US Senators Call for Sanctions on Myanmar Oil and Gas Enterprise

By The Irrawaddy 28 April 2021

U.S senators have urged the Biden administration to impose sanctions on Myanmar’s state-owned oil and gas enterprise —the largest source of foreign revenue for the military regime – in the aftermath of the Feb. 1 coup and the junta’s ongoing human rights abuses against Myanmar’s people.

On Tuesday, a bipartisan group of U.S senators including Jeff Merkley, Marco Rubio and four others, sent a letter calling on Washington to target or freeze all foreign currency revenues and foreign exchange reserves held in state accounts outside of Myanmar. The senators said that the administration’s first step should be imposing sanctions on the state-owned Myanmar Oil and Gas Enterprise (MOGE), now under the control of the junta’s leaders.

Revenue from natural gas joint ventures involving companies such as France’s Total, the US’s Chevron, South Korea’s POSCO, Thailand’s PTT, Malaysia’s Petronas and China’s CNPC are currently the most significant source of foreign exchange revenue for Myanmar. Oil and gas revenues earned Myanmar US$1.5 billion in annual income, with around 80% of that income derived from the offshore natural gas sector, according to figures from the 2019-2020 fiscal year.

MOGE collects income through its joint ventures and revenue sharing agreements with international corporations, including Chevron.

The U.S senators said that history shows that when the previous junta was in place in the 1990s, “gas revenues from Total and Chevron helped them to withstand international sanctions as their [financial] reserves dwindled”.

“This time, we believe that the Tatmadaw [Myanmar military] must be entirely prevented from accessing a steady stream of international resources,” said the senators.

U.S giant Chevron has a long partnership with MOGE. The two companies are joint investors in the Yadana offshore gas project, located off the southwest coast of Myanmar, which accounts for 42% of all oil and gas production from Myanmar’s offshore projects. Chevron paid around US$50 million to Myanmar between 2014 and 2018, according to the Myanmar Extractive Industries Transparency Initiative report (MEITI).

Total reported that it paid US$257 million in taxes and other payments to Myanmar in 2019.

Petronas’s Yetagun gas project paid US$208 million to the government in 2018, while the Shwe project, run by South Korea’s POSCO, paid US$194 million, according to MEITI.

The Zawtika gas project, run by Thailand’s PTT, paid US$41 million in 2018. The government also earned another US$300 million in 2018 from fees paid by companies to use gas export pipelines.

The U.S senators said that instead of paying MOGE, “we propose that the joint ventures involving multinational oil and gas companies pay revenue into a trust or protected account either to be held until such time as Myanmar has a legitimate and democratically-elected government or to be used for humanitarian purposes.”

As well as cutting off revenue to MOGE, the senators also suggested that the US Treasury Department maximizes and focuses its investigative capacity to identify and block any flow of resources to the Myanmar military and its network of cronies, while minimizing unintended harm to ordinary citizens.

A New York Times report revealed that Chevron has intensively lobbied the State Department and key congressional offices against sanctions, warning that they might disrupt its joint ventures in Myanmar. Chevron warned that sanctions would endanger the long-term viability of the Myanmar gas field and worsen the humanitarian crisis for those people who rely on the joint venture for power.

Human rights groups have repeatedly pressured foreign oil and gas companies to cut ties with the Myanmar military since their coup, saying that their revenues would enable the regime to continue their serious human rights abuses in the country. As of Tuesday, at least 755 civilians have been killed and 3,448 people arrested by the military regime, according to the Assistance Association for Political Prisoners.

Earth Rights International said it welcomed bipartisan Senate efforts to place sanctions on MOGE. Executive director Ka Hsaw Wa said that, “oil and gas revenues are keeping this murderous regime alive, even as it continues to kill its own people”.

“That money must be cut off now. We are happy to see bipartisan support for this action and urge the U.S. Treasury and State Department to act immediately to put sanctions on MOGE,” said Ka Hsaw Wa.

In late March, elected lawmakers from the ousted National League for Democracy government sent a final notice calling on the largest foreign-owned oil and gas companies operating in Myanmar to suspend business ties with the military regime.

U Tin Tun Naing, the Committee Representing Pyidaungsu Hluttaw (CRPH) acting minister for Planning, Finance and Industry, said in the statement that if companies continued to make payments it would seriously undermine the efforts of the Myanmar people to return the country to democracy, while the military regime will be able to utilize those resources to continue their human rights violations.