New US Law Could Force PTTEP Disclosure – The Irrawaddy


As Thailand’s national petroleum and exploration company PTTEP inks a new deal to acquire gas from the M9 field off the coast of Burma, new US legislation may force disclosure from energy companies investing in the military-run country, including PTTEP.

Thailand’s Energy Minister Wannarat Channukul was in Burma yesterday for the signing of an agreement to purchase gas from M9, also known as Sawtika. He said that Thailand will rely on Burma more and more for energy needs as Thailand’s own petroleum reserves are run down over the coming 23 years.

However, on July 15, the US Congress passed what may prove to be landmark transparency legislation as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This will require oil, gas, and mining companies registered with the US Securities and Exchange Commission (SEC) to publicly disclose their payments to governments for the extraction of natural resources on an annual basis.

The new law covers 90 percent of the major internationally operating and 12 of the top 15 Fortune-ranked oil and gas companies. According to Senators Ben Cardin (Democrat) and Richard Lugar (Republican), who mooted the inclusion of the provisions in the broader act, the tools are now available “to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals.”

It is not certain at present whether or not this will ultimately oblige PTTEP to disclose payments made to the Burmese junta. This will depend in part on the outcome of the rules under the law, which will be ironed out over the course of this year. The same applies to some of the other investors in Burma’s energy sector, such as Daewoo, Petrochina and CNPC.

However, Chevron will have to disclose under the terms of the law, and it is thought likely that Total will also, which could shed light on PTTEP payments to the Burmese government for the Yadana field, as all three companies are stakeholders in the Yadana gas project. PTTEP is also a stakeholder in the Yetagun field, buying gas from Premier Oil. China National Offshore Oil Corporation, which has significant investments in Burma, is also likely to be covered by the law.

Present law states that when companies fail to comply with SEC regulations in general, the US can delist the offender, an outcome which most businesses would likely find unpalatable.

Previously, EarthRights International (ERI) requested that PTTEP, along with Total and Chevron, disclose payments made to the Burmese military junta since the Yadana project came on stream. ERI says that all three companies responded to the request but without providing any detail on payments made. Matthew Smith of ERI told The Irrawaddy that the responses to date “do not address any of the fundamental concerns we have with regard to Yadana, on human rights or on transparency.”

Asked about payments to the Burmese regime, a PTTEP spokesperson told The Irrawaddy that the company “adheres to our codes of business conduct which encompass monetary transparency and is reflected in our participation to the disclosure of actual financial information to multi-stakeholders as guided by the applicable laws. We also strictly comply to the contractual obligations of the projects in the host countries where we operate.”

The Yadana project has generated more than US $9 billion since it came on stream in 2000. According to ERI, Burma’s ruling junta has pocketed more than $5 billion of this, the majority of which may have been squirreled away in Singaporean banks, transactions which the junta has sought to obfuscate by using an outdated and vastly undervalued exchange rate. According to a 2009 report by the International Monetary Fund, this revenue “contributed less than 1 percent of total budget revenue in 2007/08, but would have contributed about 57 percent if valued at the market exchange rate.”

The upshot is that the revenue does not appear in official statements about how much money the junta has at its disposal and is creating a false picture about the lack of social spending in Burma. A 2006 estimate of the child mortality rate in eastern Burma was 221 per 1,000, higher than the 205 recorded in the war-ravaged Democratic Republic of Congo. The World Health Organization ranks Burma’s health system as the second worst on the planet, while according to UNICEF more than 25 percent of the population lacks access to potable water.

According to Senators Carbin and Lugar, “If citizens and international organizations know how much money a country is paid for oil access, it is harder for its leader to claim the government would happily build roads, schools and hospitals but cannot afford them.”

Thailand’s growing energy needs are drawing it to other controversial projects inside Burma. Bangkok hopes to purchase additional hydroelectric power from two mooted dam projects on the Salween River inside Burma—the 1200 MW Hat Gyi dam and the 7000 MW Tasang dam.

The Salween projects and the M9 deal raise questions not only about corporate transparency and human rights issues, but also about apparent contradictions in Thailand’s broader policy toward Burma.

Tawin Pleansiri, the secretary-general of Thailand’s National Security Council (NSC), was quoted by the Thai News Service yesterday as saying that conditions for Burmese refugees to return home “would probably be after the general elections take place” sometime later this year.

However, Debbie Stothard of the NGO Altsean told The Irrawaddy that “overall, this is illogical, as giving the (Burmese) regime more funds means giving them the means to carry out more of the human rights abuses that have forced more displaced civilians to flee to Thailand.”

Thailand’s reliance on Burma as a source of energy could also, ironically, be exposing it to security threats from its western neighbor.

At the Asean Regional Forum meeting in Hanoi last week, Thai Foreign Minister Kasit Piromya stated his concern about allegations that Burma was developing nuclear weapons and engaging in UN Security Council-defying weapons trading with North Korea. But in a documentary that aired on the Al Jazeera news network in June, defectors from Burma said that gas and oil revenues from Thailand have given the junta the financial resources necessary to increase military spending.

The income available to the ruling generals is set to increase dramatically in the coming years, not only with M9, but also with the vast Shwe gas field. The latter will generate an estimated $1 billion per year in revenue for the Burmese military government.

ERI and others have raised questions about human rights abuses carried out in the process of pipeline construction and maintenance in Burma. In response to these concerns, a PTTEP spokesperson told The Irrawaddy that the company “conducts business as a responsible corporate entity and we strongly support human rights where we operate,” adding that PTTEP is involved in healthcare and educational initiatives along the Yadana route.

Under fierce pressure from human rights groups, energy companies working on Yadana may well be working to improve living conditions for those living nearby, according to a Burma-based representative of an international organization, who spoke on condition of anonymity.

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