A natural gas and oil pipeline of the Yadana project in Myanmar. © Getty Images  

Energy Companies’ Withdrawal Underscores Need for New Sanctions

(New York) – Myanmar’s military will continue to collect massive revenues from natural gas and other extractive sectors unless new targeted sanctions block foreign currency payments supporting the junta’s abusive rule, Human Rights Watch said today. On January 21, 2022, TotalEnergies and Chevron announced plans to leave Myanmar, but natural gas revenue to the junta will continue because other companies will take over their operations.

The United States, European Union, United Kingdom, Japan, and other concerned governments should now adopt a common position to impose sanctions on all natural gas revenues. Thailand’s state-owned PTT and South Korea’s POSCO, the two main energy companies remaining in Myanmar, should signal their support for such measures.

“After nearly a year in power, Myanmar’s junta is continuing to commit horrific abuses without facing significant costs from the international community,” said John Sifton, Asia advocacy director at Human Rights Watch. “Junta leaders are not going to turn away from their brutality and oppression unless governments impose more significant financial pressure on them.”

Natural gas projects in Myanmar generate over US$1 billion in foreign revenue for the junta annually, its single largest source of foreign currency revenue. The money is transmitted in US dollars to the Myanmar Oil and Gas Enterprise (MOGE) and other military-controlled bank accounts in foreign countries in the form of fees, taxes, royalties, and revenues from the export of natural gas, most of which travels by pipeline to Thailand or China.

In its announcement on January 21, TotalEnergies said that the company was withdrawing from Myanmar due to the deteriorating human rights situation, which “no longer allows TotalEnergies to make a sufficiently positive contribution in the country.” TotalEnergies, in partnership with Chevron and PTT, has since the 1990s operated the Yadana gas project, one of the country’s largest fields. Chevron sent a brief statement to journalists the same day, stating that it was making “a planned and orderly transition that will lead to an exit from the country.”

TotalEnergies’ announcement reiterated points made by its CEO, Patrick Pouyanné, in a January 18 letter to Human Rights Watch, stating that the company had informed French and US authorities that it “supports the implementation of such targeted sanctions” to stop financial flows to MOGE.

Since staging a coup on February 1, 2021, Myanmar’s military has carried out a nationwide crackdown on anti-junta protesters, activists, and the political opposition, featuring widespread killings, torture, and other abuses, amounting to crimes against humanity. It has renewed military operations in ethnic minority areas that have resulted in numerous violations of the laws of war, including war crimes. TotalEnergies has faced growing pressure over the past year from across Myanmar civil society as well as from international rights groups and institutional investors to suspend payments to the junta or support sanctions that would block such payments.

Following the coup, the US, Canada, UK, and EU member states imposed targeted economic sanctions on junta leaders and companies controlled by the Myanmar military, but not on MOGE or payments it receives. The French and the US governments, as well as the EU, have not supported such measures.

The US and EU in particular are in key positions to impose sanctions since payments in the gas sector – even those handled by non-US and non-EU companies – are typically made in US dollars and involve correspondent US and EU banks. Sanctions by the US and EU can stop payments made in US dollars or Euros even by banks in Thailand, Singapore, South Korea, and other locations, since those banks always ultimately need correspondent US and EU banks – which are subject to US and EU law – to finalize, or “settle,” large dollar or Euro transactions.

When TotalEnergies and Chevron depart Myanmar, the flow of funds to the junta will not be disrupted. TotalEnergies reported that it will continue operating the Yadana field and pipeline for six months according to existing agreements, which also stipulate that “in the event of withdrawal, TotalEnergies’ interests will be shared between the current partners, unless they object to such allocation, and that the role of operator will be taken over by one of the partners.”

PTT, the remaining foreign project partner in Yadana, which currently holds 25.5 percent of the project, announced it was “considering potential directions of the Yadana project.”

The largest gas revenues that are paid to junta-controlled accounts are made via PTT, which purchases approximately 80 percent of Myanmar’s exported natural gas from Yadana as well as the Zawtika gas field, which it operates itself. In addition, PTT owns stakes in joint ventures with POSCO, which transports and sells gas to China. Human Rights Watch has previously written to all of these companies and their shareholders, urging them to support sanctions on gas revenues.

“Energy company departures from Myanmar will be only gestures so long as the junta keeps making money,” Sifton said. “The US and EU urgently need to impose measures that will have real economic impact on the junta, if there is to be any progress on human rights.”

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