The West Callisto, an offshore drilling rig owned and operated by the Norwegian-Bermudian firm Seadrill, arrived in Burmese waters earlier this month to carry out work for French multinational oil firm Total, confirmed a spokesperson at Seadrill’s Oslo headquarters.
While previously the Norwegian government publicly discouraged Norwegian companies from doing business in Burma, it reversed its policy earlier this year and now encourages firms to do business in Burma, officially known as Myanmar.
Speaking to The Irrawaddy, Wong Aung, the director of the Shwe Gas Movement, a coalition group which follows Burma’s growing offshore gas sector, said, “I am very concerned that the Norwegian government is encouraging businesses to go to Burma when there is no transparency or accountability in the extractive sector,” said the Arakan native. “Everything is still controlled by military cronies, and massive corruption is still everywhere.”
Seadrill most recently operated in Burma last year when its rig, the West Juno, conducted drilling work in an offshore block jointly owned by UNOG, a firm controlled by the family of former Industry Minister–1Aung Thaung and Rimbunan Petrogas, a Malaysian-owned British Virgin Islands-registered company.
Former general-turned-parliamentarian Aung Thaung stands accused of being one of the masterminds behind the 2003 Depayin massacre in which dozens of NLD activists were killed while his sons, who were targets of EU sanctions, have become rich and are heavily invested in timber, construction, electricity, banking and hotels, in addition to oil and gas exploration.
Seadrill’s Fleet Status Update for May shows that the West Callisto will operate on a three-month contract for Total beginning May 12, at a day rate of US $134,900, netting the firm more than $12 million for the full 90-day contract.
Seadrill’s second largest shareholder is the Norwegian national pension fund whose 5.6 percent stake is managed by state firm Folketrygdfondet. It is unclear however how much of a role Folketrygdfondet plays in monitoring Seadrill’s overseas activities, or whether the pension fund was even aware that Seadrill’s operations in Burma were benefiting Aung Thaung’s family business. Folketrygdfondet’s spokesperson could not be reached for comment.
Last year Seadrill also conducted drilling work in Burmese waters for Thailand’s PTTEP. In 2010, Seadrill’s West Triton was hired by Australian oil firm Twinza to fulfill a 30-day contract in an offshore Burmese block.
In 2009, the West Atlas, a Seadrill rig hired by PTTEP, caught fire in the Timor Sea between Indonesia and Australia. The resulting leak continued for two months and spilled huge amounts of oil into the sea, causing one of Australia’s worst environmental disasters. Wong Aung said he worries a similar situation could occur in Burma in the near future.
Seadrill’s patron in this case, Total, for years came under continued criticism for its close cooperation with former dictator Than Shwe’s military regime. The French multinational company’s partner UNOCAL (later taken over by Chevron) were sued by displaced Karen villagers both in France and in the US for profiting from the Burmese army’s use of forced labor, torture and murder during the construction of the Yadana pipeline in the Andaman Sea.
Documents from Total’s correspondence with UNOCAL were disclosed during the US court case—papers the villagers’ lawyers called the “smoking gun memo.” A Feb. 1, 1996, memo from Total Business Development Manager Hervé Chagnoux to his counterparts at UNOCAL substantiates the claim that Total paid the Burmese military to provide security. It also suggests that Total was well aware of the use of forced labor.
The memo stated: “As far as forced labour used by the soldiers in charge of security on our gas pipeline project is concerned, we must admit between ourselves, TOTAL and Unocal, that we’re probably in a grey area.”
In October 1999 a French parliamentary committee investigating the Yadana project concluded: “The mission judges that the link between the military presence, the acts of violence against the populations, and the forced labor is established as a fact. Total had to be aware of that fact.”
Over the course of a lengthy career, Seadrill’s chairman and owner, the billionaire shipping tycoon John Fredriksen, has endured what the Financial Times termed a “lifetime of controversies.” This includes being held for more than three months of pre-trial detention in 1986 after Norwegian authorities accused him and a tanker firm he owned of tax evasion, fraud and illegally siphoning off fuel from tankers to power them, a dangerous practice that could cause an explosion.
After a lengthy court battle that lasted four years, the most serious charges were dropped and Fredriksen paid a $333,000 fine for the “level of inflammability” used in the fuel storage areas of his tankers.
Gunnar Stavrum, the editor of Norway’s Nettavisen newsite, has written two unauthorized biographies on the world’s largest shipping tycoon. He calls Fredriksen “a rough businessman.” Fredriksen earned the nickname the “Big Wolf” in 1980’s for shipping oil out of Iran at the height of the Iran-Iraq war and at a time when Saddam Hussein was regularly bombing Iranian shipping lanes. His critics charged that Fredriksen’s dealing with Iran made him “the lifeline to the Ayatollah.”
Other descriptions aimed at him include “a modern-day Onassis,” and—in the words of The Guardian—the “Volatile Viking of Shipping.”
In 1996 the Sea Empressan, an oil tanker owned by one of Fredriksen’s firm’s, spilled an estimated 70,000 tons of oil off the Welsh coast, causing one of the worst environmental catastrophes in British history.
Then Fredriksen made headlines again last year when US regulators announced they were suing two other companies owned by the Scandinavian shipping magnate (who now holds Cypriot residence to avoid paying tax in Norway) for manipulating oil prices.
The US Commodity Futures Trading Commission (CFTC) launched suits against Arcadia Petroleum Ltd and Parnon Energy Inc. The CFTC alleges that the firms and their employees ran a “scheme in 2008 involving accumulation and sell-off of a substantial position in physical crude oil to manipulate futures prices, yielding in excess of $50 million in unlawful profits.”
In an interview with Reuters last year Fredriksen claimed that he was unaware of anything improper occurring at either firm. “I did not know a thing about it—I have about 50 companies, how can I follow everything?” he said.
A leaked 2009 US diplomatic cable obtained by Wikileaks claimed Arcadia and its representative in Yemen sought to corner the local oil market by buying “Yemeni crude at below-market value and scared away potentially more competitive bidders by threatening to kidnap their representatives.”
When Reuters first revealed the cable’s contents last year Arcadia dismissed the allegations as “ludicrous.”
Fredriksen is estimated by Forbes magazine to have a net worth of more than $10 billion, and was considered to be Norway’s richest man before 2006 when he took Cypriot citizenship. He remains the largest shareholder in Seadrill with 23 percent of the company’s shares, down from the 28 percent he owned earlier this year.