Shwe Gas Project in Burma: Recent Developments

Home / Blog / Shwe Gas Project in Burma: Recent Developments

The Shwe Gas Project is a large-scale natural gas development project in Burma. It will be Burma’s largest gas development project ever in terms of gas reserves, potential revenue, and the number of people that could be adversely affected. It will very likely involve environmental degradation, as well as human rights violations such as land confiscation, forced relocation, forced labor on project infrastructure, and forced portering for the military. Adding a new element to the Shwe Gas Project, it was recently learned that Burma’s junta and the Shwe gas consortium will sell gas to PetroChina, which potentially involves construction of a gas pipeline through Burma to Kunming in China’s Yunnan Province.

In Burma, major development projects aimed to exploit natural resources are directed by the ruling junta and overseen by the Tatmadaw (military). The projects proceed with no public participation and often result in environmental degradation, as well as human rights violations such as land confiscation, forced relocation, forced labor on project infrastructure, and forced portering for the military.1 The Shwe Gas Project is a large-scale natural gas development project. It will be Burma’s largest gas development project ever in terms of gas reserves, potential revenue, and the number of people that could be adversely affected.2 With the help of companies from South Korea and India, the project is unfolding with no local participation and no Environmental Impact Assessment (EIA), and it will undoubtedly involve serious human rights violations. The legal and moral responsibility to uphold human rights and environmental protection lay not only with the junta, but also with the junta’s corporate partners.

The Shwe Gas Project is a project of the Myanmar Oil and Gas Enterprise (MOGE) – a company 100 per cent owned by the junta – in partnership with an international consortium of private and state-owned companies from South Korea and India. South Korea-based Daewoo International is the largest stakeholder (60 per cent) while the remaining 40 percent is divided between the state-owned Korean Gas Corporation (10 per cent), India’s state-owned Oil and Natural Gas Corporation (ONGC) (20 per cent) and the Gas Authority of India Ltd. (GAIL) (10 per cent).

In August 2000, Daewoo International partnered with the Myanmar Oil and Gas Enterprise (MOGE) to explore and potentially develop offshore natural gas deposits in the Bay of Bengal off the coast of Arakan State. Exploration commenced and in 2004 Daewoo International announced the discovery of a large offshore natural gas field off the coast of Sittwe, the capital of Arakan State. The gas field comprises several blocks of gas of unconfirmed size. The A-1 gas block is estimated to be the largest, containing 2.88 trillion to 3.56 trillion cubic feet of natural gas, with an estimated market value over US$80 billion. There are preliminary plans to develop several gas blocks in the Bay of Bengal.

For over two years, it was presumed that gas from the A-1 Block was destined exclusively to India via a proposed overland pipeline through Burma’s Arakan and Chin states, and through Bangladesh, for consumption in Kolkata, India. This gained the attention of EarthRights International in part because pipeline construction in Burma has historically brought severe human rights abuses and environmental degradation, as well as further entrenching the junta.3 The project, however, reached a diplomatic stalemate when India refused a bilateral agreement proposed by the government of Bangladesh.

Using India’s growing demand for natural gas as a leverage point, Dhaka set forth the following bilateral conditions in order for any pipeline to pass Bangladeshi territory: trade routes for commodities from Bangladesh to Nepal and Bhutan through Indian territory; the transmission of hydro-electricity from Nepal and Bhutan to Bangladesh through Indian territory; and pursuing measures to reduce Bangladesh’s trade imbalance with India.4 India found these conditions disagreeable and the project was stalled indefinitely.

