TotalEnergies withdraws; The junta wins in Burma

Myanmar’s abusive junta will gain an increased stake in the country’s largest oil and gas field when French company TotalEnergies pulls out of Myanmar on July 20, 2022, Human Rights Watch said today. The shares of TotalEnergies will be divided proportionally between the three remaining partners – the American Chevron, the Thai PTTEP and the Myanmar Oil and Gas Enterprise (MOGE) controlled by the junta.

TotalEnergies announced in January its intention to leave Myanmar in six months due to a deteriorating human rights situation which “no longer allows TotalEnergies to make a sufficiently positive contribution in the country”. The company has operated the Yadana gas project since the 1990s in partnership with Chevron and PTTEP.

“Transferring Total’s ownership shares to a military-controlled company will further enrich the junta at the expense of human rights,” said Bénédicte Jeannerod, France director at Human Rights Watch. “Other energy companies looking to exit should ensure they do so responsibly, without contributing to the junta’s coffers.”

Since the February 1, 2021 coup in Myanmar, the junta has imposed a brutal nationwide crackdown on all opposition. The junta’s widespread and systematic abuses, including massacres, torture, arbitrary arrests and indiscriminate attacks against civilians, constitute crimes against humanity and war crimes. Security forces killed more than 2,000 people and arbitrarily arrested more than 14,000.

In March, the oil and gas project partners approved PTTEP to take over as operator from Yadana. The split of TotalEnergies’ 31.2% stake in the gas field and pipeline will leave Chevron with a 41.1% interest, PTTEP with 37.1% and MOGE with 21.8%. Chevron also announced its intention to withdraw and indicated its intention to sell its stake to PTTEP, although few details of its exit have been made public.

Natural gas projects in Myanmar generate more than $1 billion in foreign revenue each year for the junta, its main source of foreign exchange earnings. Money is passed in US dollars to MOGE and other military-controlled bank accounts in foreign countries in the form of fees, taxes, royalties, and revenues from the export of natural gas, including most travel by pipeline to Thailand or China.

On February 21, the European Union imposed new sanctions on companies controlled by the junta, including MOGE, the first government entity to do so. However, it also issued an ambiguous-language license that appears to allow outgoing companies to relinquish or transfer their shares to MOGE.

Other companies, including Woodside, Mitsubishi, Petronas and ENEOS, have announced in recent months their intention to withdraw at least in part from their activities in Myanmar. Petronas is being replaced as operator of the Yetagun field by Gulf Petroleum Myanmar, according to reports from Myanmar Now and Justice for Myanmar.

When companies leave Myanmar, they should place their existing shares or property rights in trust or receivership, including shares of exploration or development projects, production or pipeline transportation companies, to ensure that the income from these actions does not benefit the army. If exiting companies decide they need to sell or transfer their shares to another business entity, they must ensure that those entities will abide by international sanctions and follow international business and human rights standards.

Adopting these measures would be in line with companies’ responsibilities under the UN Guiding Principles on Business and Human Rights, which state that “appropriate action” in cases where business activities enable violations of rights includes consideration of “termination of the relationship with the entity itself would have adverse human rights consequences.

The governments concerned should join the EU in sanctioning the MOGE while clarifying that transfers of property to the junta are prohibited. The United States, in particular, is in a key position to impose sanctions since payments in the gas sector – even those managed by non-US companies – are generally made in US dollars and require the intervention of US correspondent banks. or European to finalize or “settle”. », large transactions in dollars or euros. Additional sanctions would also help ensure the junta cannot evade new EU sanctions in other jurisdictions.

South Korea’s PTTEP and POSCO, the two main energy companies remaining in Myanmar, are expected to signal support for such measures. The largest gas revenue payments to junta-controlled accounts are made through PTT, PTTEP’s parent company, which buys about 80 percent of Myanmar’s exported natural gas from Yadana as well as the Zawtika gas field, which it operates itself. In April, PTTEP announced that it was pulling out of the nearly exhausted Yetagun field. POSCO manages the second largest project, Shwe.

Human Rights Watch has previously written to all of these companies and their shareholders, urging them to support the gas revenue sanctions. Human Rights Watch has also urged other governments, including the US, UK, Australia, and Japan, to adopt the EU’s approach and sanction Myanmar military companies such as MOGE.

“The US and other governments should follow the EU’s lead in urgently imposing measures that will starve the junta of its millions in gas revenue before rights-averse companies take over gas flows. payment,” Jeannerod said. “The junta leaders must face the economic consequences of the atrocities they are committing across Myanmar.”

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