TotalEnergies, the French oil giant, and Chevron said Friday that they would begin taking steps to withdraw from an offshore natural gas field in Myanmar that is a critical source of energy for both the host country and neighboring Thailand.
TotalEnergies said it was responding to a deterioration of the human rights situation and the “rule of law” in Myanmar since the military coup in February.
The situation had reached a point, the company said, where it could no longer “make a sufficiently positive contribution in the country.” Since the coup, the military regime has waged a brutal crackdown on protests. Soldiers and the police have killed at least 1,488 civilians, according to the Assistance Association for Political Prisoners.
Chevron and TotalEnergies argued in the past that their presence was beneficial to the people of Myanmar and that shutting off the flow of gas would increase hardship. Chevron says the gas from the Yadana field generates electric power for roughly half the population of Yangon, Myanmar’s largest city, as well as supplying Thailand.
“Effectively turning off the power to half of Yangon’s homes, schools and hospitals — in the middle of a state of emergency and a pandemic — risks creating even more hardship,” Chevron said in a briefing note published in May on the company’s website.
Last year, Chevron waged a vigorous lobbying campaign in Washington to prevent the White House from imposing sanctions in Myanmar that could disrupt the gas operations at the Yadana field and worsen the crisis for people who rely on the power.
The companies, though, have evidently decided that they have no choice but to yield to pressure from human rights groups and others to prepare to abandon a project that provides financial sustenance for Myanmar’s military.
Total, which is the operator or manager of Yadana, said it would withdraw after six months without compensation. Chevron said it was reviewing its interest in the project to “enable a planned and orderly transition that will lead to an exit from the country.”
The departures are not likely to be a major financial hit for either company. Chevron obtains only about 1.5 percent of its global gas output from Myanmar. TotalEnergies owns about 31 percent of the project, which dates to the 1990s, while the rest is owned by Chevron (28 percent); a subsidiary of Thailand’s energy company, PTT (26 percent); and the Myanmar national oil company (15 percent).
On the other hand, a stoppage of gas exports to Thailand, a major consumer, could have an impact on the already heated market for the fuel.
“Any disruption would further tighten an international gas market where there is already considerable supply anxiety,” said Neil Beveridge, an analyst at Bernstein, a research firm.
Still, it is not clear that the exit of Total and Chevron would lead to an end to the flows of gas or of funds to the military regime. Thailand’s PTT could take over operating the project. And TotalEnergies said in its news release that stopping revenue going to the Myanmar government from Yadana was “materially impossible” because the Thai company made most of the payments from gas sales from the project.
