SPECIAL - Oil in Burma

[Rangoonp@xxxxxxx]

Oil in Burma

Fueling Oppression

by Dara O'Rourke / Multinational Monitor

KNOWN TO HUMAN RIGHTS GROUPS as "Asia's new killing fields," Burma is a
country violently divided. The military regime which controls the
country of 42 million
is currently waging battles against more than a dozen ethnic insurgent
groups and a student-led democracy movement. The regime, considered
illegitimate by most
countries in the world, faces international condemnation and pressure
from the democratically elected government-in-exile to relinquish power. 

The military regime, which calls itself the State Law and Order
Restoration Council (SLORC), is relying on the exploitation of BurmaÆs
natural resources to finance the
military battles it is waging against its own people. In 1988, the
regime "began to sell BurmaÆs natural resources like fast food,"
according to the Burma Action Group, a
British human rights organization. A main item on this menu is the sale
of BurmaÆs oil reserves. 

With the critical assistance of multinational oil corporations, the
SLORC plans to significantly expand oil production in Burma over the
next several years to generate
foreign currency to purchase weapons. Between 70 and 90 percent of the
profits from oil and gas development will go directly to the military
regime. The Burma Rights
Movement for Action, an opposition group based in Bangkok, Thailand,
estimates oil exploration contracts have accounted for 65 percent of the
foreign investment in
Burma since 1988. 

Michele Bohana, the director of the Washington, D.C.-based Institute for
Asian Democracy, asserts that "these foreign investments directly
support the illegitimate military
junta of Burma. The government is bankrupt. They have to get foreign
exchange to survive." Further, the SLORC is counting on the large
presence of multinational
corporations such as Amoco , Unocal , Texaco , Royal Dutch Shell ,
Petro-Canada and Idemitsu to gain international legitimacy and to fend
off proposed international
economic sanctions. 

  

>From crackdown to build-up 

In 1988, the SLORC took control of Burma from long-standing leader
General Ne Win, and changed the name of the country to Myanmar. However,
rumors suggest that
Ne Win continues to exert significant control over the SLORC and its
policy decisions. During its coup and subsequent crackdown on
pro-democracy demonstrators,
SLORC troops gunned down an estimated 4,000 students and other
protestors. 

Following the coup, foreign donors suspended $500 million per year in
aid to Burma. The nearly bankrupt regime, which began to run out of
money to finance its army,
promised to hold free elections in 1990. 

In the 1990 elections, the National League for Democracy, led by 1991
Nobel Peace Prize winner Aung San Suu Kyi, won an overwhelming 81
percent of the popular vote.
The SLORC received 2 percent of the parliamentary seats in the election.
However, the SLORC annulled the election and imprisoned the victors,
including Aung San Suu
Kyi, who remains under house arrest in Rangoon. 

A small group of donors, including the International Development
Association (IDA) of the World Bank , the Asian Development Bank (ADB),
the United Nations
Development Program and the Japanese government, reactivated their aid
to SLORC following the election, arguing along with multinational
business leaders that
investment in Burma will speed development and eventually promote
political liberalization. 

The SLORC, in the meantime, continues to rule Burma by repressive
military control. Military expenditures currently account for
approximately 60 percent of the
government budget. Arms purchases in 1991 amounted to approximately $1.4
billion. The military has grown by over 50 percent since the SLORC took
power, from
190,000 to approximately 300,000 troops. 

Most governments around the world, as well as human rights groups such
as Amnesty International and Asia Watch, condemn the regime and the
repressive human
rights conditions that are regularly reported within the country. The
Lawyers Committee for Human Rights reports that BurmaÆs citizens are
"subject to unlawful arrest,
detention without trial and torture for exercising their rights to
expression and association," and have recently been "forced to serve as
porters for the Burmese army, where
they are used as human mine detectors." A number of countries have
proposed a United Nations embargo, as well as other economic sanctions
to force the SLORC to
honor basic human rights accords and the results of the 1990 elections. 

However, while leaders of many countries such as the United States and
Canada officially oppose the actions of the SLORC, they continue to
allow multinational
corporations based in their countries to operate and invest in Burma,
buoying the unstable and financially strapped regime. Multinational oil
companies based in the
United States, Canada, England, Japan and Australia have directly
invested over $400 million in Burma since 1989. And critics say that the
SLORC is using its greatly
expanded foreign currency reserves to modernize and expand its army
rather than to benefit the people. "Despite the influx of foreign money,
the lives [sic] of the average
citizen of Burma has not improved," contends the Burma Rights Movement
for Action. "Instead, it has steadily gotten worse." 

