Two oil majors to exit Myanmar
Thai partner PTTEP considering role in gas venture after TotalEnergies and Chevron leave
The oil majors TotalEnergies and Chevron Corp, partners in a major gas project in Myanmar, have decided to withdraw from the country, they said on Friday, citing the worsening humanitarian situation following last year’s coup.
Thailand’s PTT Exploration and Production Plc, which holds a 25.5% share in the TotalEnergies-led venture, is "carefully considering" its direction in Myanmar after the announcement, said Montri Rawanchaikul, chief executive of parent company PTT Plc.
PTTEP is “putting the utmost importance for energy security of both Thailand and Myanmar”, it said in a statement.
Since the February coup, Myanmar security forces have killed more than 1,400 people and arrested thousands to try to crush resistance, local non-governmental organisation Assistance Association for Political Prisoners said. The junta disputes the figures.
TotalEnergies and Chevron, along with other firms including PTTEP, were part of a joint venture operating the Yadana gas project off Myanmar’s southwest coast, and the MGTC transport system carrying gas from the field to the Myanmar/Thailand border.
“The situation, in terms of human rights and more generally the rule of law, which have kept worsening in Myanmar since the coup of February 2021, has led us to reassess the situation and no longer allows TotalEnergies to make a sufficiently positive contribution in the country,” TotalEnergies said in a statement.
“As a result, (it) has decided to initiate the contractual process of withdrawing from the Yadana field and from MGTC in Myanmar, both as operator and as shareholder, without any financial compensation for TotalEnergies.”
The junta seized power alleging widespread fraud in a November 2020 election won by a landslide by the civilian government led by Aung San Suu Kyi. International and local monitoring groups said there were no major irregularities with the vote.
TotalEnergies did not quantify the financial impact of the withdrawal, but said the country represented a minor part of its revenues.
“Financial considerations have never been crucial in this matter. Our operations in Myanmar amounted to $105 million in 2021, equivalent to less than 1% of the company’s income,” said a TotalEnergies spokesperson.
Myanmar amounted to 0.6% of TotalEnergies’ total oil and gas production in that period.
A Chevron spokesperson said: “In light of circumstances in Myanmar, we have reviewed our interest in the Yadana natural gas project to enable a planned and orderly transition that will lead to an exit from the country.
“As a non-operator with a minority interest in the project, our immediate priority remains the safety and well-being of employees, safe operations and the supply of much-needed energy for the people of Myanmar and Thailand.”
Total was the biggest shareholder in the project with a 31.24% stake, while Chevron holds 28%. PTTEP and the Myanmar state-owned oil and gas group MOGE hold the remainder.
Rights groups welcomed TotalEnergies’ move and said more companies — and sanctions on Myanmar’s oil and gas — should follow.
“TotalEnergies has finally taken heed of the calls of Myanmar people, local and international civil society to stop the flow of funds to the terrorist junta,” said Yadanar Maung, a spokesperson for activist group Justice for Myanmar.
“It is now essential that international governments move ahead with targeted sanctions on oil and gas to deny the junta funds from the remaining oil and gas projects.”
TotalEnergies said that, before deciding to pull out of Myanmar, it had approached French authorities to consider putting in place targeted sanctions that would confine all the financial flows to escrow accounts without shutting down gas production.
The company had announced last year that it was suspending cash payments to its joint venture with the army, Moattama Gas Transportation Company Limited (MGTC).
TotalEnergies paid around $230 million to the Myanmar authorities in 2019 and another $176 million in 2020 in the form of taxes and “production rights”, according to the company’s own financial statements.
It said on Friday that it had tried “insofar as is materially and legally possible” to limit financial flows received by military-linked businesses. “TotalEnergies has not identified any means for doing so,” it added.
It said it was “materially impossible” to prevent revenue flows as PTT made most gas sale payments.
The group said it had notified its partners in Myanmar of its withdrawal, which will become effective at the latest at the expiry of a six-month contractual period.
Past agreements stipulate that TotalEnergies’ interests will be shared between the current partners, unless they object to such an allocation, and the role of operator will be taken over by one of them, it said.
TotalEnergies said it has been the operator of the Yadana gas field’s blocks M5 and M6 in Myanmar since 1992.
Located in the Gulf of Martaban, the Yadana fields produce gas for delivery to power plants in Thailand. They also supply Myanmar’s domestic market via an offshore pipeline built and operated by state energy firm Myanma Oil and Gas Enterprise.
A spokesperson for the group said PTT would be a “natural” choice for its Myanmar assets, adding it was already in contact with the company over this.
The Yadana field produces around 6 billion cubic metres per year of gas, TotalEnergies said. About 30% is supplied to MOGE for domestic use and 70% is exported to Thailand, where it is sold to PTT, TotalEnergies said.
“This gas helps to provide about half of the electricity in the Burmese capital Yangon and supplies the western part of Thailand,” it said.
The military-run Myanmar government did not immediately respond to a request for comment. MOGE officials declined to comment.
TotalEnergies told Reuters the withdrawal process was unilateral and did not require the approval of Myanmar authorities.