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The Rush for Burma’s oil and gas: not so fast, says Aung San Suu Kyi

This week, speaking before the International Labour Organization’s 101st International Labour Conference in Switzerland as part of her historic visit to Europe, Daw Aung San Suu Kyi recommended that governments prohibit their companies from doing business with Burma’s state-owned oil and gas company, Myanma Oil and Gas Enterprise (MOGE) until the company adopts responsible and transparent business practices.  She noted (emphasis added):

The Myanmar Oil and Gas Enterprise (MOGE), the state-owned company under the Ministry of Energy with which all foreign participation in the energy sector takes place through joint-venture arrangements, lacks both transparency and accountability at present. The Government needs to apply internationally recognized standards, such as the IMF’s Code of Good Practices on Fiscal Transparency. Other countries could help by not allowing their own companies to partner MOGE, unless it was signed up to such codes. This would also ensure that their own companies would subject to the above codes themselves, and to the various requirements of publish what you pay.

Because of the requirement that all oil and gas investments be made through joint ventures with MOGE, Daw Suu’s recommendation effectively suggests to foreign governments that they prohibit companies from oil and gas investments in Burma until there are significant reforms within MOGE.  Daw Suu also endorsed the requirements of publish what you pay, and international movement to require the transparent disclosure of payments to governments related to the extraction of oil, gas, and mining.

Here at ERI, we’ve supported disclosure of all payments by oil and gas companies to the government of Burma, and in 2010, ERI and over 160 Burma ngo’s, political leaders, academics, labor unions, and investors called on the French company Total, and its partners in Burma, Chevron (U.S.) and PTTEP (Thailand) to disclosure their payments. Instead of disclosing their payments, each refused, citing contractual prohibitions and the government Burma’s unhappiness f they disclosed. A review of the contracts (scroll down for all four contracts) clearly demonstrates that there is no such specific prohibition and ERI and the signatories on the 2010 statement continue to call on the companies to disclosure their payments. Marking a positive step, Total did disclose that in 2008, their portion of the Yadana project contributed US$254 million to the government of Burma. With a 32% stake in the project, it’s clear that the government earned somewhere in the neighborhood of one billion (US) from this single project in 2008. Unfortunately, Total has not released further payment information and we remain frustrated that no companies have disclosed to the people of Burma, what they have paid for the rights to extract petroleum. Just what are they and the government hiding?

Clearly, the public has a right to know where these payments have gone, and Daw Suu’s statement yesterday makes clear that transparency of payments is at the top of the list when it comes to responsible investment in oil and gas in Burma.

Daw Suu’s position may send shock waves through major extractive companies plotting investments in this resource-rich country, but sends a very clear signal that now is not the time to invest in extractive projects in Burma. This message should also be heard in the halls of the governments in the U.S., EU, Australia, and other countries that have recently suspended or ended their investment sanctions against Burma; and the message is, while the people of Burma do want renewed western investment, not all investment is equal, and when it comes to extractive projects, it may be better to wait for further political reform before proceeding.

While stressing that Burma urgently needs investment and jobs, Daw Suu noted that much remains to be done, particularly around legal reform and effective implementation before workers’ rights and land rights are fully guaranteed and respected throughout the country. In addition, increase public participation and transparency in the legislative process is urgently needed, as are lasting, inclusive resolutions to the long-running ethnic conflicts throughout the country. 

Daw Suu went on to note that foreign investment should be sustainable and include significant job training and modern technology. She emphasized that not all investment should be encourage at this time: while responsible investment in tourism, agriculture, financial services and basic infrastructure could provide positive result for the people and economy of Burma, she clearly stated that new investment’s in oil and gas projects should not go forward until significant reforms are completed.

In fact, Daw Suu seems to be suggesting that western governments specifically prohibit their companies from investing in projects with MOGE. Clearly extractive companies are already planning their moves into Burma, and only government action can slow them down. Will these governments, who claim to be supporting the reforms and democratic process, adhere to this sound advice, or will they allow their companies to exploit Burma’s natural, non-renewable resources for their own gain?