The Multinational Monitor

JUNE 1993 - VOLUME 14 - NUMBER 6

T H E   F R O N T

Texaco Must Go

After three years of failed attempts at recovering Burma's oil and gas, most major oil companies have now withdrawn completely from the country. Amoco (United States), Petro-Canada (Canada), Royal-Dutch Shell (Netherlands), Idemitsu (Japan) and Broken Hill Proprietary (Australia) have all given up an expensive battle against difficult terrain, violent monsoons, poor infrastructure and the difficulties, both physical and political, of operating within a civil war. Although the companies cite only technical and financial reasons for their decision to end operations within Burma, it seems likely that increasing international pressure surrounding corporate cooperation with the human rights abusing military regime has had its impact [see "Oil in Burma: Fueling Oppression," Multinational Monitor, October 1992].

However, by the end of 1992, as at least six of the major companies had announced their plans for withdrawal, Texaco had quietly announced a major deal with the Burmese regime, the State Law and Order Restoration Council (SLORC), for exploration and production of natural gas of fthe coast of southeastern Burma in the Gulf of Martaban. Initial reports suggest that this is possibly Burma's largest natural gas find, with the potential to double national output.

As the Bangkok Post reported in February, Texaco's announcement has rekindled the interest of foreign firms in Burma, and "raised hopes" for the Burmese regime. Texaco's gas production will not only pump profits into the hands of the SLORC, but very likely will also drive the development of a gas pipeline across the Burmese forest into Thailand.

Texaco Moves In

Ten multinational oil companies entered into agreements with the Burmese military regime in 1989 to explore for oil and gas, with at least four more joining by 1992. Industry analysts estimate the companies have spent approximately $500 million over the last three years, including major "signing bonuses" that put $50 to $100 million directly into the hands of Burma's military leaders. None of these firms have been successful in producing commercial quantities of oil or gas onshore.

Texaco, however, was not one of the original 10 companies to win a concession for oil exploration in Burma, but instead joined into a concession in 1991 operated by Croft Exploration Myanmar Limited, a British oil exploration firm. The project with Croft was unsuccessful.

In September 1991, without the usual press conference or industry journal coverage, Texaco entered into an exploration and development agreement with two other multinationals to develop the Yetagun gas field, 120 kilometers off the coast of Tavoy, 450 kilometers southwest of Rangoon. Texaco holds a 50 percent stake in the Yetagun field, with Premier Consolidated Oilfields (England) holding a 30 percent stake, and Nippon Oil (Japan) holding the remaining 20 percent. As with all oil and gas production ventures in Burma, the military-controlled Myanmar Oil and Gas Enterprise (MOGE) is a partner in the operation, and has an option to hold a 15 percent operating stake.

In December 1992, it was reported that at first testing the Yetagun field produced 75 million cubic feet per day (MMcfd) of gas. This compares with Burma's current national natural gas production level of 50 to 85 MMcfd. The other major gas find discovered in the last 10 years is the Martaban field, 240 kilometers southeast of Rangoon, which is now being developed by Total Cie Francaise des Petroles (Total CFP) of France and Unocal (United States). The Martaban field had a reported initial production rate of 39 MMcfd and is thus of tremendous importance to the Burmese regime. Total holds a 52 percent share in the Martaban field. Unocal (United States), along with the exploration branch of the Petroleum Authority of Thailand (PTTEP), are said to hold the remaining 48 percent in this venture. Edith Mirante of Project Maje, a Burmese human rights organization, asserts however, that "Unocal has recently brought a controlling interest in the Martaban field from Total." This goes against the claims Unocal has recently made to human rights and environmental organizations that it was pulling out of Burma completely. The field is estimated to hold two to four trillion cubic feet of natural gas.

Total has been fairly open about its plans in Burma, and has discussed in the Thai press its development goals and plans for a pipeline to Thailand. Total has estimated the cost of investment for the exploration and production of the Martaban field at around $800 million to $1 billion. The Bangkok Post reports that "four drilling platforms are to be set up and a pipeline laid to Tavoy before connecting into Thailand." The Bangkok Post went on to note that "Thai companies are eager to build a pipeline into Thailand," as the quantities recovered from the Martaban field .vill be "more than Burma could currently absorb."Texaco's production is likely to make the pipeline highly profitable.

The second Texaco gas discovery, the Yetagun East No. 1 field, was reported in April to have produced 63 \11\1cfd of gas at first testing. The l'etagun East No. 1 field is only two miles south of the Yetagun No. 1 field. Another test well was also drilled but was "a non-commercial discovery." The two Yetagun fields could quite possibly triple Burma's national output of natural gas.

