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In our end of year review (here) we covered Myanmar's misery following the military coup of February 2021. Since General Min Aung Hlaing seized power as Chairman of the State Administration Council and then named himself prime minister, the situation in the south-east Asian nation has gone from bad to worse: demonstrations suppressed with lethal force, thousands arrested and tortured, and elected ministers and mayors thrown into prison.
In recent weeks the army has launched an offensive against rebels in the eastern states of Karen and Kayah, forcing more than 100,000 people to flee their homes. This number includes around ten thousand refugees who crossed the border into Thailand.
An estimated 1,400 civilians have died in the violence in Myanmar since the coup, which Human Rights Watch says constitutes a crime against humanity.
The Financial Times (here) reported further air strikes last week. The strikes killed civilians, including a seven-year-old girl in Hpruso, the same township where more than thirty people were killed and their bodies burnt by government troops on Christmas Eve.
With the world distracted by the crisis in Ukraine, the Myanmar military has been stepping up its violence.
Now, TotalEnergies and Chevron have said that enough is enough. Good on them.
TotalEnergies' CEO Patrick Pouyanné wrote to Human Rights Watch last week (here), saying that his company supports targeted sanctions by the European Union and the USA against the military government of Myanmar, and also against Myanmar's state owned energy company MOGE.
TotalEnergies said that whilst it would be illegal for it to stop paying taxes to the government, "we have decided to make donations to human rights organisations in Myanmar in an amount equivalent to the taxes actually paid by our subsidiary to the Myanmar State Treasury."
The company has been vocal in its condemnation of the junta. Mr Pouyanné writes how "TotalEnergies has repeatedly, publicly and very firmly condemned both the violence and the human rights abuses committed in Myanmar."
Coming from a company the size and status of TotalEnergies, this is impressive and commendable.
TotalEnergies is the operator of the offshore Yadana field, and is a partner in the Moattama Gas Transportation Company, which transports gas from the field for export to Thailand. State-owned MOGE is also a partner in the pipeline and the field, along with Chevron. Last May, the pipeline company suspended all cash dividends to shareholders as TotalEnergies and Chevron faced criticism for paying out cash from their operations to the government.
TotalEnergies' production from the Yadana gas field currently supplies half of Myanmar's domestic gas consumption and around 12 per cent of gas consumed by neighbouring Thailand. Natural gas from Yadana and other fields comprised 40 per cent of Myanmar's exports and 20 per cent of government revenues in fiscal year 2018-19, the most recent for which data exists.
Gas sales generate over US$1 billion in foreign revenue for the military government of Myanmar every year, and these revenues are its single largest source of foreign currency income.
Cutting off the gas supply to western Thailand and to Myanmar's largest city, Yangon, by suspending production from Yadana would not be responsible or ethical, TotalEnergies and Chevron decided. We agree.
However, the pair have now committed to exiting their stakes in the field and the pipeline company. They will walk away from the assets, leaving Thailand's state energy company PTTEP and MOGE as the sole remaining shareholders.
TotalEnergies and Chevron have served notice under the operating agreements that within six months they will relinquish their shares for no fee, and either MOGE or PTTEP should take over as operators.
Human Rights Watch praised TotalEnergies' decision in a press release here.
"With TotalEnergies' announcement, governments now have no reason to oppose or avoid tough measures that show support to the millions of people in Myanmar who want justice and accountability," commented John Sifton, Asia advocacy director at Human Rights Watch. "Junta leaders are only going to turn away from their brutality and oppression if the economic costs of their abuses are too great for them to bear.
"TotalEnergies' support for sanctions should be an example to other energy companies operating in Myanmar, as well as to the Thai government, the single biggest buyer of Myanmar gas. Board members and institutional investors in other companies should push them to follow TotalEnergies' decision."
Human Right Watch has called on the EU and the US to impose sanctions quickly, and to block payments to the junta in euros and dollars. At the moment, banks in Thailand, Singapore, South Korea, and China continue to process payments for gas sales for MOGE and the government. However, foreign banks must comply with EU and US law if sanctions blocked EU and US banks from processing payments to the junta in euros or US dollars.
