Burma: Foreign companies finance brutal regime

Companies Should Condemn Crackdown

Related story: Increased attacks on media freedom in Burma raise human rights fears

(New York, October 2, 2007) – Chinese, Indian, Thai, and other
companies doing business in Burma should ensure their operations do not
contribute to or benefit from human rights abuses, Human Rights Watch
said today. The military government in Burma has launched a violent
crackdown on peaceful demonstrators that so far has led to many deaths,
enforced disappearances, and mass arbitrary arrests.

“Companies doing business in Burma argue their presence is constructive
and will benefit the Burmese people, but they have yet to condemn the
government’s abuses against its own citizens,” said Arvind Ganesan,
director of the Business and Human Rights Program at Human Rights
Watch. “Keeping quiet while monks and other peaceful protesters are
murdered and jailed is not evidence of constructive engagement.”

Human Rights Watch said that companies operating in Burma should use
their influence with the ruling State Peace and Development Council
(SPDC) to put an end to ongoing human rights abuses. In the current
environment, companies should urge the SPDC to halt the crackdown,
release all political prisoners, and open a real dialogue with opposition
and ethnic groups. If the situation does not improve, companies should
be prepared to reconsider their operations in the country.

Human Rights Watch said that there is no transparency in Burma about
how much the government receives in oil and gas payments, nor clarity
about how the funds are spent. The military receives the largest share of
the official budget and the SPDC allocates only a pittance to social
programs including health and education.

Foreign investment in Burma’s oil and natural gas sector is especially
significant. Sales of natural gas account for the single largest source of
revenue to the military government. Gas exports accounted for fully half
of the country’s exports in 2006. Burma’s gas business brought in
revenue of US$2.16 billion in 2006 from sales to its main buyer,
Thailand. These funds flow directly to the government and provide the
junta with a major source of financing that is completely independent of
its citizens.

Current investors in Burma’s oil and gas industry include companies
from Australia, the British Virgin Islands, China, France, India, Japan,
Malaysia, Singapore, South Korea, Thailand, Russia, and the United
States.

The SPDC has greatly expanded investment in Burma’s oil and natural
gas industry in recent years. Allowing foreign investment in oil and gas
is apparently aimed at bringing in more revenue to keep the government
afloat at a time when economic mismanagement and profligate spending
on the military and the building of a new capital at Nay Pyi Taw have
drained government finances. Natural gas exploration, development and
production projects are under way in approximately 30 different gas
fields. These projects are organized as joint ventures with the Burmese
government’s Myanmar Oil and Gas Enterprise (MOGE).

“Outside investment in Burma’s oil and gas industry has thrown a lifeline
to the country’s brutal rulers,” added Ganesan. “The businesses that help
finance the military shouldn’t argue that the government’s crackdown is
not their problem.”

Details of the Deals

At present the SPDC receives the bulk of its gas money from the onshore
“Yadana” and “Yetagun” gas fields. The Yadana consortium is led by
Total of France and includes UNOCAL (now Chevron) of the United
States and Thailand’s state-controlled PTT Exploration and Production
Co Ltd (PTTEP). The Yetagun consortium, led by Malaysia’s state-
owned Petronas, includes Japan’s Nippon Oil as well as PTTEP. PTTEP,
a subsidiary of the largely state-owned PTT Public Co Ltd (PTT) of
Thailand, buys the gas for export to Thailand.

Major offshore natural gas projects are under development. A consortium
of South Korean and Indian firms, in partnership with the Myanmar Oil
and Gas Enterprise, has made a large gas find off the coast of Arakan
State in western Burma. Known as the “Shwe” gas project, it is expected
to produce massive revenues once it is in production. Estimates of the
gas yield of the Shwe deposits range between US$37 to US$52 billion,
and could lead to a total gain in revenues to the junta or future Burmese
governments of US$12 to US$17 billion over 20 years.