INFO: Oil (and Rainforest Hardwood) in Burma -- Fueling Oppression
Multinational Monitor via Jym Dyer
[Also Posted to misc.activism.progressive (by Somebody Else)]
OIL IN BURMA: FUELING OPPRESSION
By Dara O'Rourke
[Published in the October 1992 issue of Multinational Monitor]
Known to human rights groups as Asia's new killing fields,"
Burma is a country violently divided. The military regime which
controls the country of 42 million is currently waging battles
against more than a dozen ethnic insurgent groups and a
student-led democracy movement The regime, considered
illegitimate by most countries in the world, faces international
condemnation and pressure from the democratically elected
government-in-exile to relinquish power.
The military regime, which calls itself the State Law and Order
Restoration Council (SLORC), is relying on the exploitation of
Burma's natural resources to finance the military battles it is
waging against its own people. In 1988, the regime "began to
sell Burma's natural resources like fast food," according to the
Burma Action Group, a British human rights organization. A main
item on this menu is the sale of Burma's oil reserves.
With the critical assistance of multinational oil corporations,
the SLORC plans to significantly expand oil production in Burma
over the next several years to generate foreign currency to
purchase weapons. Between 70 and 90 percent of the profits from
oil and gas development will go directly to the military regime.
The Burma Rights Movement for Action, an opposition group based
in Bangkok, Thailand, estimates oil exploration contracts have
accounted for 65 percent of the foreign investment in Burma
since 1988.
Michele Bohana, the director of the Washington, D.C.-based
Institute for Asian Democracy, asserts that "these foreign
investments directly support the illegitimate military junta of
Burma. The government is bankrupt. They have to get foreign
exchange to survive." Further, the SLORC is counting on the
large presence of multinational corporations such as Amoco,
Unocal, Texaco, Royal Dutch Shell, Petro-Canada and Idemitsu to
gain international legitimacy and to fend off proposed
international economic sanctions.
From Crackdown to Build-Up
In 1988, the SLORC took control of Burma from longstanding
leader General Ne Win, and changed the name of the country to
Myanmar. However, rumors suggest that Ne Win continues to exert
significant control over the SLORC and its policy decisions.
During its coup and subsequent crackdown on pro-democracy
demonstrators, SLORC troops gunned down an estimated 4,000
students and other protesters.
Following the coup, foreign donors suspended $500 million per
year in aid to Burma. The nearly bankrupt regime, which began
to run out of money to finance its army, promised to hold free
elections in 1990.
In the 1990 elections, the National League for Democracy, led
by 1991 Nobel Peace Prize winner Aung San Suu Kyi, won an
overwhelming 81 percent of the popular vote. The SLORC received
2 percent of the parliamentary seats in the election. However,
the SLORC annulled the election and imprisoned the victors,
including Aung San Suu Kyi, who remains under house arrest in
Rangoon.
A small group of donors, including the International Development
Association (IDA) of the World Bank, the Asian Development Bank
(ADB), the United Nations Development Program and the Japanese
government, reactivated their aid to SLORC following the
election, arguing along with multinational business leaders that
investment in Burma will speed development and eventually
promote political liberalization.
The SLORC, in the meantime, continues to rule Burma by
repressive military control. Military expenditures currently
account for approximately 60 percent of the government budget.
Arms purchases in 1991 amounted to approximately $1.4 billion.
The military has grown by over 50 percent since the SLORC took
power, from 190,000 to approximately 300,000 troops.
Most governments around the world, as well as human rights
groups such as Amnesty International and Asia Watch, condemn
the regime and the repressive human rights conditions that are
regularly reported within the country. The Lawyers Committee
for Human Rights reports that Burma's citizens are "subject
to unlawful arrest, detention without trial and torture for
exercising their rights to expression and association," and
have recently been "forced to serve as porters for the Burmese
army, where they are used as human mine detectors." A number
of countries have proposed a United Nations embargo, as well as
other economic sanctions to force the SLORC to honor basic human
rights accords and the results of the 1990 elections.
However, while leaders of many countries such as the United
States and Canada officially oppose the actions of the SLORC,
they continue to allow multinational corporations based in their
countries to operate and invest in Burma, buoying the unstable
and financially strapped regime. Multinational oil companies
based in the United States, Canada, England, Japan and Australia
have directly invested over $400 million in Burma since 1989.
And critics say that the SLORC is using its greatly expanded
foreign currency reserves to modernize and expand its army
rather than to benefit the people. "Despite the influx of
foreign money, the lives [sic] of the average citizen of Burma
has not improved," contends the Burma Rights Movement for
Action. "Instead, it has steadily gotten worse."
