Despite mounting international pressure for energy companies to withdraw from Myanmar to prevent the ruling junta from filling its coffers and fuelling airstrikes on civilians, Thai PTT Group continues to own and operate natural gas fields in the country.
Yadana Offshore Gas Field, Myanmar (source: totalenergies.com)
Mineral fuels, oils, distillation products such as oil and gas, and electricity make up the lion’s share of Thai-Myanmar trade. According to the United Nations COMTRADE database on international trade, Thai imports from Myanmar were worth $2.81 billion in 2021, more than half of which, $1.72 billion, came from oil, gas, and electricity. Thai exports to Myanmar, valued at $4.25 billion in 2021, are less heavily weighted in a single sector, but oil and gas remain the largest category at $550.84 million.
The Directorate of Investment and Company Administration, an agency within Myanmar’s Ministry of Investment and Foreign Economic Relations reports that Thailand is the country’s third largest investor in terms of planned projects and fifth largest in terms of existing projects as of 30 September 2022.
Thai foreign direct investment (FDI) inflows into planned projects is about $11.5 billion, comprising around 12.5% of Myanmar’s total FDI in this market. Thai FDI into pre-existing projects is lower, slightly more than $4 billion and constituting just under 6% of that market. Singapore, then China, comprise the #1 and #2 spots on the list.
Tale of two gas fields
The two largest natural gas fields in Myanmar are the offshore Yadana and Yetagun sites. Thai state-owned PTT Exploration and Production Plc (PTTEP) has operated the Yadana field since 20 July 2022 after the exit of the American and French oil and gas majors TotalEnergies and Chevron. TotalEnergies said in a statement that the situation in Myanmar has deteriorated in terms of human rights and the rule of law.
“We have therefore assessed the situation, which no longer allows TotalEnergies to make a positive contribution in this country.”
Their decision to cease all activities in Myanmar and withdraw from the Yadana field was quickly followed by a subsidiary of Chevron in a similar statement condemning the violence and human rights abuses occurring in Myanmar.
“In light of the circumstances in Myanmar, in January 2022 we [Chevron] announced that we would be exiting the country.”
Despite the withdrawal, Chevron still owns a 41.1% participating interest in the project. PTTEP International Limited (PTTEPI), the current operator, owns 37.1%, and the Myanmar state-owned Myanma Oil and Gas Enterprise (MOGE) owns the remaining 21.8% stake according to a PTT investor relations letter addressed to the Stock Exchange of Thailand (SET) in March 2022.
The Yadana field accounts for 11% of Thailand’ natural gas consumption and half of Myanmar’s natural gas supply. PTT stated that the decision to take over the project was made to “ascertain gas supply continuity”.
While PTTEP took over the Yadana field in July, it had withdrawn from the Yetagun field two months earlier on 29 April, 2022. The Yetagun reserves are much smaller than those of Yadana, producing an average volume of 17 million standard cubic feet per day (MMSCFD) compared to 770 MMSCFD from Yadana. PTTEP’s withdrawal statement did not mention the situation in Myanmar.
“The withdrawal is part of the company’s portfolio management to refocus on projects that support the energy security for the country.”
PTTEP’s withdrawal has been joined by Malaysian state-owned Petronas, the former operator, and JX Nippon Oil and Gas Exploration, a 100%-owned subsidiary of Eneos Holdings, according to Reuters. Operations and previously held stakes have been transferred to MOGE.
What lies further afield?
A Human Rights Watch (HRW) report shows that natural gas projects in Myanmar represent the single largest source of foreign currency revenue for the State Administration Council (SAC), generating over $1 billion annually. This money comes from natural gas exports paid in US dollars, mostly in pipelines to Thailand and China.
The Myanmar military, also known as the Tatmadaw, has ruled the country since Senior General Min Aung Hliang staged a coup against the democratically elected National Unity Government on 1 February, 2021. HRW claims the junta’s widespread and systematic abuses “amount to crimes against humanity and war crimes”. HRW has also written to energy companies and their stakeholders operating in Myanmar, asking them to support sanctions on gas revenues.