  

Natural resource auction 

The SLORC leadership has apparently decided that exploiting natural
resources is the best means of developing the country. Current SLORC
practices regarding timber,
minerals, fishing rights and oil concessions indicate sales of these
resources are the primary strategy for raising funds. 

When the SLORC took control of Burma, the country was estimated to have
had 80 percent of the worldÆs remaining teak forests. During the last
three years, however,
the SLORC has sold expansive concessions of teak and other hardwoods to
Thai timber companies for clear-cutting. In 1990, the United Nations
estimated that 1,235,000
acres of tree cover were disappearing every year in Burma due to
clear-cutting practices. The World Watch Institute estimates
forest-cutting in Burma at over 2 million
acres per year. 

Burma has large mineral reserves of tin, tungsten, copper, lead and
zinc, as well as deposits of precious stones such as jade, rubies and
sapphires. SLORC has been
selling the rights to mine these gems throughout Burma. Insight
Indochina reported in 1991 that the SLORC had set a goal of producing
49,200 ounces of gold in 1992.
This is a 1,130 percent increase over 1990Æs production of 4,000 ounces. 

One of BurmaÆs most famous resources is opium, which is converted into
heroin for sale on the international market. A number of groups,
including Green November
32, an environmental and human rights group based in Bangkok, Thailand,
have alleged that SLORC leaders are involved in the illicit heroin
trade, with some funds going
directly to weapons purchases. David Todd, a Canadian journalist,
reported in the Ottawa Citizen that "Western intelligence agencies say
[an arms deal with China was]
paid for in part with the proceeds from heroin and opium trafficking in
which Myanmar military authorities are deeply involved." 

The SLORC, however, is focusing its efforts on oil and gas development.
Because of a lack of foreign exchange, Burma has had a policy
restricting the import of oil, thus
creating a serious shortage throughout the country. Oil development is
thus meant to alleviate the energy shortages throughout the country, as
well as raise foreign
currency. 

Multinational oil companies move in 

All oil and gas development in Burma is controlled by the military-run
Myanmar Oil & Gas Enterprise (MOGE). Despite financial and technical
support from Japan over
the last decade, Burma has experienced a steady decline in oil and gas
output, from a level of 30,000 barrels per day in the late 1970s to
around 12,000 barrels per day in
1991. 

In 1988, due to worsening economic conditions and the precipitous
decline in oil production, the SLORC moved to end its isolationist
policies and attract foreign oil
investment. As part of this move, the government reversed a 26-year
policy banning foreign participation in onshore oil exploration and
development, and signed contracts
with nine foreign oil companies. 

The nine multinational oil companies that signed the first contracts
with the SLORC in 1989 included Amoco (United States), Unocal (United
States), Idemitsu (Japan),
Royal Dutch Shell (Netherlands/United Kingdom), Yukong Oil (South
Korea), Broken Hill Petroleum (Australia), Petro Canada (Canada), Croft
Exploration (United
Kingdom) and Kirkland Resources (United Kingdom). These firms were
reported to have paid between $5 million and $8 million each in signing
bonuses to the Burmese
regime. 

Since 1989, a number of other companies have also signed contracts with
the SLORC. These include Premier Oil (United Kingdom), Nippon Oil
Exploration (Japan), ELF
(France), Petronas (Malaysia), and most recently International Petroleum
Corp. (Canada), Apache Oil (United States), Tyndall International
(United States) and Texaco
(United States). 

By the summer of 1991, according to the Far Eastern Economic Review,
oil companies spent an estimated US$415 million on exploitation efforts,
hoping to cash in on
the SLORC-granted oil concessions. Bohana explains, "the oil companies
havenÆt lifted a drop of oil yet, but they have thrown hundreds of
millions of dollars into the
hands of the SLORC." 

AmocoÆs contract to explore the Block B concession, a 33,000 square
kilometer tract located in the Upper Chinwin basin in northern Burma,
included an initial payment
of $5 million to the SLORC as a signing bonus. Amoco has worked very
hard to foster good relations with the SLORC. The chair of Amoco, H.
Laurence Fuller, traveled to
Burma personally in 1990 to meet with the SLORC head, General Saw Maung.
Jim Fair of Amoco says that the company drilled one well in 1992, and
"did not find
hydrocarbons in commercial quantities." According to Fair, Amoco is
currently "evaluating whether [the company] will continue in Burma,
period." Amoco continues to
keep an office open in Rangoon, the capital city. 

