Thursday 9 January 2014

Oil Booms In Myanmar Despite Political Challenges

Global energy sources and global politics have been inextricably linked since the dawn of the industrial age. Emerging developments in Myanmar are now giving the world another reminder of the relationship between the two.

Myanmar, still known as Burma by many, was ruled for decades by a repressive military junta that kept it isolated from the rest of the world. Stiff economic sanctions were imposed by both the EU and the U.S., and while some Western energy companies were criticized by human rights groups for helping the regime elude the sanctions, Myanmar’s economy was by and large stagnant and its considerable natural energy resources largely untapped.

But recent liberalization, recognized by President Obama in his visit to the country last November, has resulted in the beginnings of unfettered oil and gas exploration. Myanmar has significant reserves of both—including one onshore field known in the petroleum services industry by the ironic name of the “Stalin basin”—enough to put it among the world’s top few dozen producers despite its current status as a net importer.

The government is now in the final stages of selecting the companies that will
be allowed to develop its energy sources. While American companies have been bidding aggressively for the rights—encouraged by Washington, which has so publicly signaled its blessing of Myanmar’s liberalization efforts— others are urging a more cautious attitude.

For one thing, critics say the Burmese economy is widely regarded as rife with cronyism: many worry that the contracts will mainly serve to enrich some of the country’s elite. And human rights activists have a new worry. Myanmar, despite its reputation as a home of tranquil Buddhism, is in fact a hotbed of seething tribal and religious tensions, some of which occasionally erupt in violence. Many are concerned that the pattern of energy development will exacerbate these tensions by favoring some groups over others.

Another possible complicating factor in Myanmar’s oil and gas picture comes from Aung San Suu Kyi, the Nobel Prize-winning dissident who, following liberalization, is now a member of Parliament and a possible candidate for president in 2015. While generally favoring greater oil and gas production, she has also advocated keeping most of the country’s resources for domestic use, rather than for export. That could change the economics of exploration and drilling, at least from the perspective of Western companies.

As a consequence, not all countries have the same appetite for rapidly increasing their trade with Myanmar: many are waiting for more signs that the commitment to democracy is genuine and irreversible, and that the country’s many minority groups are protected as development proceeds.

But nearly everyone has the same vision for what they’d like to see happen. Myanmar, then part of the British Empire, first exported crude oil in the 1880s. Most want to see it return quickly to the global stage, though only after human rights and other concerns are accommodated.

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This article is also published on the Energy Realities website.

source: Forbes

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