Natural Resource Auction
The SLORC leadership has apparently decided that exploiting
natural resources is the best means of developing the country.
Current SLORC practices regarding timber, minerals, fishing
rights and oil concessions indicate sales of these resources
are the primary strategy for raising funds.
When the SLORC took control of Burma, the country was estimated
to have had 80 percent of the world's remaining teak forests.
During the last three years, however, the SLORC has sold
expansive concessions of teak and other hardwoods to Thai
timber companies for clear-cutting. In 1990, the United Nations
estimated that 1,235,000 acres of tree cover were disappearing
every year in Burma due to clear-cutting practices. The World
Watch Institute estimates forest-cutting in Burma at over 2
million acres per year.
Burma has large mineral reserves of tin, tungsten, copper, lead
and zinc, as well as deposits of precious stones such as jade,
rubies and sapphires. SLORC has been selling the rights to mine
these gems throughout Burma. Insight Indochina reported in 1991
that the SLORC had set a goal of producing 49,200 ounces of gold
in 1992. This is a 1,130 percent increase over 1990's
production of 4,000 ounces.
One of Burma's most famous resources is opium, which is
converted into heroin for sale on the international market. A
number of groups, including Green November 32, an environmental
and human rights group based in Bangkok, Thailand, have alleged
that SLORC leaders are involved in the illicit heroin trade,
with some funds going directly to weapons purchases. David
Todd, a Canadian journalist, reported in the Ottawa Citizen that
"Western intelligence agencies say [an arms deal with China was]
paid for in part with the proceeds from heroin and opium
trafficking in which Myanmar military authorities are deeply
involved."
The SLORC, however, is focusing its efforts on oil and gas
development. Because of a lack of foreign exchange, Burma has
had a policy restricting the import of oil, thus creating a
serious shortage throughout the country. Oil development is
thus meant to alleviate the energy shortages throughout the
country, as well as raise foreign currency.
Multinational Oil Companies Move In
All oil and gas development in Burma is controlled by the
military-run Myanmar Oil & Gas Enterprise (MOGE). Despite
financial and technical support from Japan over the last decade,
Burma has experienced a steady decline in oil and gas output,
from a level of 30,000 barrels per day in the late 1970s to
around 12,000 barrels per day in 1991.
In 1988, due to worsening economic conditions and the
precipitous decline in oil production, the SLORC moved to end
its isolationist policies and attract foreign oil investment.
As part of this move, the government reversed a 26-year policy
banning foreign participation in onshore oil exploration and
development, and signed contracts with nine foreign oil
companies.
The nine multinational oil companies that signed the first
contracts with the SLORC in 1989 included Amoco (United States),
Unocal (United States), Idemitsu (Japan), Royal Dutch Shell
(Netherlands/United Kingdom), Yukong Oil (South Korea), Broken
Hill Petroleum (Australia), Petro Canada (Canada), Croft
Exploration (United Kingdom) and Kirkland Resources (United
Kingdom). These firms were reported to have paid between $5
million and $8 million each in signing bonuses to the Burmese
regime.
Since 1989, a number of other companies have also signed
contracts with the SLORC. These include Premier Oil (United
Kingdom), Nippon Oil Exploration (Japan), ELF (France), Petronas
(Malaysia), and most recently International Petroleum Corp.
(Canada), Apache Oil (United States), Tyndall International
(United States) and Texaco (United States).
By the summer of 1991, according to the Far Eastern Economic
Review, oil companies spent an estimated US$415 million on
exploitation efforts, hoping to cash in on the SLORC-granted oil
concessions. Bohana ex- plains, "the oil companies haven't
lifted a drop of oil yet, but they have thrown hundreds of
millions of dollars into the hands of the SLORC."
Amoco's contract to explore the Block B concession, a 33,000
square kilometer tract located in the Upper Chinwin basin in
northern Burma, included an initial payment of $5 million to the
SLORC as a signing bonus. Amoco has worked very hard to foster
good relations with the SLORC. The chair of Amoco, H. Laurence
Fuller, traveled to Burma personally in 1990 to meet with the
SLORC head, General Saw Maung. Jim Fair of Amoco says that the
company drilled one well in 1992, and "did not find hydrocarbons
in commercial quantities." According to Fair, Amoco is
currently "evaluating whether [the company] will continue in
Burma, period." Amoco continues to keep an office open in
Rangoon, the capital city.
