Oil industry eyes opportunity in Burma

Oil-and-gas companies are concerned about reporting requirements for doing business with Burma now that the United States has established relations with the country. 

Companies are lobbying the State Department on the reporting issue as the administration works to build diplomatic ties. President Obama on Monday hosted Burmese President Thein Sein at the White House in the latest sign of growing cooperation. 

Oil-and gas-firms are interested in buying blocs in the resource-rich Bay of Bengal off of Burma’s western coast. Burma has offered up several plots to European Union bidders in recent auctions, and U.S. firms are also beginning to show interest.

The companies are lobbying State on a rule governing business practices in Burma, also known as Myanmar, that Foggy Bottom is scheduled to finalize in the coming weeks. The American Petroleum Institute (API), Royal Dutch Shell, Chevron and Total S.A. have all been in contact with State on Burmese investment, according to lobbying disclosure forms.

 At issue is the human rights record of Burma, where a military junta suppressed ethnic minorities and democracy campaigners for decades.

Obama lifted sanctions and restored relations with Burma after Sein implemented reforms, including releasing democracy advocate and Nobel Peace laureate Aung San Suu Kyi from prison in 2010 after 21 years of captivity.

But human rights groups, along with Suu Kyi, have objected to Obama’s decision to let U.S. firms enter into contracts with Burma’s state-owned energy firm, the Myanmar Oil and Gas Enterprise (MOGE).

They say the military is the main driver of cronyism and suppression in Burma and depends on the MOGE for revenue. Human rights groups pushed State to remove MOGE from a list of firms that U.S. companies could do business with in the draft rule’s comment period, but they aren’t expecting to succeed.

State notes that the Burmese government supports the forthcoming rule as a way to clean up its business environment. Officials say the rule will have a positive effect on MOGE and Burma’s government by requiring them to adhere to U.S. human rights and ethics practices.

On Monday, State and Burma issued a joint statement reaffirming a commitment to help Burma "manage their natural resources, including oil and gas, and the revenues they generate, transparently and for the benefit of all their citizens."

API said that delegates of the Burmese government reached out to the trade group for assistance with the State Department rule.

“API is the global leader in setting industry standards, and as a resource rich country the delegates are seeing the many benefits that the U.S. is realizing as a result of new technologies combined with responsible oil and natural gas production,” Reid Porter, an API spokesman, told The Hill.

Under the State Department’s draft rule, any U.S. firm making an investment of more than $500,000 in Burma must file public documentation of human rights practices, how land was purchased, payments to the Burmese government and list any Burmese entities with which they are contracting.

The concerns that rule are designed to address are most acute near the Bay of Bengal, said Jennifer Quigley, executive director of the Washington, D.C.-based U.S. Campaign for Burma. She said she doesn’t hold out much hope that the oil-and-gas industry would have a reforming effect on the country.

“I come from a pessimistic view of the oil and gas industry, especially in Burma. This is the bread and butter for the military,” she told The Hill.

The Bay of Bengal lies adjacent to the Burmese state of Rakhine, the site of recent charges of ethnic cleansing of minority Rohingya Muslims by police and special security forces comprised of native Buddhists.

Any onshore facilities from oil-and-gas production in the Bay of Bengal are likely to end up on land owned by displaced Rohingya Muslims, Quigley told The Hill.

U.S. companies would also have to partner with MOGE, which Burma's government requires of foreign firms. Quigley said that could make U.S. companies complicit in human rights abuses, as she said it's unlikely that MOGE would use a security force other than the military.

“These oil companies are going to be put in the position where they have to submit reports where they’re either going to have to be hiding that or they’re acknowledging they’re violating U.S. law,” Quigley said.

Chevron is the only U.S. oil-and-gas firm doing business in Burma, doing so as a minority partner in the Total S.A.-operated Yadana gas pipeline. MOGE and PTTEP, a state-owned Thailand firm, also have stakes in the project.

The forthcoming State rule offers a grandfather exemption for that project, as the reporting requirements will only cover new investments.

Kurt Glaubitz, a spokesman with Chevron, told The Hill that the pipeline has yielded “significant social and economic benefits" for Burma, but noted large-scale foreign investment in the nation is still probably a ways off.

“I think it will work, but I think the infrastructure to attract foreign investment isn’t there presently,” Glaubitz said.

source: The Hill
http://thehill.com/blogs/e2-wire/e2-wire/300785-oil-industry-eyes-opportunity-in-burma