Texaco is the world's 11th largest oil and gas company, and is more commonly known in Asia as Caltex, the joint venture company Texaco operates with Chevron. Despite Texaco's size, the company has been all but invisible in Burma. Texaco's representatives in Thailand have refused to comment on their Burma operations. Environmentalists in Thailand believe this may be out of fear of an international boycott against the company for working with, and being associated with, the environmental and human rights abuses of the Burmese military. According to company sources, Texaco currently also has "frontier offshore exploration projects in Malaysia, Thailand and China," and is involved in exploration projects in Indonesia and Australia.

Premier Petroleum Myanmar (England), a wholly owned subsidiary of Premier Consolidated Oilfields, was the first company to win a concession in the block that includes the Yetagun field. In 1990, Premier signed two production sharing agreements with the MOGE. Premier then brought in Texaco and Nippon Oil to complete the exploration effort. Texaco, Premier and Nippon Oil now hold rights to three off shore blocks around the Yetagun field totaling approximately 12 million acres. The companies are expanding their exploration efforts in these blocks.

Plans in the pipeline

The Petroleum Authority of Thailand, Texaco, Total and the supporting oil companies are currently working out details with the SLORC on the development of undersea gas pipelines first from the Yeragun and Martaban fields to the Burmese coast and then across the border into Thailand. The development of the gas pipeline is believed to have serious environmental, social and military implications for the ethnic groups living along the Thai-Burmese border, particularly the three million Karen.

All negotiations on the development of the pipeline are secret; however, activists monitoring military movements inside Burma say it is now possible to predict likely pipeline routes. Sources inside Burma have reported that the SLORC has moved 10 battalions of "Special Task Force" troops into the Ye-Tavoy district in southeastern Burma. These troops are believed to be the first wave of soldiers sent to secure the area for the proposed pipeline. Ethnic Karen and Mon people living along the border are concerned the SLORC will soon mount military attacks into their territories, as they have already begun forcibly relocating villagers to cluster villages along the border.

The most likely route for the pipeline, according to Steve Thompson of Green November 32, a Karen environmental and human rights organization, is the Nat En Daung Pass crossing into Thailand. Thompson believes that Thailand is the likely market for all of Burma's natural gas because it is so close to the gas fields, has a growing energy demand and has been negotiating with the SLORC for some time regarding oil and gas development.

If Thompson's predictions are correct, the pipeline will be passing through an area that neither the Burmese nor Thai militaries have been able to control for the last 40 years. It is likely that in order to secure the area, and then build and defend the pipeline, SLORC will employ violent military action and human rights abuses. The SLORC continues to relocate villagers off valuable lands and into cluster villages around Burma. Forced labor and the use of villagers as ammunition porters is also reported regularly.

The route discussed for the gas pipeline will pass through ecologically diverse and currently well protected forests. Road-building will cut through the forests and significantly disturb its ecosystems. And in every other region of Burma, where roads are cut, logging soon follows.

The Karen-controlled territory along the Thai-Burmese border, particularly in southeastern Burma where the pipeline would be routed, is said to be the habitat for a number of endangered species that have been eliminated in Burma and other parts of

Southeast Asia. Less that 10 Asian rhinos are believed to live in the area, as well as endangered tigers, tapirs, bears, wild elephants and numerous bird and fish species.

The politics of sanctions

In the interests of ending the 40-year civil war and bringing the legitimate government back to power in Burma, a number of human rights groups, as well as a recent team of Nobel Prize recipients, are working to bring economic sanctions and an arms embargo against the SLORC. Some groups arc also working to have the SLORC's seat at the United Nations revoked. The recent gas finds will make these efforts much more difficult.

The Texaco/Premier/Nippon Oil gas project, combined with the Total/Unocal/PPT project, has put the Burmese military in a very good position to bargain with the international community. If these powerful companies can successfully lobby their own governments, they can effectively block any UN sanctions against the SLORC that would be detrimental to their business interests, such as an economic embargo.

Texaco executives decline to comment on the company's role in Burma or the possibility of U.N. sanctions against the regime. Michelle Bohana, director of the Washington, D. C.-based Institute for Asian Democracy, believes that Texaco should explain why it would even consider operating in Burma until the government changes hands and strongly advocates the withdrawal of U.S. and other foreign companies from the country.

"Foreign investment is a one-way ticket to maintaining the SLORC's rule - an illegitimate regime that was never voted in by the citizens of Burma," says Bohana. "President Clinton should denormalize U.S. relations with the SLORC by calling for Texaco and all other multinationals to withdraw from the country until there is democracy. Otherwise we are supporting the generation of currency to buy the arms that are repressing the Burmese people." To supporters of human rights in Burma, she says, "The issue is very cut and dried. "

- Dara O'Rourke

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