In December 2005, while India and Bangladesh deliberated to a standstill, the junta and the Shwe gas consortium indiscriminately signed a memorandum of understanding (MoU) with PetroChina, a private oil and gas company based in Beijing, for the sale of gas from the A-1 Block. This MoU includes preliminary plans for the construction of an overland pipeline through Burma to Kunming in China’s Yunnan Province.5

All was not lost for India, however. The junta guarantees gas deposits off Arakan State are plentiful enough to supply the needs of both India and China. India recently hired Brussels-based consulting firm Suz Tractebel to conduct a feasibility study for pipeline routes circumventing Bangladeshi territory. The only possible route for an Indian pipeline that avoids Bangladesh will be overland to Northeastern India. Any undersea route will necessarily pass through Bangladeshi waters and encounter the same bilateral demands, not to mention that route involves considerably more advanced technology and higher construction costs. The findings and recommendations of Suz Tractebel are expected in May 2006.6

The Shwe consortium and the Myanmar Oil and Gas Enterprise (MOGE) oversee development of the Shwe Gas Project, which will include drilling and transporting the gas to end-users. Considering that the Shwe consortium includes India’s ONGC and GAIL, the advent of China as an end-user created what appeared to be the awkward situation of India effectively supplying gas to China, their biggest competitor for oil and gas. However, assuming India finds an economically attractive way to transport gas avoiding Bangladeshi territory, the Indian government will be both an official consortium stakeholder in the overall project, as well as a potential end-user of the Shwe gas. China, on the other hand, will enjoy only end-user status.

The introduction of China to the Shwe gas picture was unexpected but not surprising for several reasons: The junta had no incentive to set aside the gas exclusively for India and patiently await the outcome of stalled bilateral negotiations with Bangladesh – PetroChina was ready to buy; the MoU with PetroChina represents the ever growing economic and trade relationship between Burma and China, coinciding with several recent diplomatic visits between high level officials from each country; and Burma’s military junta is politically and economically unstable and insecure, wrought with corruption and deceit.7 This politico-economic military climate arguably contributes to a sense of urgency to all of the junta’s undertakings, particularly when those undertakings secure needed revenue, as the Shwe Gas Project does on an unprecedented scale.

The Shwe Gas Movement

As the largest stakeholder in the Shwe Gas Project, Daewoo International (60 per cent) is the primary target of international activism for earth rights and corporate social responsibility in Burma. Most recently, Mizo activists in Mizoram, India, organized the Anti Gas Pipeline Campaign, calling for the immediate cessation of the Shwe Gas Project, citing human rights and environmental concerns consistent with the larger Shwe Gas Movement.

Activism targeting Daewoo International is not meant to acquiesce the involvement of the government’s of India, South Korea, Bangladesh, and China – all of whom have leverage in the project and with the junta, and all of whom are equally responsible for any human rights abuses and environmental destruction associated with the Shwe Gas Project. Until these countries abstain from partnering with the junta – an internationally recognized violator of human rights and the environment – the people of Burma and the environment will suffer.

Engaging the Junta

Companies like Daewoo International could not always invest recklessly in Burma as they do now. In 1988 Burma’s junta not only renamed the country “Myanmar,” they also redesigned the country’s macroeconomic policy. The generals in power shifted from the tragic, unsuccessful, and heavy-handed “Burmese Way to Socialism” to their own disastrous brand of economic liberalism.8 By law, Burma’s open-market economy now encourages and channels foreign investment through the ruling generals, enabling and entrenching them by design.9 Despite the junta’s growing personal economic prowess, the country is in a protracted mess, branded by the United Nations a Least Developed Country (LDC), with no signs of improvement.10 While East Asian economies are projected to enjoy a decent sustained growth in 2006,11 economic activity in Burma will be sluggish at best. Burma’s energy sector will contribute to a rise in GDP, but even that will be misleading, the result of unitary lucrative projects like the Shwe Gas Project rather than any real, balanced and sustainable development.12

When Daewoo International and the junta’s partners from South Korea, India, and China invest in Burma, they do not invest in the country’s development, they invest in the junta.13 Of all foreign investment into Burma, the oil and gas sector is the junta’s most lucrative, accounting for approximately US$2.494 billion since 1988,14 or roughly 33 percent of all foreign investment since 1988. From the Shwe Gas Project, Daewoo International projects net profits of US$86 million annually for 20 years, while the junta could take in up to US$3 billion annually. If anyone questions the relative economic vitality of the brutal junta, question no further.15

The Shwe Gas Project threatens the basic human rights and environment of the people of Burma. The project must stop until the 52 million people of Burma can participate in development decisions and enjoy their human rights.

