The Guardian (USA)

Revealed: how world’s biggest fossil fuel firms ‘profited in Myanmar after coup’

Dominic Rushe in New York and Nick Mathiason and Diarmid O'Sullivan in London

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In the two years since a murderous junta launched a coup in Myanmar, some of the world’s biggest oil and gas service companies continued to make millions of dollars from operations that have helped prop up the military regime, tax documents seen by the Guardian suggest.

The Myanmar military seized power in February 2021 and according to the United Nations special rapporteur on Myanmar, it is “committing war crimes and crimes against humanity daily”. More than 2,940 people, including children, pro-democracy activists and other civilians have been killed, according to Assistance Associatio­n for Political Prisoners.

Amid this violence, leaked Myanmar tax records and other reports appear to show that US, UK and Irish oil and gas field contractor­s – which provide essential drilling and other services to Myanamar’s gas field operators – have continued to make millions in profit in the country after the coup.

The documents were obtained by transparen­cy non-profit Distribute­d Denial of Secrets and analysed by Myanmar activist group Justice For Myanmar, investigat­ive journalism organisati­on Finance Uncovered and the Guardian.

The documents suggest that in some cases the subsidiari­es of major US gas field service firms continued working in Myanmar – even after the US state department warned in January last year there were significan­t risks in doing business in the country – including with state-owned entities that financiall­y benefit the junta, such as the national oil and gas company Myanma

Oil and Gas Enterprise (MOGE).

On Tuesday the US, UK, Australia and Canada announced more Myanmar sanctions, including on the managing

director and deputy managing director of MOGE. But they stopped short of sanctionin­g MOGE itself.

Last February the European Union became the first jurisdicti­on to announce sanctions against MOGE itself in light of the “intensifyi­ng human rights violations in Myanmar” and the “substantiv­e resources” MOGE provides the junta.

The EU sanctions prohibit European companies from working on Myanmar’s oil and gas field projects. But the US and UK have not yet introduced similar measures and such work – which may involve direct or indirect dealings with MOGE – is not prohibited.

Among the findings, the leaked tax documents show that:

US oil services giant Halliburto­n’s Singapore-based subsidiary­Myanmar Energy Services reported pre-tax profits of $6.3m in Myanmar in the year to September 2021, which includes eight months while the junta was in power.

Houston-headquarte­red oil services company Baker Hughes branch in Yangon reported pre-tax profits of $2.64m in the country in the six months to March 2022.

US firm Diamond Offshore Drilling reported $37m in fees to the Myanmar tax authority during the year to September 2021 and another $24.2m from then until March 2022.

Schlumberg­er Logelco (Yangon Branch), the Panama-based subsidiary of the US-listed world’s largest offshore drilling company, earned revenues of $51.7m in the year to September 2021 in Myanmar and as late as September 2022 was owed $200,000 in service fees from the junta’s energy ministry.

The services provided to Myanmar’s Asia-owned gas field operators by these companies gave vital support to MOGE, which is a major shareholde­r in all of the country’s most important oil and gas projects.

MOGE collects taxes and royalties for the state on gas field projects, ensuring that the junta gets lucrative tax and royalty payments, as well as a vast share of profits. According to the junta’s own figures the oil and gas industry is its biggest source of foreign-currency revenue, bringing in $1.72bn in the six months to 31 March 2022 alone.

Yadanar Maung, Justice For Myanmar spokespers­on, called the situation “deplorable”.

“Oilfield service companies in Myanmar have blood on their hands for operating in an industry that bankrolls the illegal Myanmar military junta, as it wages a campaign of terror against the people,” Maung said.

“These companies have breached their internatio­nal human rights responsibi­lities and may be complicit in the junta’s war crimes and crimes against humanity byservicin­g oil and gas projects that fund the junta’s atrocities.”

Maung welcomed the latest sanctions but said “far more needs to be done.

“So far, only the EU has sanctioned MOGE, which bankrolls the junta. We call on the US, UK, Canada and Australia to follow the EU and also sanction MOGE,” Maung said.

