Vandana Hari is founder of Singapore-based Vanda Insights, which tracks energy markets.
Pushing international oil and gas companies to quit Myanmar in an attempt to starve the military junta of vital revenues and force an end to the coup is not only futile but loaded with potentially harmful long-term consequences.
Oil majors Shell, Chevron and Total, alongside a handful of prominent players from China, South Korea, Thailand and Australia, are all heavily invested in Myanmar.
While none of the companies condone the Feb. 1 coup or the bloody crisis that has engulfed the country since, their responses to calls to withdraw have been varied. Clearly, the companies are juggling a range of imperatives that are core to both their commercial operations as well as their long-term business strategies.
While France's Total and Australia's Woodside canceled their offshore A6 gas development project in the Rakhine Basin, the French major has resisted calls to cease operations at the Yadana gas field, which it operates on behalf of a consortium.
Total wanted to protect its employees from forced labor, guarantee their safety and maintain electricity supplies, according to CEO Patrick Pouyanne. Yadana also exports gas to neighboring Thailand through a pipeline.
Malaysia's state-owned Petronas, which operates Myanmar's Yetagun gas field in the Andaman Sea, suspended operations and declared force majeure -- a contractual clause that relieves a party of its obligations in the event of extraordinary circumstances beyond its control -- citing a significant drop in production. The company managed to avoid taking sides.
Thailand's PTT Exploration and Production is continuing with a feasibility study for a gas-to-power project based on the Zawtika block that it operates, and expects to sign a 20-year power purchase agreement with Myanmar authorities by early next year. As the project is not currently operational, PTTEP has not faced any flak for putting cash into the military's coffers.
South Korea's Posco, which operates Myanmar's Shwe gas field through a subsidiary, has stood its ground on the project, rejecting the argument that it is indirectly supporting the military junta. The company's relationship with state-owned Myanma Oil and Gas Enterprise (MOGE), a partner in the field, dates back far before the coup, it maintained. Were Posco to pull out of Myanmar, it would be simply replaced by a Chinese company or another foreign player, thus benefiting the junta but harming the interests of South Korea, Posco argued.
Total, Petronas, PTTEP and Posco, as operators of Myanmar's four giant gas fields, have come under greater scrutiny than their joint-venture partners such as Chevron and Shell.
Nonetheless, Chevron, a partner in Yadana through its subsidiary Unocal, has stressed that it does not "direct nor control" payment of export revenues to MOGE. Besides, the latter receives its share of equity gas from the project, not cash, which cannot be placed in escrow, according to Chevron.
Though one could accuse the oil companies that are staying put of being self-serving by not heeding to the calls of pro-democracy protesters and human rights groups, it would be a flawed, one-dimensional view of a complex and multilayered problem.
Oil companies are designed to be frontiers of technological and commercial excellence. While they are hardy and can operate in the harshest of environments, they are not equipped to be agents of political change or take on the might of governments and armies.
And why should anyone be allowed to fire one's guns from someone else's shoulders? Even the United Nations Human Rights Commission has been unable to corral governments of member countries to impose multilateral sanctions against the junta leaders and their military-owned and controlled enterprises -- including MOGE -- as recommended by the special rapporteur for Myanmar in a report on Mar. 11.
U.N. member states have not even moved to unanimously impose an arms embargo against the junta, with Russia and China thwarting the move.
While some Western governments, including the U.S. and U.K., have imposed sanctions on individuals and conglomerates linked to the Myanmar military, governments in Asia, including Myanmar's biggest trading partners, have rejected the approach. The question of whether sanctions would even serve any purpose remains moot.
The response from regional governments has been varied, with some calling for the restoration of democracy and others -- most prominently China -- saying the coup is Myanmar's internal affair. It effectively rules out a coordinated regional strategy and direction from governments to the companies working in Myanmar.
Chinese workers of CNPC lay steel pipes on the branch line of the Sino-Myanmar natural gas pipeline in December 2012.
© Imaginechina/AP State-owned China National Petroleum Corp. (CNPC) is a partner in a Myanmar offshore gas exploration project and a joint investor with MOGE in twin cross-border oil and gas pipelines that supply China.
In the absence of a unified regional approach, the possibility of Chinese companies cornering oil and gas assets discarded by their regional or international peers looms large. While being a major blow for the exiting company, more crucially, it would not serve the purpose of engendering a return to democracy in Myanmar.
There are longer-term implications of foreign oil and gas players turning their backs on projects in Myanmar, apart from lingering losses on their balance sheets. It would raise the hurdle for those companies -- or their peers -- in returning to the country when the situation has normalized.
This would leave Myanmar poorer in the long run and its gas buyers uneasy, with a considerably smaller pool of producers or a sector completely dominated by China.