Notes

1 The military has a well documented history of human rights violations, as well as introducing rape, torture, and murder to local communities in surrounding areas of development projects. For information on human rights abuses and environmental degradation associated with previous natural gas pipelines constructed through Burma, see EarthRights International report “Total Denial Continues” (2003) and EarthRights International web article “Another Yadana.”   On Shwe Gas development prior to the MoU regarding the sale of Shwe gas to China, see Matthew Smith & Naing Htoo, Another Snake in the Jungle? Shwe Gas Development in Western Burma, Watershed, Vol. II, No.1, 31, 34-36 (July-Oct. 2005), subscriptions and past issues available at http://www.terraper.org/watershed/subcribe.html.

2 The Yadana and Yetagun pipelines in Burma adversely affected approximately 35,000 people. See EarthRights International web article “Another Yadana,” supra note 1. The Shwe Gas project potentially involves construction of two pipelines considerably longer than previous pipelines in Burma, covering wider terrain, thus affecting a greater number of people.

3 On behalf of fifteen Burmese villagers, EarthRights International filed a lawsuit in US Courts against California-based Unocal Corporation for human rights abuses associated with the construction of the Yadana and Yetagun pipelines through southern Burma. In 1997, the U.S. Federal District Court in Los Angeles found that, “the evidence does suggest that Unocal knew that forced labor was being utilized and that the Joint Venturers benefited from the practice.” On the basis of this finding the Court concluded that corporations and their executive officers can be held legally responsible under the Alien Tort Claims Act for violations of international human rights norms in foreign countries, and that U.S. courts have the authority to adjudicate such claims. The 9th Circuit Court’s decision is available at http://www.laborrights.org/projects/corporate/unocal/unocal091802.pdf (accessed 28 February 2006).

4 “Primary Jolt in Burma-India Gas Pipeline Project,” Mizzima, 19 January 2005. available at http://mizzima.com/archives/news-in-2005/news-in-jan/19-January%2005-24.htm [accessed 02 March 2006]

5 See David Fulbrook, “Gas Deal Fuels China’s Plans for Myanmar.” The Straits Times. 2 February 2006.

6 See Syed Ali Mujtaba, “Consultant to Study Indo-Burma Gas Pipeline Routes.” Mizzima News, 8 February 2006.

7 See Kyaw Yin Hlaing, “Myanmar in 2004: Why Military Rule Continues” in Southeast Asian Affairs 2005, Institute of South East Asia Studies Publications, Singapore (2005). p231-256.

8 See Myanmar Foreign Investment Law, available at the official Myanmar government website, http://www.energy.gov.mm/Incentive_1.htm.

9 Shareholding capacity is reserved for the military and military families. See The EU and Burma: The Case for Targeted Sanctions, available at www.burmacampaign.org.uk/reports/targeted_sanctions.htm.

10 See the United Nations Conference on Trade and Development (UNCTAD), Least Developed Countries (LDC) http://www.unctad.org/Templates/Page.asp?intItemID=3641&lang=1

11 See recent United Nations economic forecast report, “World Economic Situation and Prospects 2006,” available at http://www.un.org/esa/policy/wess/wesp2006files/wesp2006.pdf

12 Based on a February 2006 interview with an undisclosed economist. Notes on file with author.

13 See Tyler Giannini “Destructive Engagement: A Decade of Foreign Investment in Burma” EarthRights International issue paper (1999). [accessed 28 February 2006].

14 “Foreign Investment in Burma Hits US $7.6 Billion.” The Irrawaddy Online Newsletter, 18 November 2005.

15 See S. Mukherjee, “Myanmar: Cheers Jeers over Giant Gas Find” Asia Times Online (13 Feb 2004).

More Blog Posts

December 10, 2018

Plan it Right: National Action Plan of Thailand on Business and Human Rights Shall be Inclusive to CSOs Voices
Read More

November 27, 2018

2019 EarthRights School Application
Read More

November 19, 2018

Congress Should Investigate the Oil Industry’s Role in Causing the Climate Crisis
Read More
Milena Kaneva and Vaclav HavelKaren villagers protest the damming of the Salween River