Myanmar is one of the poorest countries in Asia but is also rich in oil and gas deposits. The country’s major projects export gas to China and Thailand, with around 20% of the gas retained for domestic use.

The major gas projects in which MOGE has significan­t shareholdi­ngs are run by the South Korean corporatio­n Posco Internatio­nal, Thailand’s PTTEP and Gulf Petroleum Myanmar, also from Thailand. Gulf Myanmar Petroleum, PTTEP and Posco were contacted for comment.

Activists argue that any role played by western gas field contractor­s in Myanmar’s gas and oil industry after the coup makes them complicit in the junta’s war of aggression. Some legal experts argue the contractor­s could face future legal issues from their activities in the country.

Baker Hughes told the Guardian its contracts were signed before the coup and completed in early 2022. The company said it had not signed new contracts since the coup and had “a very limited number of personnel in the country to support critical safety and operations needs”.

Halliburto­n, Schlumberg­er and Diamond Offshore Drilling did not respond to repeated requests for comment.

Last January, France’s Total and US’s Chevron – which have long been criticised for their roles as gas project operators in the country – announced plans to exit Myanmar.

Chevron told the Guardian that it had now sold its 41.1% interest in the Yadana Project to Et Martem Holdings,

a wholly owned subsidiary of MTI Energy, a Canadian company.

The situation is complicate­d by the US’s ambiguous stance on MOGE. Myanmar’s state-owned gems, pearl and timber industries have been sanctioned by the US but Washington has not yet tackled MOGE, the linchpin in the junta’s largest single source of foreign revenue.

In 2021 the New York Times reported that the oil giant Chevron had led an intense lobbying effort against sanctions that would disrupt oil operations in the country. That report came after the UN’s special rapporteur on Myanmar, Tom Andrews, had told Congress that MOGE was “now effectivel­y controlled by a murderous criminal enterprise” and called on it and other state entities to be sanctioned in order to “meaningful­ly degrade the junta’s sources of revenue”.

Last January, the state department did specifical­ly warn of the dangers of doing business in the country and cited MOGE as particular­ly problemati­c. MOGE and other state-owned enterprise­s “not only generate revenue for a military regime that is responsibl­e for lethal attacks against the people of Burma, but many of them also are subject to allegation­s of corruption, child and forced labor, surveillan­ce, and other human and labor rights abuses”, it warned.

But while the US has put sanctions on the State Administra­tion Council – the junta’s ruling body which controls MOGE through the ministry of energy – it has stopped short of imposing tougher sanctions on MOGE itself. And the US commerce department’s country commercial guide for Myanmar, last updated in July 2022, describes the “dynamic” oil and gas sector as a “best prospect industry” with “significan­t opportunit­ies for US investors”.

The Biden administra­tion is understood to be struggling with a desire to implement stronger sanctions while maintainin­g good relations with Thailand, a strategic partner, and also a major buyer of Myanmar’s natural gas.

Justice for Myanmr’s Maung said the Biden administra­tion’s contradict­ory approach to Myanmar “has allowed US oil and gas corporatio­ns to continue business as usual in Myanmar, enabling the junta’s internatio­nal crimes”.

“While the Department of State has warned that dealing with MOGE risks money laundering, furthering corruption and contributi­ng to serious human rights violations, the US Department of Commerce is advising US companies to seek profits in the oil and gas sectors in Myanmar and to compete for MOGE tenders,” Maung said. “We call on the US to stand with the people of Myanmar by imposing sanctions on MOGE and helping to cut the flow of funds to the junta.”

Pressure is mounting on the Biden administra­tion to act. Last year, the Democratic senators Jeff Merkley, Cory Booker, Dianne Feinstein, Edward Markey and Gary Peters wrote to the US treasury urging the Biden administra­tion to impose sanctions to help stem the junta’s brutality, especially by cutting off revenues from MOGE. “MOGE sanctions are one of the most significan­t actions the United States could take to degrade the junta’s ability to operate,” they wrote.

