Total To Wait On Burma Expansion
By Francis Wade
French oil giant Total will wait until further signs of progress on democratic reform in Burma before moving to expand its controversial operations in the country, CEO Christophe de Margerie has said.
The 60-year-old, renowned for his bolshie defence of the company’s human rights record, told reporters this week that Total “would like to play a bigger role in the country”. It already part-runs the Yadana gas project, which carries gas from offshore blocks south of Rangoon to Thailand, and which rights groups brand as one of the world’s most maligned energy operations, but its eyes are set on expansion.
The intractable nature of many of Burma’s domestic crises means however that, if sincere about gauging developments there, de Margerie may have to wait some time. Critics were quick to round on the prisoner amnesty yesterday, which despite being driven by a message of conciliation from Naypyidaw, included only a small number of political prisoners among the thousands released. Moreover, many of the country’s key energy projects are located in regions beset by armed conflict.
“We decided that… it was important to be in Myanmar [Burma] but that we will not invest until things are getting better… I do hope that will happen,” Reuters quoted him as saying.
Burma’s gas reserves are thought to be in the region of 800 billion cubic metres, although areas of the country still remain unexplored. Total does not have a role in the massive Shwe pipeline project, which will pump 400 million cubic feet of gas across Burma from the Bay of Bengal to southern China, although Naypyidaw appears to have little against overseas companies exploring new energy frontiers in the country.
Quite what role Total will play in Burma’s expanding power sector remains unclear, but the company claims to be treading a bolder path as it goes about seeking new investment opportunities. Speaking to the Financial Times yesterday, de Margerie claimed the company had been “probably too cautious in the past … we were not taking sufficient risk to get sufficient access to new resources”.
Such statements are likely to draw the ire of environmental groups that have been monitoring its presence in Burma since the mid-1990s when work first began on Yadana. The Washington DC-based EarthRights International said in a 2009 report that its Yadana operations implicated it in “forced labour, killings, high-level corruption, and authoritarianism”.
The same organisation warned last year that investment in Burma’s energy sector by overseas companies may in fact be counterproductive, given the huge reputational and business risks that accompany working in a country so severely lacking in environmental or corporate accountability as Burma.
While such concerns appear not to have rubbed off on de Margerie – Total already has sizeable operations in Nigeria’s oilfields, and is currently eyeing Kenya’s healthy offshore blocks, while the military crackdown on protestors in Yemen this year had little impact on its work there – it has remained out of Iran since it cancelled all of its operations there last year.
Of the Iran pullout, de Margerie said in 2008, when the first stage of withdrawal began: “Today we would be taking too much political risk to invest in Iran because people will say: ‘Total will do anything for money’.”
US and EU sanctions on Iran played a major part in the decision, throwing into sharp relief the porous nature of punitive measures the West has implemented on Burma. The sanctions the EU does have on Burma were introduced after Total began work there, and do not force the withdrawal of companies already in the country.
Observers had approached yesterday’s prisoner amnesty with cautious optimism, given development in recent months that have seen the new government open up to the political opposition. US officials have hinted that the removal of sanctions largely hinges on the release of all political prisoners in Burma.
At the moment, however, the government appears to have reneged on its pledges of reform, with high-profile dissidents still behind bars. De Margerie was vague on exactly what qualifies as progress, although his hunger for a greater presence in Burma, whose vast gas reserves are being eagerly eyed by neighbouring China and India and whose future with regards to energy investment is thus a promising one, is evident.