Black Gold Rush

Myanmar labor conditions

Scenes from southern Magway’s oil rush, where the work is hard and rewards are uncertain. Click on the box below to see more images. (Photo: JPaing / The Irrawaddy)

MINHLA TOWNSHIP, Magway Region — It’s been more than a year since the farmers of Htankai and Dahatpin, two villages in southern Magway Region, regained control of land that was taken away from them nearly two decades ago, but so far, their fields are still far from green.

In April of last year, in a rare reversal of the rampant land-grabbing that marked Myanmar’s era of military rule, the government instructed the state-owned Myanmar Oil and Gas Enterprise (MOGE) to return land that it had seized in 1996 to form a joint venture with private firms.

Since then, however, the only thing that has been growing in the affected 25-mile (40-km) wide tract of land is the number of oil wells run by small-scale operators looking to soak up some of the black gold that MOGE left behind.

“There were two oil fields, Htankai and Dahatpin, under our supervision, but now the joint venture is gone and we’re not working there anymore,” said an MOGE engineer who asked not to be identified. “Now it’s being explored illegally.”

By some counts, there are now more than 55,000 wells covering the bleak, blackened stretch of ground that the government wants turned back into productive farmland. Of those, more than 20,000 appeared after the MOGE decided last June to abandon its efforts to enforce an end to drilling in the area—one of the conditions under which it agreed to return the land.

Although many farmers said they intended to honor their promise to bring the land back under cultivation, the influx of outsiders who came to exploit the region’s resources made it difficult for them to grow their crops.

“When the farms were given back to us, we weren’t allowed to drill and we didn’t receive

any money from the other oil drillers. As they continued drilling, we couldn’t grow any crops and life got much harder for us,” said U Aung Moe Hein, a resident of Htankai.

“To be frank, if other people are taking crude oil, we’d like to do it too,” he added.

What most local landowners are doing, however, is charging for the right to sink small wells on their land, for a fee of anywhere from 100,000 kyat to 1.5 million kyat (US $100-1,500) per well, depending on the yield.

While this has brought some welcome income into the region, it has also come with a serious drawback: a dramatic rise in crime, as unregulated drilling and a push for quick profits at all costs breed a general climate of lawlessness.

With yields varying from three gallons to 25 barrels per day, the competition for the best wells is fierce. Add to this the fuel of alcohol, illegal drugs and prostitution, and relations among drillers soon turn truly combustible.

“There are lots of problems here. When tensions arise between rivals, they often lead to knife fights,” said U Thaw Zin, an oil driller in Htankai. “But if you mind your own business, it’s not so bad.”

For most, in fact, the money to be made here is not worth fighting over. “Drillers like us only make an average of 10,000 kyat [$10] a day. The only ones who are getting really rich from this business are the owners of the buying centers,” said U Min Latt, a driller from neighboring Mandalay Region.

With a daily output of at least 100 barrels, there certainly is money to be made by those who trade in the contraband crude, which is shipped by highway or waterway to the refineries of Monywa, Sagaing Region.

Fortunately for the petrol smugglers, there doesn’t seem to be much interest in cracking down on their activities. Trucks carrying oil drive right past the MOGE office in Htankai en route to Monywa, but are rarely if ever stopped.

“We see them every day, but we don’t have the right to arrest them. That’s the job of law enforcement,” said one MOGE official in Htankai, speaking on condition of anonymity.

The drillers, however, have not been so lucky in their dealings with the authorities.

“About 70 policemen came and shouted at us to get out of the field,” said U Aye Chan, an oil driller, recalling a recent incident. “They said we face up to five years in prison if we don’t stop. But we have invested a lot to do this—some of us have even sold our farms and houses so we could do business here. Our lives would be ruined if we couldn’t work here.”

Although appeals to higher authorities, including the president and the chief minister of Magway Region, have enabled the drillers to continue, the precariousness of the situation—and diminishing yields—have convinced many that they’re better off elsewhere.

“Oil production has significantly dropped, so some drillers are now leaving the area,” confirmed U Htun Myint, a resident of Htankai.

Meanwhile, just a few dozen miles away, the MOGE has licensed a private company to explore another oilfield where the long-term outlook is very different.

Drillers who want to work the Ya Naung Mone field can do so by making a deal with the landowners, and the oil company buys the crude at close to market value. According to one trader, this arrangement works far better than the free-for-all at Htankai, even if it does mean that drillers and traders have to pay taxes.

“To be honest, we’d rather pay taxes than give bribes all the time,” he said. “It’s better to drill legally than to keep wasting money on corruption.”

This article first appeared in the June 2014 issue of The Irrawaddy magazine.

One Response to Black Gold Rush

  1. Actually Moge abandoned dry wells.I am getting a bit concerned whether the wells are sealed off properly..using concrete plugs at different depths.I think metal pipes using as casing during drilling process are expensive in Burma ,so they dont leave behind the casing with concrete sealing in the wellbore or drilled hole when Moge abandoned the thousand wells.
    If Moge hadn’t done that kind of things,the underground water will be migrating to the layers where crude oil was extracted.The exodus who had become overnight roughnecks have the vision of making money never think the pollution caused by them.Sorry to say ..The Gush of oil is not in Magwe Division .

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