Unocal has been working in the Block F concession, and has entered a
joint venture agreement to explore the Block E concession, both of which
are located in central
Burma. Unocal is reported to have agreed to invest $29 million over the
three years of its contract. However, in response to high exploration
costs and three failed oil
wells, Russ Small of Unocal says that the company is "planning to pull
out of Myanmar at the end of 1992," when its contract expires. "Three
years, three wells, youÆre
out," Small says. Unocal has not officially announced this decision. 

Texaco, the newest entry into Burma, recently bought into three
different concessions, one onshore and two offshore, without any public
announcement. Onshore,
Texaco purchased a 42 percent stake in Block I, the concession held by
Croft Exploration and Clyde Petroleum. Offshore, Texaco acquired a 50
percent interest from
Premier Oil in two blocks covering 7.9 million acres in the Gulf of
Mataban. After uncovering TexacoÆs quiet move into Burma, Green November
32, released a
statement, charging, "Texaco does not want its financial involvement
with - and therefore tacit support of - the brutal SLORC military regime
to be known, as it may make it
a target for boycott action." 

In 1989, Petro-Canada signed a $22 million oil exploration contract for
the Block E concession with the SLORC, including an initial $6 million
signing payment. Petro-
Canada is the 80 percent state-owned oil company of Canada. While the
Canadian government has repeatedly condemned the actions of the SLORC,
the government
claims it cannot influence the decisions of its own oil company. 

A number of human rights and environmental groups have called on the
Canadian government to pull Petro-Canada out of Burma. The Canadian
environmental group
Friends of the Rainforest has organized a boycott of Petro-Canada
because, it charges, "up to 90 percent of any oil and gas production
goes to the military regime."
Friends of the Rainforest also argues that "oil investment dollars are
helping turn mainland AsiaÆs last significant forested region into a
wasteland. Petro-Canada must
share responsibility, along with [the companyÆs] principal shareholder,
the Government of Canada." 

Royal Dutch Shell is exploring the Block G concession, which includes
over 19,000 square kilometers in central Burma. Earlier this year, Shell
became the first
multinational to discover recoverable quantities of oil or gas. The
company found large natural gas reserves at Ahpyauk, 80 kilometers north
of Rangoon. Shell and SLORC
plan to bring the well into production as quickly as possible at a rate
of 20 million cubic feet per day. A Bangkok newspaper quoted Pe Kyi,
engineering director for the
MOGE, as saying that SLORC was "very happy" about ShellÆs find, and
promised many more wells would be drilled in the near future. 

Yukong Oil, Broken Hill Proprietary (BHP) and Kirkland have all been
unsuccessful in their oil exploration efforts. Yukong spent more than
$20 million without completing
its first spud. BHP spudded a dry well in 1991. And Kirkland was
reported to be considering pulling out of Burma at the end of 1991,
after two years of unsuccessful
exploration in a war-torn area close to the Thai border. 

Natural gas exploration has increased onshore as well as offshore. A
subsidiary of the Thai national oil company, PTT Exploration and
Production (PTTEP), has proposed
a $2 to $3 billion project to explore for natural gas in BurmaÆs Gulf of
Mataban. The project would pump the estimated 3.6 trillion cubic feet of
natural gas reserves in
Mataban through a 500-kilometer undersea pipeline from Burma to
Kanchanaburi province in Thailand. This pipeline would require extensive
military protection, as it would
pass through areas currently held by Karen and Mon rebels. 

The French oil giant Total signed an agreement with the MOGE in July
1992 to develop natural gas in two offshore blocks in the Gulf of
Mataban covering an area of
26,000 square kilometers. Total plans to work with PTTEP to develop the
concessions and feed the natural gas into the proposed pipeline. MOGE
chose Total over two
other western multinationals, Royal Dutch Shell and Unocal, in
negotiations which lasted over a year. 

Most of the actual work in Burma is not performed by these oil giants,
but is instead farmed out to smaller multinational oil service and
support firms. These smaller
companies are performing geophysical testing, cutting roads, building
helipads, drilling test wells and providing other support for the
controlling oil firms. Some of the
largest of these firms include Parker Drilling Co. (United States),
Compagnie General de Geophysique (France), Geophysical Company Limited
(France/United States),
which is owned by Schlumberger, Halliburton Geophysical Services (United
States), Grant Norpac (United States), Heavilift (Australia), Columbia
(United States), PAE
Singapore (United States) and Seismograph Services Ltd. (United Kingdom)
which is owned by Raytheon, a U.S. defense contractor. 

