Testimony of John Imle(Unocal presi

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Subject: Testimony of John Imle(Unocal president) on S.1511 (22/5/96)

/* posted 31 Jan 6:00am 1997 by drunoo@xxxxxxxxxxxx in igc:reg.burma */
/* -------------" The UNOCAL propaganda (22/5/96) "--------------- */

HEARING FOCUSED ON THE BURMA FREEDOM AND DEMOCRACY ACT S.1511
THE TESTIMONY OF JOHN F.IMLE, JR., PRESIDENT, UNOCAL CORPORATION
U.S. SENATE COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS, 22 MAY 1996
(Burma Debate MAY/JUN 1996.)

INTRODUCTION

Mr. Chairman, I am John Imle, President of Unocal Corporation. Unocal is a
global diversified energy corporation headquartered in Los Angeles,
California. We appreciate the opportunity to testify today. Our interest in
this hearing stems from our involvement ina partnership to develop the
Yadana natural gas field offshore MYanmar -- formerly known by its colonial
name, Burma -- and from our long history in developing countries in Asia.

UNOCAL'S POSITION ON S.1511
Unocal opposes the passage of S.1511. We believe the approach outlined in
S.1511 is counterproductive to its intent.

Rather than isolating Myanmar, the expanding use of unilateral steps will
further isolate the United States from many of its allies in Asia and
Europe -- all of whom are aggressively developing closer relationships with
Myanmar.

WHY IS UNOCAL IN MYANMAR ?
By the very nature of our business, energy companies must go to the
resources.

Unlike oil, natural gas cannot be transported over great distances. A
natural gas development project must have all related production and
transportation facilities located within a reasonable distance to a hard
currency energy market with sufficient demand for that gas.

Thus, geology and geography -- not geopolitics -- are our dictates. Other
industries have the luxury of locating wherever it is the most convenient,
expedient or cheapest. No international energy resource company has that
luxury.

These factors also play a key role in determining how we develop the Yadana
field. A world-class energy resource located 43 miles offshore Myanmar, the
field has reserves of more than 5 trillion cubic feet of natural gas.

Unocal joined this project in 1993 and has a 28.26 pecent interest. The
lead partner and project operator is Paris-based Total, which won the bid
for the field in 1992 and which hold a 31.24 percent share. The other
partner in the Yadana project are Thailand's PTTEP [Patroleum Authority of
Thailand Exploration and Production], which holds a 25.5 percent share, and
MOGE [Myanmar Oil and GAs Enterprise], Myanmar's oil and gas company, which
holds a 15 percent interest.

Much of the gas will be transported approximately 416 miles by pipeline
from the offshore Yadana field to Thailand where it will fuel an
electricity generating plant to be constructed at Ratchaburi, southwest of
Bangkok. Demand for electricity in Thailand is soaring and expected to
double over the next 15 years. Thailand has a strong economy and sufficient
resources to purchase the gas.

The Yadana project also makes feasible power and fertilizer plants to be
built near the capital city of Yangon, as well as a possible second
electricity generating plant in southern Myanmar.

Let me make one point very clear: this project will go forward with or
without the active involvement of Unocal or any other American company. It
involves the development of a known, abundant natural gas field, using
off-the-shelf technology, and serving a market with rapidly expanding
demand. There are no technological or economic hurdles to developing the
Yadana field.

If this legislation is enacted ad we are forced out, the current
parthership will either purchase our share of other foreign partner will be
recruited immediately. I also want to add that as a direct result of
discussions about bans on U.S. private investment in Myanmar, I have been
approached by a leading Asian corporation about possibly purchasing
Unocal's share in this project.

Our position is that it would be irresponsible -- for us, our stodkholders,
our employees and, for that matter, the people of Myanmar -- for Unocal to
divest our interest. Here's why: the project is being conducted in an
ethical and responsible manner, it is a key part of our Southeast Asia
business strategy, and it will bring numerous infrastructure development
and socio-economic benefits to Myanmar and Thailand.

WHO BENEFITS FROM OUR PRESENCE ?
The people of Myanmar will receive the main benefits of our involvement in
the Yadana project.

In a very poor nation desperately short of energy supplies, the project
will make feasible plants currently under evaluation for construction in
Yangon.

Myanmar's agricultural sector must now import -- at a significant cost --
most of the fertilizers used in its agricultural production. This
dependency will be lessened with the proposed ocnstruction of a
1750-metric-ton-per-day fertilizer plant near the capital city.

Of importance are the socio-economic development benefits the project is
bringig to the 20,000 villagers living in the vicinity of the 39 mile long
pipeline route. They will directly benefit from the project in two
important ways:

- the project offers immediate employment opportunities for all ethnic
communities in this region. Our employment practices ensure that the wage
scales for these jobs are superior to prevailing local average wage scales
and that employees are provided a safe and healthful work environment.

- the partners are underwriting a wide range of socio-economic development
programs that are developing a provate sector in teh region and
significantly improving local standards of living. We're building new or
removating existing schools, hospitals adn health centres. And we've
launched a major malaria research and prevention program under the
direction of teh Pasteur Institute.

These investments -- as well as all costs -- in the project are shared pro
rate by teh partners. Capital costs for the project -- which extends only
up to the Thai border -- are estimated at $1 billion. No significant income
is expected to be generated until the year 2000, and it will be another
three year -- the year 2003 -- before the partners expect to recover their
original investments.

The full project as well as its socio-economic development programs are
described in detail in the report and photographs attached to my testimony.
I ask consent, Mr. Chairman, that these documents be made part of the
hearing record.

The people of Thailand will also benefit from this project. The
clean-burning natural gas transported to Ratchaburi will generate up to
2,800 megawatts of electricity. This represents almost 10 percent of
Thailand's increased energy demand.

