regime's supreme leader, Gen. Than Shwe, requesting exclusive rights for Thailand's state-run PTT Exploration and Production oil company to develop Myanmar's gas reserves.
So far, Thailand is the only country that imports gas from Myanmar. In 2004, Myanmar earned $578 million from Thailand, or 23 percent of its official total export revenues. Timber, gems and other products are smuggled to neighboring countries and not accounted for officially.
The country's largely undeveloped gas reserves, however, have set off a fierce bidding war between China, India and Thailand that could bring in up to $17 billion for the regime, according to the Shwe Gas Movement, a grassroots coalition monitoring Myanmar's energy sector.
Malaysia's energy giant, Petroliam Berhard, signed a memorandum of intent this month to cooperate with Myanmar on oil and gas projects, the state-run newspaper New Light of Myanmar said.
Myanmar's Asian neighbors are not alone.
Despite sanctions by the European Union and the U.S., French and American oil companies Total SA and Chevron operate in Myanmar's lucrative Yadana gas fields through grandfather clauses and sanction loopholes.
The U.S. imposed economic sanctions on Myanmar in 1997, prohibiting most new investment in the country. In 2003, a more stringent law banned nearly all U.S. imports from Myanmar and further restricted financial dealings with the country.
"Chevron maintains its investment in Myanmar assets for compelling business reasons, fundamental of which is to better meet Southeast Asian demand for energy supplies," said Charlie Stewart, a Chevron spokesman. "Providing safe, reliable and secure supplies of natural gas will contribute to economic growth and stability in the region."
According to The Burma Campaign, a British advocacy group, more than 100 international companies do business with Myanmar. The firms include U.S.-based luxury tour operator Abercrombie & Kent Inc. and Britain-based timber company Morgan Timber, which sells Burmese teak.
But it's energy needs that are driving foreign investment.
Earlier this year, Thailand's MDX Group signed a $6 million contract to build a dam that will supply Thailand with electricity, one of five planned in Myanmar along the Salween River. Environmentalists say the development will ravage a delicate ecosystem, and activists say it threatens numerous marginalized ethnic groups.
Thailand claims its policy of "constructive engagement" is helping speed Myanmar toward democratic and economic reforms.
"Most of the cooperation programs we have with them go down to the grass roots. It involves local people, it involves local well-being. I think that would contribute not only to economic prosperity, but national reconciliation," said Thai Foreign Ministry spokesman Kitti Wasinondh.
But the Karen Rivers Watch group said a Myanmar military offensive has driven thousands of ethnic Karen from their homes, in part to open up the area for the building of the dams.
"Of all the business that is going into Burma ... the amount that goes toward the health and education of the people is pathetic, said Ka Hsaw Wa of EarthRights International. "Most of it just goes to the military junta and helps to strengthen their military power."
Santa Monica, CA -- The Foundation for Taxpayer and Consumer Rights and its OilWatchdog.org project today called on Chevron CEO David O'Reilly to "immediately sever Chevron's ties to Myanmar's brutal government and personally speak out against its violent suppression of peaceful protest."
In a letter to O'Reilly, OilWatchdog co-founder Judy Dugan said, "Your ad campaign, which a Chevron official said would cost 'in the high tens of millions' of dollars, portrays a company that deeply cares about the world and its future. Given your investment in Myanmar alone, that is a gauzy, gorgeous lie."
Chevron has a stake in natural gas fields in Myanmar through its 2005 purchase of Unocal. Unocal's 28% ownership of natural gas fields with the French oil company Total was, along with other existing investments, excluded from an embargo by the United States and European nations.
"It is surprising that the 2005 change of ownership did not trigger demands for disinvestment by the embargo partners," said Dugan. "Chevron should divest now as a moral imperative."
Here is the text of the letter (also viewable as a pdf here).
October 1, 2007
Dear Mr. O'Reilly,
"Chevron's lavish new image-advertising campaign makes your 65,000 employees look like the Peace Corps, sowing harmony and good feeling across the world. Yet as you well know, the smiling families, poets and sports coaches shown in your 2.5-minute debut television ad, "Human Energy," don't make corporate policy.
"Chevron's continued lucrative investment in the natural gas fields of Myanmar fuels a despotic regime that has focused its "human energy" on violently suppressing its citizens -- including the murder of Buddhist monks and the apparent point-blank killing of a Japanese news photographer.
"You could have divested the Myanmar fields when Chevron bought their operator, Unocal, in 2005. Chevron said last year that it was considering such action, but failed to take it.
"You and your corporation have been silent as Myanmar troops fired on democracy proponents, beat them and incarcerated them. You have been silent about the continued imprisonment and intimidation of Aung San Suu Kyi, whose overwhelming 1990 election to lead the nation was overturned by force.
"Your ad campaign, which a Chevron official said would cost 'in the high tens of millions' of dollars, portrays a company that deeply cares about the world and its future. Given your investment in Myanmar alone, that is a gauzy, gorgeous lie.
"We urge you to immediately sever Chevron's ties to Myanmar's brutal government and personally speak out against its violent suppression of peaceful protest."
For more background on the nonprofit, nonpartisan FTCR and OilWatchdog, see our websites at: www.ConsumerWatchdog.org and www.OilWatchdog.org.