TotalEnergies and Chevron withdraw from Myanmar as human rights conditions worsen

TotalEnergies and Chevron are withdrawing from their lucrative Myanmar gas project citing worsening human rights in the country after last year’s military coup.

The decision is a hammer blow to the regime which overturned a democratically elected government on February 1 last year.

Since then, the military has launched a fierce crackdown on activists, anti-junta protestors and journalists that has killed more than 1,400 people and seen an escalation of violent attacks on ethnic minority regions, according to Human Rights Watch

Revenues from TotalEnergies’ and Chevron’s Yadana offshore gas project is the single biggest contributor to state coffers. Their withdrawal is hugely significant and now threatens to destabilize the regime.

In 2019, TotalEnergies reported that it paid Myanmar €229.6m (US$257m) in taxes and the government’s share from its gas production.

In its statement, TotalEnergies acknowledged the deteriorating conditions people in Myanmar population are experiencing.

“(It) has led us to reassess the situation and no longer allows TotalEnergies to make a sufficiently positive contribution in the country. As a result, TotalEnergies has decided to initiate the contractual process of withdrawing from the Yadana field.”

Concerted pressure

The company also referenced concerted pressure from hundreds of campaign groups who have demanded that international gas producers stop sending revenues to the government through the state owned Myanmar Oil and Gas Exploration Company (MOGE).

The decision was welcomed by the campaign group, Justice for Myanmar, which said: “It is now essential that governments move ahead with targeted sanctions on oil and gas to deny the junta funds from the remaining oil and gas projects.”

“TotalEnergies must now ensure that they exit responsibly in a way that mitigates negative human rights impacts on people in Myanmar during the process of their withdrawal.”

Chevron and TotalEnergies’ withdrawal does not necessarily mean that gas supplies will stop at Yadana. The French company is giving six months notice to the remaining partners who include PTTEP, a subsidiary of the Thai national energy company and MOGE who will have to find another extractive industry company to step in or operate the project themselves.

Sanctions

Last night TotalEnergies confirmed it had been holding talks with US and French authorities focused on the introduction of sanctions to prevent gas revenue reaching MOGE.

The energy giant chief executive, Patrick Pouyanné stated: “We have formally requested the French Ministry of Foreign Affairs that these sanctions can be set up with a view to putting in place a legal framework to respond to calls requesting us to stop the financial flows resulting from the production of the Yadana field to MOGE, the national company of Myanmar.

TotalEnergies has now come to the view that that money from its Yadana project should be held in what is known as an “arms length” escrow account, out of the reach of Myanmar’s generals who have controlled the country since last year’s coup. This position is what campaigners had been calling for in the wake of the coup.

Hard currency

In total, gas revenues provide the coup regime with an estimated US$1bn per year in vital hard currency which it needs to pay for imports such as weapons and fuel.

“All the spending needs in terms of foreign exchange are met from mining and oil and gas revenues,” a former adviser to Myanmar’s finance ministry told Finance Uncovered and Myanmar Now earlier this month.

Since July 2019, Finance Uncovered has been working with Justice for Myanmar on investigations into international companies that have extensive dealings with military-owned enterprises. These are largely companies in the extractive industry, telecoms and real estate.

Our stories have run with Le Monde, Suddeutsche Zeitung, the New York Times and a host of international media.

And following the coup, Finance Uncovered has been producing a string of stories with Myanmar Now, an independent news outlet.

Economists say that blocking the flow of gas revenues, as well as stopping the generals from accessing Myanmar’s several billion dollars in foreign reserves, would have a significant financial effect on the junta.

It is unclear, however, whether this would force the generals to the negotiating table or cause them to become even more uncompromising.

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