HOW CAN SUBSTANTIVE LONG-LASTING CHANGE BE ACHIEVED
Based on Unocal's 30-year history of doing business in Thailand, the
Philippines and Indonesia, we believe that long term and consistent
engagement in Myanmar will bring about change similar to that which
occurred in those countries.

U.S. corporations can and should play a role in helping shape the economic
development of Myanmar by seeting a leadership example. We can achieve this
by following specific business practices and codes of conduct and ensuring
that our operations comply fully with those standards.

Unocal is a publicly held corporation, accountable to our Board and our
stockholders. Our written code of conduct for doing business
internationally expresses clearly our commitment to treating everyone
working on any or our projects with fairness and respect. We have
established a comprehensive system of safeguards and complience practice to
ensure that every aspect of the Yadana project complies fully with our code
of conduct.

Unocal's code of conduct and Yadana project specific codes and policies are
included in the appendix of the report submitted with my written remarks.

We can promote constructive and positive change by demonstrating that
strict attention to health and safety standards, environmental compliance
and responsible labor practices are good for this project, good for
attracting capital for future projects, and good for the long-term
development of Myanmar.

Since joining the project in 1993, we have conducted six in-depth,
first-hand field evaluations, most recently in January 1996. I have been
there several times as well. In addition to these on-the ground reviews,
ongoing map research and aerial photography confirm that the Yadana project
is complying fully with our corporate code of conduct. Our board of
Directors regularly reviews the progress of the Yadana project and annually
reports on compliance issues to our shareholders.

S.1511 would eliminate any positive presence that U.S. corporations might
have in Myanmar. Section 4(b)(1) would ban U.S. companies to disengage. We
strongly oppose this section, and believe it will be counter-productivve to
promoting substantive, long-term change and encouraging economic progress
in Myanmar.

The additional unilateral steps outlined in S.1511 will render the United
States irrelevant in Myanmar's development and marginal in Southeast Asia.
None of Myanmar's major trading partners in Asia or in Europe is
considering a similar course of aciton, and none is likely to follow the
U.S. lead. In fact, the seven nations of ASEAN in July, 1995 took the first
formal step in forging even closer relationships with Myanmar by its
signing ASEAN's Treaty of Amity and Cooperation.

A number of provisions outlined in S.1511 will put the United States in
direct confrontation with our friends and allies in the region. I am not a
foreign policy expert, Mr. Chairman. However, having recently visited a
number of Southeast Asia countries, I've heard a constant and growing
concern about the current direction of U.S. policy toward Myanmar. Our
friends in these countries seriously believe that the current U.S. policy
of isolation and non-engagement will be intensified, and may, in fact,
weaken U.S.-ASEAN relations as ASEAN cross-border trade and engagement with
Myanmar increases.

The nations of Southeast Asia adopted a policy of constructive engagement
for a number of reasons. There is concern about Chinese economic dominance
in the region. Divisions and confrontations pose serious and significant
dangers, especially for neighbors sharing common borders. These nations
know that the politics of confrontation have created more problems that it
has solved. The are unlikely to change their policy of engagement. The
ASEAN nations are keenly aware that isolating Myanmar holds a very real
danger of forcing Myanmar squarely into the camp of its northern neighbor.

I, too, am concerned about official U.S.policy of isolation and
non-engagement.

Since September 1988, the United States has unilaterally suspended all
economic assistance to Myanmar and withdrawn GSP privileges. The
decertification of Myanmar as a narcotics cooperating in 1989 has, by law,
required the U.S. Executive Directors at all multinational financial
institutions such as the World Bank and the Asian Development Bank to vote
against projects in Myanmar. Neither Eximbank nor OPIChave programs in
Myanmar. And, since 1991, the U.S. diplomatic presence in Myanmar has been
down graded from Ambassador to the consular level.

Mr Chairman, I am fully aware fo teh cnallenges facing Myanmar, but none of
these unilateral steps has forced the changes in Myanmar that this bill
would demand.

Nor, I submit, would the further steps in S.1511. Instead, the bill would
further marginalize U.S. influence. The only people hurt by S.1511 will be
the ordinary citizens of Myanmar who other wise might benefit from the
humanitarian projects and techincal assistance previously carried out by
U.S. bilateral assistance agencies.

Steps outlined in S.1511 cannot have any measurable positive impact because
we have minimal economic and political leverage. U.S. investment in Myanmar
is less than 10 percent of all foreign investment and can -- and will -- be
easily replaced. By codyifing current sanctions, Cnagress will leave this
Administration -- and any further administration -- with no flexibility to
respond to or encourage changes in Myanmar.

The only result of S.1511 will be to isolate ourselves, not the government
of Myanmar. S.1511 will make it more difficult for the U.S. to be an active
player in Asia during the next centur. The United States runs the very real
risk of becoming irrelevant.

A review of U.S. actions shows clearly that the U.S. has not implemented a
policy that even remotely resembles constructive engagement.

If we continue traveling down the path of unilateral sanctions, we will be
unable to lead by example not only in Myanmar but throughout the region. We
will diminish our ability to influence constructively the future of
Southeast Asia and cede the opportunity to participate in the formative
stages of Myanmar's development. We also will have compromised,
hyprocritically in my assessment, our commitment to improving the lives of
others.

We are prooud of the Yadana project because it does what current government
policy fails to do: improve the lives of others. It is an outstanding model
of responsible economic development that can make a difference to teh
people of Myanmar and Thailand. For the first time in many villagers'
lives, our project brings hope and the chance of a better way of life.

As Myanmar opens up its economy to the West, it is time for us to lead by
example. It is not the time to slam the door shut.

To those who ask how we can remain in Myanmar, we respond, "How can we ever
justify leaving ?"

Thank you.
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