Myanmar: Chevron and Total suspend some payments to the junta
(New York) – Governments and energy companies are expected to follow through on a recent decision by Chevron and Total SA to suspend payments for a Myanmar gas pipeline project with further steps to cut funding to the country’s military junta Human Rights Watch said today. While the May 26, 2021 announcement Reflects a shift in corporate relations with the junta that seized power on February 1 and has since engaged in a brutal crackdown, the payments represent only a modest amount of the military’s overall gas revenues.
Governments and all energy companies operating in Myanmar should take stronger action to block natural gas revenues to Myanmar’s military. Natural gas revenues are the the army’s largest source of foreign currency income, including approximately $ 1 billion in duties, taxes, charges, fees, tariffs and other benefits. Dividends suspended by Chevron and Total represent a minimal portion of all payments the government receives from natural gas.
“The recent move by Chevron and Total is a step in the right direction, but it affects less than 5% of the natural gas revenue the Burmese junta receives,” said John Sifton, advocacy director for Asia. “To have a real impact, governments and businesses must go further to prevent the junta from receiving funds or accessing bank accounts that receive payments.”
decision ad by Total and Chevron relates to only a 15% dividend paid by a gas pipeline company, the Moattama Gas Transportation Company (“Moattama”), on the profits from the transport charges it receives to transport gas from the offshore gas field from Yadana in Myanmar to Myanmar and Thailand. Total said payments were suspended effective April 1.
Total and Chevron are together the majority owners of Moattama, with 31.2% and 28.3% respectively of the project. The army-controlled Myanmar Oil and Gas Enterprise (MOGE) owns 15 percent and the Thai state-owned gas company PTT holds 25.5 percent. Total acts as the “operator” of the Yadana wellheads and the Moattama pipeline infrastructure. Suspended payments are dividends paid to these companies based on their share of ownership. According to Moattama financial records, the company paid MOGE about $ 38 million in 2018 and about $ 52 million in 2019, in accordance with EITI Reports indicating that the MOGE’s aggregate gas transportation dividends from gas operations represent less than 7 percent of the state’s aggregate revenues from natural gas.
The statements by Total and Chevron do not mention the hundreds of millions of dollars in additional tariffs, fees and taxes that Moattama pays into bank accounts controlled by the Myanmar military. The statement does not apply to the hundreds of millions of dollars more MOGE receives from its share of revenues from the sale of gas to PTT.
“While only a modest amount of overall revenue has been suspended, Total and Chevron’s decision means that at least some Myanmar companies recognize that their cash payments to junta-controlled accounts create major reputational risks.” , Sifton said.
Total recognized the dire situation in Myanmar and suggested in its statement that further action could be taken: “ Total condemns the violence and human rights violations occurring in Myanmar and reaffirms that it will abide by any decision that could be taken by international and national authorities, including sanctions imposed by EU or US authorities. “
Chevron declaration noted that the company “condemns the violence and human rights violations occurring in Myanmar. We support the people of Myanmar and the world community by urging a peaceful resolution that respects the will of the people. The company said it would comply with the penalties imposed on the additional gas revenue, but warned against them.
Total and Chevron are expected to provide more information on the value of the suspended dividends. They and other energy companies operating in Myanmar should also clarify their positions on sanctions and explain why carefully enforced sanctions would not allow their operations to continue while the junta’s revenues were blocked. Businesses should also adhere to applicable international sanctions and make public information about all payments they make to military-controlled and state-owned entities.
Total has yet to respond to a May 11 letter in which Human Rights Watch asked about the potential effects, if any, from the United States, the European Union, the United Kingdom and others. that impose sanctions on Myanmar military controlled entities or impose economic measures to prevent Myanmar military controlled bank accounts from receiving income. Specifically, the letter asked whether such measures would prevent Total from continuing to operate in Myanmar.
Governments considering new sanctions on gas revenues should focus more on PTT, a shareholder and major buyer of the gas that Moattama transports, and the banks that send and receive its payments into accounts controlled by the Myanmar military. All revenue from Total’s Myanmar joint ventures comes from PTTs initially, and the company pays military accounts separately. hundreds of millions of dollars a year.
PTT alone operates a smaller gas field, Zawtika, which provides the Burmese junta with hundreds of millions of dollars in additional payments.
Another gas and pipeline production company run by South Korean company POSCO operates in the country. third major area, Shwe, and receives payments from a Chinese company that pays the junta several hundred million dollars a year.
Total, Chevron, PTT and POSCO should signal their support to authorities in the US, EU, Thailand and other jurisdictions for sanctions or other measures to block royalties, share dividends, tariffs and tax payments on accounts controlled by the Myanmar military.
“If governments effectively sanction or suspend the natural gas revenues generated for the military junta, it will lose $ 1 billion a year to harm the people of Myanmar,” Sifton said. “This type of economic impact could put real pressure on the military to stop its brutal repression and bring the country back to a democratic path.”