Total and Chevron pull out of Myanmar gas project

TotalEnergies and Chevron are set to pull out of Myanmar’s main Yadana offshore gasfield, bowing to longstanding pressure from campaigners calling for them to cut off a leading revenue source for the country’s military junta.

France’s Total said on Friday that human rights abuses had worsened since the country’s coup in February last year and that it had seen no progress in finding ways to bring in sanctions on gas revenues — a measure it now openly supported.

The company, which had previously cited its role in supplying gas to Yangon, Myanmar’s largest city, as a reason for remaining, will now start to transfer its operations to other partners in the Yadana project, in which it holds a 31.2 per cent stake.

The situation “no longer allows TotalEnergies to make a sufficiently positive contribution in the country”, it said, adding that it had approached the French government to help bring in sanctions on financial flows through a system of escrow accounts to hold the payments, without shutting down production.

“TotalEnergies has not identified any means for doing so,” it said.

Chevron, the US energy major that is one of the junior partners in the project, said in a separate announcement it had also reviewed its interest in the gasfield and would withdraw.

Natural gas projects generate more than $1bn a year for Myanmar’s junta, which seized power from elected leader Aung San Suu Kyi last year and has arrested or killed thousands of people in a crackdown.

Total operates the gas platform and its pipelines with state-run Myanmar Oil and Gas Enterprise, Chevron and Thai group PTT as junior partners.

Friday’s moves come amid a growing threat of international sanctions against MOGE. A person familiar with the gas project told the FT that Chevron had been working on an exit strategy from Myanmar for some time.

The western groups had resisted pressure since the coup from campaigners and investors to cut off tax and other payments to MOGE, arguing that withholding tax revenue might put their local staff at risk or disrupt electricity supplies.

Total put part of its shift in stance down to a lack of progress by western governments in finding a way to implement financial sanctions.

The company had come to the conclusion that General Min Aung Hlaing’s military junta looked likely to endure, one person close to the group said. “The company exhausted all its options,” the person added.

Just a day earlier, Total chief executive Patrick Pouyanné acknowledged support for sanctions in a letter to Human Rights Watch, saying the company had been in contact with US authorities over possible penalties.

PTT did not immediately respond to requests for comment on the sanctions. Human Rights Watch called on the US and France to reach a common position on imposing sanctions.

Total did not disclose any hit or provisions from its exit, but said it would transfer its stake within six months, for no financial compensation. Its profits from Myanmar amounted to $105m in 2021.

Yadanar Maung of campaign group Justice for Myanmar said it welcomed Total’s withdrawal.

“It is now essential that international governments move ahead with targeted sanctions on oil and gas to deny the junta funds from the remaining oil and gas projects,” Maung said, adding that other companies in the sector should follow suit.

Myanmar has become a reputational minefield for multinational companies doing business that brings them in contact with the military regime. Norwegian telecom Telenor has been struggling for months to leave the country.

On Friday, a person with knowledge of the matter confirmed a Reuters report that Lebanese telecoms group M1 would partner with Myanmar’s Shwe Byain Phyu Group to bid for Telenor’s business in the south-east Asian country. Telenor agreed a $105m deal to sell the business to M1 last July but the sale stalled after junta officials demanded that a Myanmar investor be brought in alongside it.

Telenor said it had applied for regulatory approval to sell its Myanmar unit but declined to comment further on “speculation”.

M1 and Shwe Byain Phyu could not be reached for comment.

Follow on Twitter: @JohnReedwrites

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