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Myanmar Crisis

Total and Chevron strike symbolic blow at Myanmar junta's revenue

Activists urge further suspensions of gas-related payments

An activist gestures as other protesters hold pictures of victims of Myanmar's military coup at a demonstration in front of oil producer Total's headquarters near Paris, on March 25.   © Reuters

BANGKOK -- Oil and gas majors Total of France and Chevron of the U.S. announced on Tuesday that they will suspend some cash payments linked to Moattama Gas Transportation Company, a Myanmar gas pipeline joint venture between three foreign energy companies and state-owned energy producer Myanma Oil and Gas Enterprise.

The move suspends just a fraction of Myanmar's earnings from its lucrative gas fields, which amounted to more than $3.3 billion in 2020, according to U.N. data, and it does not affect the military regime's share of gas revenues, royalties from the country's gas field operations or taxes from the pipeline, which together constitute the vast majority of payments to the junta facilitated by the foreign energy companies.

Activists welcomed the move as a small but symbolic sign of international pushback against Myanmar's junta but urged more action. Since the Feb. 1 coup, the country's security forces have carried out a brutal campaign against civilian protesters, killing at least 830 people and arresting more than 5,400 according to the monitoring group Assistance Association for Political Prisoners.

"We cautiously welcome Total and Chevron's decision to suspend payment by the MGTC. ... But we note that this is only a minor portion of the revenue that the junta is receiving from Total's operations in Myanmar, which also includes the state's share of gas revenues, royalties and corporate income taxes," said Justice For Myanmar spokesperson Yadanar Maung. She called on oil and gas companies in Myanmar to "act decisively" to stop all revenue payments reaching the junta. "Total and Chevron have made enormous profits in Myanmar in the past, while simultaneously bolstering brutal military regimes. This must stop."

In separate statements on Wednesday, Chevron and Total said they had jointly proposed at a May 12 MGTC shareholders meeting to suspend cash distributions to the company's stakeholders. The suspension is likely to affect this year's dividend payments from the gas pipeline operation. MOGE's share of dividends from the pipeline operation is estimated at $43 million annually over the three financial years to 2019, according to Justice For Myanmar and U.K.-based Finance Uncovered.

In an April 1 report, Brussels-based International Crisis Group warned that the Myanmar regime would likely fall back on natural gas and other natural resources, which were the mainstay of the national economy in previous decades of military rule.

MGTC runs a 400 km pipeline that carries gas produced from the Yadana field operated by Total Exploration & Production Myanmar. The pipeline runs to the Myanmar-Thailand border. MOGE operates a separate domestic distribution network.

Total and Chevron between them own 59% of MGTC, with Total's stake being 31.24% and Chevron's 28.26%. The remaining two shareholders are Thailand's PTT Exploration and Production Public Company (25.5%) and state-controlled Myanma Oil and Gas Enterprise (15%).

The decision to suspend payments, backdated to April 1, follows strong criticism of the foreign companies by international human rights groups for maintaining their gas production operations in Myanmar. Other critics have pressed them to suspend payments of royalties, taxes and other fees to the junta. Total and Chevron have argued that withdrawing or cutting back their operations would jeopardize their employees and penalize the people of Myanmar. PTTEP has declined to make a statement about its position in Myanmar.

In announcing the suspension of cash distributions, Total said it condemns the violence and human rights abuses occurring in Myanmar, but emphasized that it "continues to act as a responsible operator of the Yadana field, maintaining the production of gas in accordance with applicable laws, so as not to disrupt the electricity supply that is vital to the local populations of Myanmar and Thailand." Similarly, Chevron said that "any actions should be carefully considered to ensure the people of Myanmar are not further disadvantaged by unintended and unpredictable consequences of well-intentioned decisions."

Both companies have said they will comply with any decisions by relevant international and national authorities, including applicable sanctions issued by EU or U.S. authorities.

So far, neither the U.S. nor EU has imposed sanctions on MOGE, although they have targeted some military-owned conglomerates and businesses, as well as individuals linked to the junta.

Additional reporting by Rory Wallace in Yangon.

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