Mon, Jun 17 2024 17 June, 2024

Chevron called out over controversial Myanmar exit

Developments in war-torn Myanmar continue to impact not only its people, but its relationship with western energy companies.

Commercial sea port in the Andaman Sea at the border of Thailand and Myanmar (Photo: Adobe Stock/wirojsid)

On April 9th, after more than three decades of operations in the country’s gas sector, U.S. supermajor Chevron pulled out of Myanmar over government human rights abuses.

Chevron was the last western energy company operating in Myanmar. France’s TotalEnergies announced in early 2022 that it would cease its operations and withdraw from the country also due to human rights abuses.

Yet, in a move that surprised some observers, Chevron didn’t sell its 41.1 percent stake in the country’s Yadana gas field, but redistributed its shares to remaining investors, Thailand’s PTT Exploration and Production Corporation (PTTEP) and state-owned Myanmar Oil and Gas Enterprise (MOGE).

MOGE is the country’s oil and gas regulator which also holds stakes in Myanmar’s large offshore natural gas fields — Yadana, Yetagun, Zawtika and Shwe.

Chevron’s withdrawal came some two years after it condemned violence and human rights abuses following the February 2021 coup that saw a military-led junta replace a democratically elected government in Myanmar. The unpopular coup led to a crackdown on dissidents and a subsequent nationwide resistance movement backed by a number of ethnic minority armies.

The U.S., Canada, EU and UK imposed targeted economic sanctions on the Myanmar military, its leaders and entities. The U.S., however, fell short of cutting Myanmar off from the U.S. financial system, as the EU had done with the euro in early 2022. To date, there are no UN sanctions imposed against the country.

The Association of Southeast Asian Nations (ASEAN) and other international groups have accused Myanmar’s military of committing atrocities against civilians in an effort to crush the growing resistance.

By May 3rd, some 26,620 people had been arrested by the junta with more than 20,000 remaining in detention, including political opposition leaders and activists, human rights defenders, journalists, students, lawyers and medical workers, according to the Assistance Association for Political Prisoners (AAPP).

Added to the fray, unfair trials have continued, including nearly 2,000 people being sentenced to prison terms, hard labour and death. Trials took place in makeshift courts in prisons and military tribunals, with defendants typically having limited or no access to legal representation, according to the AAPP report.

The junta has rejected international calls to stop hostilities and human rights abuses, but it defends it actions by claiming that it’s fighting domestic terrorism.

Myanmar is one of the poorest countries in Southeast Asia, suffering from decades of stagnation, misgovernment and isolation. After its transition to a civilian government in 2011, the country launched political and economic reforms aimed at attracting FDI and reintegrating the country into the global economy. However, after the junta took over in 2021, progress was halted and is now being reversed.

Chevron called out

Chevron’s exit from Myanmar, for its part, has created as much controversy as did its presence in the country. Many claim it funnelled revenue from the Yadana gas project to state-run MOGE, which in turn helped fund the military-led regime.

An argument can be made that Chevron had no other option since MOGE’s accounts were unlawfully seized by the junta during its 2021 coup d’état. MOGE provides the self-installed government with its biggest single source of revenue by selling oil and gas abroad.

On the other hand, numerous human rights organisations and NGOs hold a different view. “UN experts have determined that the junta is not the country’s legitimate government, meaning that it is not allowed to stand in for the government in commercial contracts,”  a report by Washington, D.C.-based non-profit Earth Rights said on April 9th.

“Nevertheless, the Yadana project shareholders, including Chevron, decided to treat the military junta as their counterpart and have facilitated payments to the junta throughout the coup,” it said. Chevron also allegedly acquiesced to MOGE setting up a special bank account to help skirt partial U.S. sanctions levied against the country.

“Chevron appears to have exited Myanmar in an irresponsible manner, ensuring that the junta will continue misappropriating tens of millions of dollars in gas revenues each month,” the report added.

It also pointed out that “civil society” had been asking Chevron “to stop allowing the junta to misappropriate gas revenues before withdrawing from the project in line with international human rights standards for responsible disengagement.”

This, they claim, did not happen.

When Gas Outlook reached out to Chevron for a response, company spokesman Cameron Van Ast only said that Chevron had exited Myanmar in a “responsible, orderly and safe manner, in accordance with international law and trade sanctions.”

“During this time, we have helped to improve the quality of life for the people in Myanmar through health, economic development and renewable energy programmes,” he added.

Thai gas needs centre-stage

Criticism is also being levelled against PTTEP for increasing its stake in the Yadana gas field after Chevron’s departure. Detractors question how a state-owned Thai energy company can justify not only staying in Myanmar, but how it can accept an increased stake in one of its gas fields.

That answer seems to be based more in pragmatism than concern over the welfare of the people of Myanmar. Notably, Thailand is a major buyer of gas from Myanmar to help make up for its own depleting gas reserves in the Gulf of Thailand. Domestic production and Thai-Malaysia joint development in the Gulf accounted for about a 50 percent share of Thailand’s energy supply in 2021.

“Myanmar is an important source of gas imports for Thailand, accounting for 11 percent of the country’s gas demand in 2024. With a number of international operators having exited Myanmar since 2021, PTTEP will be the largest foreign investor in the country’s E&P sector,” Andrew Harwood, Research Director of Corporate and Upstream at consultancy Wood Mackenzie, told Gas Outlook.

LNG is also set to make up a larger part of Thailand’s gas supply going forward, but the country is still heavily reliant on gas imports from Myanmar for its power sector.

PTTEP chief executive Montri Rawanchaikul told a year-end 2023 analysts meeting that the “Zawtika and Yadana projects in Myanmar… can never be stopped despite the pressure being exerted on them as they nurture 11 power plants on the west side of Thailand, representing about 17 percent of domestic electricity production.”

Thailand shares a 2,414 km (1,500 mile) border with Myanmar.