With Pipelines at Stake, Companies Try PR Approach

By May Lay 21 June 2012

KYAUKPYU, Arakan State — Located on the coast of Arakan State in western Burma, Kyaukpyu is fast becoming a major gateway for the country’s offshore resources. And as the starting point of the multi-billion dollar Shwe Gas Project, it is also becoming the focus of a contentious debate over who benefits from those resources.

Consisting of two pipelines—one to transport natural gas from Burma’s Shwe gas fields in the Bay of Bengal to China’s Yunnan Province, and another to carry crude oil imported from the Middle East, also to China—the Shwe Gas Project is controversial for the same reason that the Myitsone Dam project in Kachin State attracted such opposition—because it is a great boon to Burma’s powerful neighbor, but of more dubious benefit to its people.

With this in mind, the two companies behind the project—the South East Asia Gas Pipeline Co, Ltd (SEAGP) and the South East Asia Crude Oil Pipeline Co, Ltd (SEACOP)—have mounted a concerted effort to counter perceptions that the pipelines are little more than largesse to the main foreign backers of Burma’s former junta.

“The Shwe Gas Movement website publishes the wrong information,” said Chengun Dong, the deputy manager of SEACOP’s jetty project on Maday Island, near Kyaukyu, where construction on the pipeline began in November 2009.

Disputing the claims of the Shwe Gas Movement, a watchdog group based in Thailand that has highlighted human rights abuses and environmental problems associated with the Shwe Gas Project, Dong told Burmese reporters who were recently invited to the site of the project that displaced farmers had already been fully compensated for the loss of their land.

“We also donated US $8 million for the first year and pledged to spend $2 million for each subsequent year for the next 30 years to support the education and health care of local residents along the pipelines,” he added.

Fearing a repeat of the Myitsone Dam fiasco, which saw the suspension of work on the largest of seven hydro-power dams in Kachin State that were designed to generate a total of 16,500 MW of electricity, mostly for export to China, those involved in the Shwe Gas Project are anxious to emphasize the project’s advantages for both Burma and China.

The pipelines, which are due to be completed by May 2013 and are expected to start transporting gas and oil by September of the same year, will each earn Burma $7 million a year in right-of-way transit fees, and will cost $2 billion each to build, according to an official from the Ministry of Energy’s Energy Planning Department.

Like the Myitsone project, the pipelines rely heavily on foreign investment to cover construction costs. SEAGP is essentially a partnership between two state corporations, Myanmar Oil and Gas Enterprise and the China National Petroleum Corporation (which hold 50.9 and 49.1 percent stakes in the company, respectively). SEACOP, on the other hand, brings together six companies from four countries—two from Burma, two from India, one from Korea and one from China.

Despite fears that the project could be derailed by popular opposition, work on the pipelines is moving forward at a steady pace, and is on track to meet its projected completion date. “Currently the gas pipeline project is 70 percent complete, while the crude oil jetty is about 50 percent finished,” said SEACOP’s Dong.

But while this may be music to the ears of investors, the companies in charge of the pipelines are having a harder time convincing those who lie in their path that the project will also make their lives better. And in light of local people’s actual experience to date, it seems unlikely that any amount of PR is going to change their minds.

In Kyaukpyu, where the project begins, fisherman complain that construction work has already destroyed their livelihood. Underwater mining carried out as part of the project has devastated the marine ecosystem, killing fish and the coral reefs that support them, they say.

“We stopped fishing this year because we can no longer catch anything,” said one 35-year-old former fisherman.

Ironically, the same activity that has made it impossible for local people to support themselves by their traditional means now provides them with their sole source of income. According to the fisherman, many in the area now work as general laborers with the construction companies working on the pipelines.

For most, however, the trade-off hasn’t worked in their favor. “Before we could make as much money as we wanted, but now we get just 90,000 kyat [around $110] a month, and they keep 30,000 kyat of that for meals.”

Although their contracts show that they are paid 9,000 kyat ($11) a day, the amount they actually receive is just 3,000 kyat. Most of the rest is paid to local agents, through whom  some 586 workers have found employment with the pipeline companies. Like the fisherman, most workers bring home 90,000 kyat a month, but a handful receive as much as 400,000 kyat ($475) for work in more skilled positions.

Another problem facing those living in the path of the pipelines is land confiscation and disruption of farming activities. In some areas traversed by the pipelines, farmers are paid 3.6 million kyat ($4,280) per acre, but in Arakan State, they receive half that amount.

For many affected by the pipelines, it is difficult to understand how compensation rates are calculated. “When we went to get compensation money, they explained the different rates, but I didn’t take any notes and they didn’t show us anything in writing,” said one farmer with more than 50 acres of land in Arakan State.

Farmers face not only the loss of their land, but are also deprived of access to water because of the pipelines. The China’s state-run CNPC has constructed a 650,000 gallon reservoir on Maday Island for use by Chinese workers, but only 146,000 gallons, or 22 percent of this, are available to five villages in the area.

“We can’t get any water to grow paddy because the reservoir blocks the flow of water to my fields,” said some local farmers on the island.

While CNPC has agreed to give 75 percent of maintenance jobs on the completed pipelines to Burmese workers, few expect this to make up for the loss of other forms of employment, as most of the new jobs will be for poorly paid unskilled work.