Watching the World: A close shave in Myanmar

May 9, 2005
Few oil companies can relish the idea of operating in Mynamar, given the track record of human rights activists on the one hand and the ruling junta on the other.

Few oil companies can relish the idea of operating in Mynamar, given the track record of human rights activists on the one hand and the ruling junta on the other.

Indeed, one need only recall the case that Unocal Corp. fought in order to get some insight into the problems likely to be faced by any company that plans to work in the country.

Just last month, Unocal settled lawsuits launched against it in 1996 on behalf of villagers who claimed the company had turned a blind eye to government abuses ranging from murder to torture as it constructed the Yadana gas pipeline.

But the whole issue threatens to rise up again with ChevronTexaco Corp.’s proposed acquisition of Unocal and its assets in Myanmar.

Rights issues

“ChevronTexaco have bought themselves a major headache,” said John Jackson, director of Burma Campaign UK. “Unless they state that they will sell off the Burma operations as soon as possible, they will come under pressure from investors and human rights groups.”

Early speculation suggested that ChevronTexaco might divest itself of the Unocal holdings in Myanmar, simply to avoid any potential problems.

“Our expectations would be a swift sale of this $700 million asset, perhaps to the Chinese, if major opposition were to emerge,” Deutsche Bank analysts wrote in a research report in early April.

With its acquisition of Unocal still up in the air, however, ChevronTexaco has yet to publicly confirm or deny any speculation concerning the disposition of its potential holdings in Myanmar.

But any oil executive would want to keep a close eye on developments there.

Earlier this year, Myanmar, India, and Bangladesh publicly revealed that they would cooperatively begin construction of the Shwe natural gas pipeline, running from Arakan to Calcutta.

The planned pipeline followed the announcement of a decision by a consortium of South Korean and Indian companies to develop a massive natural gas field in the Gulf of Bengal off western Myanmar.

New developments

Opposition to this project already has surfaced. “An alarming number of similarities already exist between the Yadana pipeline and the Shwe pipeline,” said human rights group EarthRights International (ERI).

If nothing is done, the group said, “it appears likely that history will repeat itself.” It said, “Forced labor and human rights abuses remain an ongoing problem throughout [Myanmar], and it can be assumed that these violations will continue at any major development project site.”

ERI, which was cocounsel in the lawsuit against Unocal, has already sounded its charge against ChevronTexaco.

At a shareholders’ meeting on Apr. 27, an ERI representative said, “Despite the fact that the Yadana pipeline is the largest foreign investment in [Myanmar], neither the local people nor the people of [Myanmar] as a whole will benefit from ChevronTexaco’s presence.”

No wonder some people think that, at times, prospecting for oil and gas in an energy-hungry world can be such a downright thankless task.