Therefore, even if Thailand, Singapore, South Korea, and China do not pass sanctions themselves (and such a move would be highly unlikely from any of the four), banking sanctions in euros and dollars would make life difficult for the junta.
Whether the pain will be sufficient to force the generals to abdicate and restore power to democratically elected officials remains to be seen.
But as democracies, Singapore and South Korea should be joining TotalEnergies and Chevron in taking a stand against a brutal regime that has violated international norms and killed hundreds of its own people.
What does it say about the integrity of prime minister Lee Hsien Loong of Singapore if a French oil and gas company takes a stronger stand on human rights abuses than he does?
I will admit that the decision by the two western oil companies is not driven by pure altruism. During the last period of military rule in Myanmar in the 1990s and early 2000s, which was equally violent and brutal, western oil companies with operations in Myanmar were hammered by activists and human rights lawyers. Chevron was hauled through the courts by victims of atrocities in Myanmar who lost their homes and claimed they were abused in the construction of the Moattama pipeline.
Britain's Premier Oil ended up selling its stake in the offshore Yetagun field in the Andaman Sea to Petronas of Malaysia in 2003 after various shareholder protests and activist boycotts.
The latest coup has proved to be as contentious as the last, and pressure has been building up on investors in Myanmar's oil and gas sector ever since the military government took power. We have seen how Transocean is keen to hide its contracts in country by declining to name where rigs that are deployed in Myanmar are working on its fleet status report.
Another big investor, Norway's telecoms operator Telenor, is also trying to withdraw from Myanmar, facing pressure from sanctions and activists. The company announced it was selling its telecom operations there to M1, an investment firm owned by the family of Lebanese Prime Minister Najib Mikati, Reuters has reported here. Unfortunately, the junta then demanded that a local company also take a stake in the venture, which has stalled the process.
Myanmar's government is toxic and few responsible corporates want to be associated with it.
But there is silence on one key issue. TotalEnergies and its partner Woodside have a major undeveloped gas field in Myanmar's offshore Block A-6, as we reported here.
Whilst work has been suspended on the block, TotalEnergies has given no indication that it is quitting the block. And why would it? The initial development plan was based on up to 10 deepwater wells tied back to a subsea production system and a shallow-water processing platform, with an initial production rate of 60 million cubic feet (1.7 million cubic metres) per day of gas.
If the regime of general Min Aung Hlaing eventually falls, then Total and Woodside can restart their development plans and bring the deepwater block to production quickly. Than Shwe, the former general who was the head of state of Myanmar from 1992 to 2011 and another self-appointed prime minister, eventually had to step down after two decades in power, and then the National League for Democracy won elections by a landslide.
This is a long game. Like the people of Myanmar, TotalEnergies and Woodside are going to need to be patient.
Meanwhile, Petronas has dodged the ethical and moral challenges that TotalEnergies and Chevron have had to face in Myanmar, but not by choice.
In April, the Malaysian state-owned energy company suspended production at Yetagun gas field and declared force majeure, not because of any inherent opposition to the military government, but because the field's output declined significantly.
"Prior to the cessation of production, Yetagun field was producing well below the technical turndown rate of its facilities," Petronas said in its announcement (here). "There has been a drastic decline in production level due to subsurface challenges in the field since January 2021 and it has further deteriorated recently. Continuing to produce at a low rate would impose significant risks to the integrity of our assets and the safety of our people. As a responsible operator, we had to temporarily cease production and declare force majeure."
Ouch.
Also, it's not clear when production from the field will restart.
PTTEP and Posco of Korea are now the two remaining offshore operators with production in Myanmar. Can they stand the heat as the regime continues to kill, shoot, torture and imprison? We'll keep you posted.
Background reading
Reminder: you can read TotalEnergies' letter to Human Rights Watch here.
Full history of the Yadana gas field is here.
Details of current American sanctions on Myanmar are here.