Australian Firm Seeks to Reassure Locals on Gas Drilling off Rakhine

By Moe Myint 4 April 2019

YANGON—Australian energy giant Woodside is stepping into war-torn Rakhine State with a plan to begin drilling in two oil-and-gas blocks in the Bay of Bengal. This week the company sought to reassure residents in southern Rakhine State’s Kyaukphyu that there was a need for the projects, citing the potential economic benefits and pledging to minimize the environmental impacts on the site, located about 52 miles offshore.

Kyaukphyu resident and Arakan League for Democracy (ALD) member U Tun Lwin told The Irrawaddy that Woodside held a meeting with local residents at the Hotel Kyaukphyu on Wednesday. He said Woodside and a Chinese company will jointly drill the two offshore projects, each holding a 50-percent stake.

Woodside is expected to begin drilling in two oil-and-gas blocks, AD 1 and AD 8, soon. The initial process will likely take at least 45 days. U Tun Lwin explained that company officials promised to carry out the drilling in such a way as to have the least harmful environmental impact possible on the ocean environment. It also vowed not to disrupt local fishing.

Woodside has already determined that gas exists in AD 1 and AD 8, but needs to drill to assess whether extraction would be commercially viable.

It was unclear whether the shareholding agreement covers only the capital investment in drilling activity or extends to profit sharing. Upper House lawmaker U Kyaw Than, who represents Kyaukphyu constituency for the Arakan National Party (ANP), attended the meeting. He said the company elaborated on the results of its Environmental Impact Assessment (EIA)/Social Impact Assessment (SIA) report.

Locals requested copies of the EIA/SIA report from Woodside but company staff did not hand any out, saying it was only available in English. U Kyaw Than said locals would not be opposed if the project brings tangible positive results.

Although some local activists questioned the Memorandum of Understanding (MOU) and Memorandum of Agreements (MOA) signed between the Myanmar government and Woodside, company staff avoided answering questions on this.

U Kyaw Than said Kyaukphyu residents had previously had a negative experience with the China National Petroleum Corp (CNPC)’s pipeline project, also known as the SHWE gas project, which cuts 480 miles across Myanmar and connects Kyaukphyu’s Maday Island to China’s Yunnan Province.

A crude oil tanker approaches Maday Island in Rakhine State’s Kyaukphyu Township in 2017. / Thaung Tin / Facebook

During the pipeline’s construction, thousands of plots of farmland were confiscated from locals, among other rights abuses. The project has earned billions of dollars for the Union government but locals have seen little benefit in terms of regional development, critics say.

All income from the SHWE gas project goes into the Union government’s coffers, a source of irritation for regional ministers who say Rakhine State has not received a fair share of the annual budget allocation under the National League for Democracy (NLD)-led government in recent years.

“We urge them to implement the project transparently. As a major Australian firm, they should act with dignity and not seek to take advantage of loopholes,” U Kyaw Than said.

Company representatives’ failure to provide precise information to meeting participants led some locals to criticize what they saw as a lack of transparency and to say they didn’t trust the company. Some social activists expressed their dismay on Facebook, saying that once again a huge financial windfall from Rakhine State’s resources will go the to the Union government, which will allocate a large amount of money to fund the Myanmar military’s ongoing campaign against Arakan Army (AA) rebels in the north of Rakhine.

The Irrawaddy contacted a Woodside employee who traveled to Kyaukphyu along with a group of international experts, but he declined to comment as he is unauthorized to speak with the media. He referred questions to the company’s Australian headquarters.

According to leaflets distributed by Woodside representatives at the Kyaukphyu meeting, the company entered Myanmar’s oil-and-gas sector in 2015 and has implemented nine projects.

Its latest project, Shwe Ye Tun, is situated in Irrawaddy Division’s territorial waters. The company has been drilling for gas there since last year. It is still assessing whether gas is present in commercially viable quantities.

According to U Tun Lwin, some meeting attendees raised questions about the stake to be held by the Union government as well as the investors, but the Woodside employees did not provide shareholding information. Nearly a dozen government officials from different departments in Kyaukphyu district, an ANP lawmaker and some civil society groups joined the meeting.