Unocal has been working in the Block F concession, and has
entered a joint venture agreement to explore the Block E
concession, both of which are located in central Burma. Unocal
is reported to have agreed to invest $29 million over the three
years of its contract. However, in response to high exploration
costs and three failed oil wells, Russ Small of Unocal says that
the company is "planning to pull out of Myanmar at the end of
1992," when its contract expires. "Three years, three wells,
you're out," Small says. Unocal has not officially announced
this decision.
Texaco, the newest entry into Burma, recently bought into three
different concessions, one onshore and two offshore, without any
public announcement. Onshore, Texaco purchased a 42 percent
stake in Block I, the concession held by Croft Exploration and
Clyde Petroleum. Offshore, Texaco acquired a 50 percent
interest from Premier Oil in two blocks covering 7.9 million
acres in the Gulf of Mataban. After uncovering Texaco's quiet
move into Burma, Green November 32, released a statement,
charging, "Texaco does not want its financial involvement
with--and therefore tacit support of--the brutal SLORC military
regime to be known, as it may make it a target for boycott
action."
In 1989, Petro-Canada signed a $22 million oil exploration
contract for the Block E concession with the SLORC, including
an initial $6 million signing payment. Petro-Canada is the 80
percent state-owned oil company of Canada. While the Canadian
government has repeatedly condemned the actions of the SLORC,
the government claims it cannot influence the decisions of its
own oil company.
A number of human rights and environmental groups have called on
the Canadian government to pull Petro-Canada out of Burma. The
Canadian environmental group Friends of the Rainforest has
organized a boycott of Petro-Canada because, it charges, "up to
90 percent of any oil and gas production goes to the military
regime." Friends of the Rainforest also argues that "oil
investment dollars are helping turn mainland Asia's last
significant forested region into a wasteland. Petro- Canada
must share responsibility, along with [the company's] principal
shareholder, the Government of Canada."
Royal Dutch Shell is exploring the Block G concession, which
includes over 19,000 square kilometers in central Burma.
Earlier this year, Shell became the first multinational to
discover recoverable quantities of oil or gas. The company
found large natural gas reserves at Ahpyauk, 80 kilometers north
of Rangoon. Shell and SLORC plan to bring the well into
production as quickly as possible at a rate of 20 million cubic
feet per day. A Bangkok newspaper quoted Pe Kyi, engineering
director for the MOGE, as saying that SLORC was "very happy"
about Shell's find, and promised many more wells would be
drilled in the near future.
Yukong Oil, Broken Hill Proprietary (BHP) and Kirkland have all
been unsuccessful in their oil exploration efforts. Yukong
spent more than $20 million without completing its first spud.
BHP spudded a dry well in 1991. And Kirkland was reported to be
considering pulling out of Burma at the end of 1991, after two
years of unsuccessful exploration in a war-torn area close to
the Thai border.
Natural gas exploration has increased onshore as well as
offshore. A subsidiary of the Thai national oil company, PTT
Exploration and Production (PTTEP), has proposed a $2 to $3
billion project to explore for natural gas in Burma's Gulf of
Mataban. The project would pump the estimated 3.6 trillion
cubic feet of natural gas reserves in Mataban through a
500-kilometer undersea pipeline from Burma to Kanchanaburi
province in Thailand. This pipeline would require extensive
military protection, as it would pass through areas currently
held by Karen and Mon rebels.
The French oil giant Total signed an agreement with the MOGE in
July 1992 to develop natural gas in two offshore blocks in the
Gulf of Mataban covering an area of 26,000 square kilometers.
Total plans to work with PTTEP to develop the concessions and
feed the natural gas into the proposed pipeline. MOGE chose
Total over two other western multinationals, Royal Dutch Shell
and Unocal, in negotiations which lasted over a year.
Most of the actual work in Burma is not performed by these oil
giants, but is instead farmed out to smaller multinational oil
service and support firms. These smaller companies are
performing geophysical testing, cutting roads, building
helipads, drilling test wells and providing other support for
the controlling oil firms. Some of the largest of these firms
include Parker Drilling Co. (United States), Compagnie General
de Geophysique (France), Geophysical Company Limited
(France/United States), which is owned by Schlumberger,
Halliburton Geophysical Services (United States), Grant Norpac
(United States), Heavilift (Australia), Columbia (United
States), PAE Singapore (United States) and Seismograph Services
Ltd. (United Kingdom) which is owned by Raytheon, a U.S.
defense contractor.