  

Oil and the environment 

Burma is a country with particularly rough terrain, and almost no
infrastructure to support oil exploration and production. Most of the
areas where oil exploration is
proceeding remain inaccessible by roads. Heavy equipment is shipped up
rivers during the monsoon season, and then used after the monsoons have
passed. Many
activities require the use of helicopters to by-pass the roads and
rivers. Forests must thus be cleared to open areas for helipads, base
camps, testing sites and roads. 

Testing involves the use of gravity and seismic lines. Companies clear
one-to-four- meter-wide paths one kilometer apart, in a series of grid
lines, and lay 10-pound
dynamite charges every 100 to 150 meters. Cables with seismic meters are
placed along the grid lines and when the charges are detonated, readings
are taken and
analyzed. 

The companies are cutting roads by hand or with bulldozers through
virgin tropical forests in order to lay the grid lines. Green November
32 alleges Compagnie General de
Geophysique has been cutting roads "with the use of forced labor in the
Kirkland block," which is in a militarily contested area in southern
Burma. 

Environmental impacts of the oil exploration include the significant
deforestation necessary to access areas for seismic testing, and for the
construction of helipads. Once
roads are constructed into these areas, deforestation follows. Green
November 32 claims that "SLORC officials have arranged the granting of
timber concessions to
favorites in areas of virgin forest newly opened up by the oil
companies." Constructing roads also allows the military to move
soldiers, heavy artillery and supplies into
opened areas, thus securing their hold over the indigenous populations. 

Other environmental impacts of the exploration include large-scale
erosion around areas which are cleared, exploded with dynamite and
drilled. Flash floods occur in
deforested areas during the rainy season. Pollution of streams and
rivers with mud and silt from the exploration process is common.
Disruption of wildlife around the areas
being explored is unavoidable due to the explosions, chainsaws and
helicopters. 

Amoco and Unocal officials interviewed for this article claim their
operations have no detrimental environmental impacts. AmocoÆs Fair says
the company has "assessed
environmental impacts all along the way," and all of their drill sites
"return to their natural state very quickly." Bohana of the Institute
for Asian Democracy disagrees,
however, saying, "Teak and hardwood cutting is currently more
environmentally destructive, but long-term environmental destruction
will result from oil development." 

  

Oil and human rights 

Human rights groups argue that oil development has direct impacts on
the people of Burma. A Green November 32 statement notes, "recent
reports from inside Burma
indicate that human rights violations are being perpetrated by the SLORC
army in association with the oil companiesÆ planned and actual
activities. Genocidal offensives
are being carried out as part of the juntaÆs efforts to clear potential
oil bearing areas of their indigenous inhabitants. ... Tens of thousands
of Burmese people are being
forced to labor on roads for less than subsistence wages for the benefit
of the oil multinationals and the junta." 

Because a number of battles are being waged on different fronts
throughout Burma, there is also some conjecture about the areas which
the SLORC is fighting hardest to
control. Green November 32 reports, "SLORC troops have been particularly
active in oil concession areas, and have launched heavy offensives in
areas where concessions
have been offered but not sold, such as the Kachin and Arakan States.
There have been very serious human rights abuses perpetrated on local
populations in association
with these attempts to control the potentially oil-bearing zones." 

  

Sanctimony vs. sanctions 

Pro-democracy groups complain that Western governments are unwilling to
back up their rhetorical condemnation of the military regime in Burma
with economic
sanctions. These groups argue that ending oil exploration and
development in Burma by multinational corporations may be the most
effective means of forcing the regime
to acknowledge the result of the 1990 elections, and to restore human
rights and democracy to Burma. 

But as a Green November 32 statement explains, "When a multinational
oil company with the financial and political influence of Texaco invests
in a country like Burma, it
makes it substantially more difficult to effectively pressure a
government led by someone like George Bush ... into applying the
sanctions that have been repeatedly and
loudly called for. Obviously sanctions would not be good for those U.S.
oil companies - Texaco, Amoco, Unocal, Tyndall, and Apache - that have
invested so many
millions of dollars in their relationship with the SLORC regime." 

Multinational oil development remains key to the SLORCÆs expansion of
the military, and control over the people of Burma. Without foreign
exchange from oil
investments, the regime would be much more dependent on foreign aid,
which is often tied to political reforms. 

Until some form of international trade or investment sanctions are
passed by the United Nations or individual countries such as the United
States, however, multinational
oil companies will continue to fuel BurmaÆs military machine.