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Myanmar Coup Puts French, US Oil Majors Back in Spotlight

Anti-coup protesters face a row of riot police outside the Hledan Centre in Yangon, Myanmar Friday, Feb. 19, 2021. The daily protests campaigning for civil disobedience in Myanmar are increasingly focusing on businesses and government institutions…
Anti-coup protesters face a row of riot police outside the Hledan Centre in Yangon, Myanmar Friday, Feb. 19, 2021. The daily protests campaigning for civil disobedience in Myanmar are increasingly focusing on businesses and government institutions…

Since Myanmar’s military toppled the country’s democratically elected government Feb. 1, a chorus of activists at home and abroad have called on foreign firms to cut ties with the generals’ sprawling business empire, and a few firms have taken heed.

One pressure group is going a step further and taking aim at Myanmar’s murky state-owned enterprises, now that the state is firmly back in the military’s clutch. Justice for Myanmar is urging foreign firms that have invested in the country’s lucrative gas fields to pull out of their partnerships with the state-run Myanmar Oil and Gas Enterprise, including international oil majors Chevron and Total.

“If it’s business as usual, foreign investors in Myanmar’s gas will be funding an illegitimate and brutal military regime as they did before 2011, when the country was under full military rule,” it said in a statement last week.

The military started easing its vise grip on the state in 2011 after nearly 50 years in charge, first with a quasi-civilian government, and since 2015 by sharing some power with the National League for Democracy, the political party of detained former leader Aung San Suu Kyi. The generals took back full control Feb. 1, after claiming, without evidence, the NLD’s landslide win in last year’s general election was riddled with fraud.

Investor relations

Since the coup the military has arrested hundreds of activists and politicians, lifted legal checks on police powers and deployed soldiers against some of the hundreds of thousands of protesters across the country demanding that the junta retreat.

“The military coup has left international oil and gas companies with no option but to end their relationship with MOGE and the military government that controls it,” Justice for Myanmar said.

France’s Total and U.S.-based Chevron both own substantial shares in one of Myanmar’s four largest offshore gas fields, Yadana. Total, the operator, owns 31% of the project and Chevron holds 28%. MOGE owns a stake as well, in addition to its role regulating the entire industry.

South Korea’s POSCO, Malaysia’s Petronas and Thailand’s PTTEP also own significant shares in the fields in partnerships with MOGE.

State-owned enterprises are major earners for Myanmar, bringing in roughly half the government’s annual revenue. MOGE is easily the largest, earning about $1.32 billion at today’s exchange rate in 2016-17 fiscal year according to the Natural Resource Governance Institute, a U.S. research group.

Some of that money goes to the Ministry of Economy and Finance, but more than half is funneled into opaque, off-budget “other accounts” with little trace of where it goes from there, NRGI says. A 2019 government directive to abolish those accounts should see all revenues start flowing through the regular budget process, though the fate of the billions of dollars that have already gone their way remains shrouded in mystery, according to the Extractive Industries Transparency Initiative, a global campaign to account for resource revenues.

Asked to comment on Justice for Myanmar’s claim that MOGE’s foreign partners will be helping prop up the new junta and its call that they pull out, POSCO insisted the state-owned enterprise had no military ties.

“MOGE has no relationship with Myanmar military and revenue is transferred directly to Ministry of Economy and Finance of Myanmar,” a spokesperson told VOA.

Chevron, like POSCO, gave no hint of pulling out.

“Chevron is a long-term partner in Myanmar and we conduct our business in a responsible manner, respecting the law and universal human rights to benefit the communities where we work. We support the people of Myanmar on their journey to a modern, peaceful, and prosperous nation. We are monitoring the situation closely and hope for a peaceful resolution through dialogue,” a spokesperson said.

The other firms did not reply to VOA’s requests for comment.

In the minority

Some of the energy firms have been here before.

In the final years of the military’s last run-in charge, activists were calling on Chevron and Total to either leave Myanmar or convince the junta to stop its deadly crackdown on pro-democracy protesters. As now, rights groups accused them of helping the military hold on to power.

At the time, Chevron said its presence in Myanmar and other pariah countries was doing them more good than harm by employing locals and helping pay for health and education programs.

For all the mystery accounts, the gas fields still earn handsomely for the state budget, helping cover not only a share of the military’s cost but pay for a host of social services. Shutting any of those fields down would dent that budget.

But minority shareholders like Chevron and Total are unlikely to make that happen by pulling out, said one economist who has advised the NLD government and studied the country’s state enterprises. Even if enough shareholders do agree to shut down production, he said the government could nationalize the fields and sell them off to other buyers with no qualms doing business with dictators.

“The two customers for offshore gas are China and Thailand. Both in China and Thailand those are state-owned enterprises that purchase gas; they will continue to purchase gas. Foreign companies currently are minority shareholders … and there are other companies that would be happy to buy those shares. So what impact would [pulling out] have on fiscal revenue in Myanmar? None,” said the economist, who spoke on condition of anonymity for security reasons.

Pipelines connected to the gas fields have also been marred by long-running accusations of forced labor, land grabs and other abuses by the military. Fortify Rights, a rights group that trains much of its focus on Myanmar, says there’s a risk those abuses could pick up if Western companies pull out and the wrong ones take their place.

“There’s an argument to be made that if the junta were to nationalize these projects the situation for residents in the areas of these pipelines could worsen, and the small … amount of transparency that does exist around the natural gas revenues related to these projects would certainly stop. And I don’t think that would necessarily be a good thing,” said Matthew Smith, the group’s chief executive officer.

'No easy answers'

Activists and rights groups hoping to get Myanmar’s derailed democracy back on track are mostly focusing for now on bringing sanctions down on the generals and their personal business interests, or getting foreign firms doing business with them directly to break away.

They worry that anything but the sharpest cuts to the military’s purse strings will also hurt the everyday people they’re meant to help by reining the generals in.

“Justice for Myanmar is rightly concerned with massive flows of unaccounted revenues going to the military junta; I think everybody needs to be concerned about that. The nuts and bolts of how to deal with this situation given all the various actors and given all the complications to it is something that needs to be worked out, but I think the core of the concern is absolutely spot on,” said Smith.

“There’s no easy answers to these things,” he said. “But it is important that excessive revenues do not flow to this military junta, particularly now.”