Oil and the Environment
Burma is a country with particularly rough terrain, and almost
no infrastructure to support oil exploration and production.
Most of the areas where oil exploration is proceeding remain
inaccessible by roads. Heavy equipment is shipped up rivers
during the monsoon season, and then used after the monsoons have
passed. Many activities require the use of helicopters to
by-pass the roads and rivers. Forests must thus be cleared to
open areas for helipads, base camps, testing sites and roads.
Testing involves the use of gravity and seismic lines.
Companies clear one-to-four-meter-wide paths one kilometer
apart, in a series of grid lines, and lay 10-pound dynamite
charges every 100 to 150 meters. Cables with seismic meters are
placed along the grid lines and when the charges are detonated,
readings are taken and analyzed.
The companies are cutting roads by hand or with bulldozers
through virgin tropical forests in order to lay the grid lines.
Green November 32 alleges Compagnie General de Geophysique has
been cutting roads "with the use of forced labor in the Kirkland
block," which is in a militarily contested area in southern
Burma.
Environmental impacts of the oil exploration include the
significant deforestation necessary to access areas for seismic
testing, and for the construction of helipads. Once roads are
constructed into these areas, deforestation follows. Green
November 32 claims that "SLORC officials have arranged the
granting of timber concessions to favorites in areas of virgin
forest newly opened up by the oil companies." Constructing
roads also allows the military to move soldiers, heavy artillery
and supplies into opened areas, thus securing their hold over
the indigenous populations.
Other environmental impacts of the exploration include large-
scale erosion around areas which are cleared, exploded with
dynamite and drilled. Flash floods occur in deforested areas
during the rainy season. Pollution of streams and rivers with
mud and silt from the exploration process is common. Disruption
of wildlife around the areas being explored is unavoidable due
to the explosions, chain saws and helicopters.
Amoco and Unocal officials interviewed for this article claim
their operations have no detrimental environmental impacts.
Amoco's Fair says the company has "assessed environmental
impacts all along the way," and all of their drill sites "return
to their natural state very quickly." Bohana of the Institute
for Asian Democracy disagrees, however, saying, "Teak and
hardwood cutting is currently more environmentally destructive,
but longterm environmental destruction will result from oil
development."
Oil and Human Rights
Human rights groups argue that oil development has direct
impacts on the people of Burma. A Green November 32 statement
notes, "recent reports from inside Burma indicate that human
rights violations are being perpetrated by the SLORC army in
association with the oil companies' planned and actual
activities. Genocidal offensives are being carried out as part
of the junta's efforts to clear potential oil bearing areas of
their indigenous inhabitants.... Tens of thousands of Burmese
people are being forced to labor on roads for less than
subsistence wages for the benefit of the oil multinationals and
the junta."
Because a number of battles are being waged on different fronts
throughout Burma, there is also some conjecture about the areas
which the SLORC is fighting hardest to control. Green November
32 reports, "SLORC troops have been particularly active in oil
concession areas, and have launched heavy offensives in areas
where concessions have been offered but not sold, such as the
Kachin and Arakan States. There have been very serious human
rights abuses perpetrated on local populations in association
with these attempts to control the potentially oil-bearing
zones."
Sanctimony vs. Sanctions
Pro-democracy groups complain that Western governments are
unwilling to back up their rhetorical condemnation of the
military regime in Burma with economic sanctions. These groups
argue that ending oil exploration and development in Burma by
multinational corporations may be the most effective means of
forcing the regime to acknowledge the result of the 1990
elections, and to restore human rights and democracy to Burma.
But as a Green November 32 statement explains, "When a
multinational oil company with the financial and political
influence of Texaco invests in a country like Burma, it makes it
substantially more difficult to effectively pressure a
government led by someone like George Bush ... into applying
the sanctions that have been repeatedly and loudly called for.
Obviously sanctions would not be good for those U.S. oil
companies--Texaco, Amoco, Unocal, Tyndall, and Apache--that
have invested so many millions of dollars in their relationship
with the SLORC regime."
Multinational oil development remains key to the SLORC's
expansion of the military, and control over the people of Burma.
Without foreign exchange from oil investments, the regime would
be much more dependent on foreign aid, which is often tied to
political reforms.
Until some form of international trade or investment sanctions
are passed by the United Nations or individual countries such as
the United States, however, multinational oil companies will
continue to fuel Burma's military machine.
Dara O'Rourke works for the Task Force on Multinational
Corporations, a project of the Seattle-based Institute for
Trade Policy.
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