6 June 2024

Myanmar saw, not too long into the post-coup era, the departure of investments in the energy sector.

France’s Total and the US’s Chevron announced their decisions to leave Myanmar on January 21st 2022, citing the worsening human rights violations and general lawlessness.

Both worked on the Yadana Natural Gas project in the Andaman Sea, which is arguably Myanmar’s largest source of foreign income per individual project, as it had generated over one billion dollars in taxes for Myanmar, among other things.

Another French company, EDF, together with Japan’s Marubeni, also suspended the Shwe Li (3) Hydroelectricity Mega Dam project, worth 1.5 billion dollars. Both foreign entities were working with Ayeyar Hinthar, a local company.

Australia’s Woodside also announced their departure on January 27th after nine years of operating in Myanmar. Its shareholder also cited the growing list of human rights violations, claiming that they will incur a minimum of 200 million dollars in losses.

Woodside is involved in many of Myanmar’s petroleum and natural gas extractions, with a particularly notable one being the deep sea A-6 site, located on Myanmar’s western coastal line in cooperation with Total.

Myanmar’s natural gas extraction business earns around abillion dollar every year. According to AFP, the departure of western energy giants will cause the National Administration Council (NAC) to hundreds of millions of dollars annually.

Malaysia’s Petronas and Thai-based PTTEP have also announced their decisions to leave the country after their investments in the Yetagun gas field, a 24,130 square kilometerproject in the Moattama gulf, which produces both gas and liquefied gas.

Carigali, a subsidiary of Petronas, owns around 41% of the shares while PTTEP owns nearly 20%.

PTTEP claimed that the departure was part of plans by the company to restructure their investments in Myanmar’s energy related projects.

Petronas similarly claimed that it was part of a broader strategy that reevaluated their position as a company that had been active in Myanmar since 2003, based on the changing nature of the industry.

Japan-based ENEOS Holdings, a joint-venture between the Japanese government and Mitsubishi Corporation, as well as investors in the Yadana project, also announced their departure on May 2nd, citing reevaluation of Myanmar’s current climate,including social issues as well as technological-based factors.

ENEOS, in its decade of operations in Myanmar, owns 19.3% of the Yadana project. It said that their departure will be made official once the Myanmar government approves.

PTTEP, however, announced the takeover of operations of the Yadana offshore gas fields from Chevron and Total in March this year.

The NAC’s Union Minister of Information Maung Ohn said that such departures in the energy sector will not damage Myanmar, a sentiment echoed by the Union Minister of Investment and Foreign Economic Relations to members of the foreign press.

The former said that such departures were well within the confines of the contracts and that vacant spots will be taken over by the rest of the shareholders, while reaffirming that major petroleum and natural gas projects will continue to operate as normal.

He had claimed that reasons, citing human rights issues, were just excuses and that most decisions to were business-minded, as they were largely unsatisfied with the yield and a forecast of adrop in profits.

The Union Minister also said the departures were because their contracts were almost up and that no big damage would be done to Myanmar’s petroleum and natural gas sector, reassuring that Thailand’s PTTEP and South Korea’s POSCO had taken over necessary duties to keep things running.

Likewise, Union Minister Aung Naing Oo said that the investment by Total Energies is a mere 3% in the petroleum and natural gas sector, Chevron at 1.6% and Woodside is at 5.25%only, brushing off their departures as events that will not create problems for the country.

In comparison, Chinese investment in the same sector is at 27%and, despite withdrawals from the projects, Aung Naing Oo believes that those that who leave will be replaced by those that remain.

He also said that China-Myanmar cooperative efforts are underway and that Myanmar will receive quality help from China regarding the petroleum and natural gas sector. The minister also told the press that Myanmar is home to sources of petroleum and natural gas and, since Myanmar’s neighbours are always in need of those, the country’s petroleum and natural gas sector will remain an attractive destination for foreign investment.

By David Tun, Sett Naing