In December, the US House passed the National Defense Authorizat­ion Act (NDAA), which included a section outlining action on Myanmar that raised the possibilit­y of Joe Biden imposing sanctions on MOGE but stopped short of issuing a stronger ruling.

“At the end of last year, Congress made great progress in authorizin­g sanctions on Burma’s energy sector, which represents nearly half of the junta’s foreign currency income. The administra­tion must use these authoritie­s and work with regional partners to cut off the junta’s ability to fuel its brutal campaign against civilians,” Merkley told the Guardian.

The European Union toughened its stance on MOGE in February 2022, expanding its sanctions against the junta, becoming the first jurisdicti­on to sanction MOGE itself and prohibitin­g the provision of technical assistance that directly or indirectly benefits the stateowned entity, with a narrow exemption for decommissi­oning a project.

One European company, Dublinbase­d Gavin & Doherty Geosolutio­ns, a specialist geotechnic­al engineerin­g consultanc­y, secured a contract to work on Thai-owned PTTEP Internatio­nal’s Zawtika developmen­t project off the coast of Myanmar, according to August 2021 reports. The contract was announced before EU sanctions were imposed on MOGE but seven months after the coup. Gavin & Doherty declined repeated inquiries about the nature of the contract or whether it was still working in the country.

MOGE owns a 20% of Zawtika and profits from the project flow directly to the junta.

The tax documents suggest Intermoor, a subsidiary of UK-based Acteon, a subsea services company, also continued to profit from work in Myanmar until at least February 2022. The UK has issued sanctions against some individual­s and entities in Myanmar. But like the US, it has so far stopped short of sanctionin­g MOGE and no UK sanctions prohibit working directly or indirectly with the junta-controlled entity.

Filings to Myanmar’s tax authority by Diamond Offshore Drilling indicate it made repeated payments to Intermoor between October 2021 and February 2022 for work done on behalf of Posco Internatio­nal. Posco runs the Shwe gas project, which in 2020 Intermoor had publicly announced it was working on. MOGE has a 15% stake in Shwe, in addition to the revenue it gets from taxes and royalties.

A Justice For Myanmar source, verified by the Guardian, has confirmed the presence of InterMoor personnel in Myanmar in 2021 and 2022.

Neither Intermoor nor its parent company, Acteon Group responded to repeated requests to comment on this story.

Despite US and UK reluctance to target MOGE, environmen­tal lawyers claimed companies working on gas projects in Myanmar still faced legal risks from their activities.

Ben Hardman, Myanmar policy and legal adviser at Earthright­s, a Washington-based human rights and environmen­tal non-profit, said: “Oil field service companies are not just working with internatio­nal oil majors, they are supporting joint ventures with MOGE, a government agency that has effectivel­y been taken hostage by the junta. When the companies submit an invoice, the junta ultimately pays a share of them and the support of these companies ensures that the junta can keep seizing revenues that flow through MOGE.

“If these companies have an EU presence, they are at severe risk of breaching EU sanctions on MOGE. Companies in the US and the UK also face risks because both government­s have sanctioned the junta’s State Administra­tion Council, which controls MOGE’s management and revenues.”

 ?? Photograph: Philip Fong/AFP/Getty Images ?? A group of Myanmar activists demonstrat­e with placards calling the US government to sanction Myanmar’s state-run Myanma Oil and Gas Enterprise ahead of Joe Biden’s visit to Japan on 22 May 2022.
Photograph: Philip Fong/AFP/Getty Images A group of Myanmar activists demonstrat­e with placards calling the US government to sanction Myanmar’s state-run Myanma Oil and Gas Enterprise ahead of Joe Biden’s visit to Japan on 22 May 2022.
 ?? Photograph: AFP/Getty Images ?? Protesters take part in a demonstrat­ion against the military coup in Yangon, Myanmar, on 3 July 2021.
Photograph: AFP/Getty Images Protesters take part in a demonstrat­ion against the military coup in Yangon, Myanmar, on 3 July 2021.

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