PTTEP’s holdings in Myanmar are now represented by the Yadana and Zawtika fields. Located in the gulf of Martaban, Zawtika, another offshore natural gas site, albeit even smaller than Yetagun, is operated by PTTEP with an 80% stake, with MOGE holding the remaining 20%. Production ground to a halt on 1 August, 2022 after a gas leak, but resumed after repairs were completed on 14 August.
Thailand is committed to abiding by the United Nations Guiding Principles on Business and Human Rights (UNGPs). Deputy Minister of Foreign Affairs Vijavat Isarabhakdi stressed as much at an ASEAN human rights and business training activity on 1 December, 2020. The UNGPs encompass states’ obligations to protect human rights, corporate responsibility to respect human rights, and access to “remedy” in the event of business-related abuse.
Oil companies fuel airstrikes on civilians
An Amnesty International report released on 3 November 2022 found that Thai Oil, alongside regional and global oil and gas companies Chevron, ExxonMobil, Rosneft, Petrochina, and Puma Energy most of all, are “part of the supply chain which is linked to the Myanmar military responsible for air strikes amounting to war crimes.”
Puma Energy is a global energy company based in Singapore and Geneva, Switzerland, and majority-owned by commodity giant Trafigura. Amnesty’s research demonstrates the supply chains from Puma Energy’s Myanmar affiliates to the Tatmadaw.
“The relationship between NEPAS (National Energy Puma Aviation Services Co. Ltd) storage facilities and the military air bases on the Mann refinery is significant: they show that civilian and military use of aviation fuel is inextricably linked.”
Puma Energy admitted in the report that it was not able to “maintain controls to restrict supply to civilian only airlines,” something that in practice is impossible, according to Amnesty. Puma Energy announced on 5 October 2022 that it would sell its assets in Myanmar and exit the country, but it has not confirmed a date of departure as of the time of writing.
Amnesty International obtained a copy of a sales contract dated 29 April 2022 which commits Thai Oil, a subsidiary of the PTT Group listed on the SET, to selling 4,942 metric tons of A-1 jet fuel to Asia Sun Trading for $6 million. A further document obtained by Amnesty is a letter from Asia Sun Trading addressed to the Director General of the Customs Department which reads “we, Asia Sun Trading Co. Ltd., procured and imported Jet A-1 (Kerosene) Aviation fuel from Thailand-based Thai Oil Public Company Limited for use by the Tatmadaw (Air Force).”
Thai Oil responded to Amnesty International’s findings that its business unit “has decided to hold a selling of Jet A-1 [fuel] to Myanmar until no such concerned issue [sic]”.
Amnesty International recognizes the high risk of aviation fuel meant for civilian use falling instead into hands of the junta for military use and calls for the “immediate suspension of direct and indirect supply, sale, and transfer of aviation fuel to Myanmar” and for SAC to “end the use of unguided airstrikes in civilian areas.”
Thailand not reliant on Myanmar energy
According to comment received from the Spirit in Education Movement (SEM), an NGO focused on grassroots and civil society education, Thailand is not as reliant on Myanmar natural gas used to produce electricity as previously claimed by PTTEP, meaning that a partial or complete PTTEP withdrawal from Myanmar would not have a major impact on Thailand’s energy infrastructure.
“In 2021, Thailand’s backup power generation capacity exceeded the highest demand by 55%. Thailand always has surplus electricity generation over the suggested margin of 15% (above peak demand)”
SEM uses the Ratchaburi Co-Generation power plant as an example because it sources 100% of its gas from Myanmar. PTT’s payments for this natural gas go directly to MOGE. SEM finds that if power was cut from this power plant, Thailand would still have “reserve capacity that exceeds the highest demand by as much as 30%”.
“If PTTEP withdraws from its investment in Myanmar, we do not think it will affect the energy situation in Thailand”
Despite these energy surpluses, Thais are charged the same amount in their monthly electricity bills to pay for the operation of power plants that may not be necessary.
SEM conveyed the “request of the Myanmar civil society”, demanding these payments stop so the Burmese junta cannot access this money to prevent it from being used to “buy weapons that would lead to the persecution of the Myanmar people”.