ASEAN Beat | Economy | Southeast Asia
The U.S. oil major has announced the sale of its 41.1 percent interest in the Yadana offshore gas field to Canada’s MTI.
The U.S. oil major Chevron announced on Friday that it would finally cut its ties with military-ruled Myanmar, after agreeing to sell its assets in the country. According to a report by Reuters, the firm said it had agreed to sell for an undisclosed amount its 41.1 percent interest in the Yadana offshore gas field to a subsidiary of the Canadian company MTI.
The agreement comes just over a year after Chevron and the French multinational TotalEnergies announced that they were withdrawing from Myanmar due to the political upheaval and brutal military crackdowns that followed the military coup of February 2021.
After the coup, Chevron and TotalEnergies came under intense pressure to cease their involvement in the Yadana gas field, and the pipeline company MGTC that transports the gas to western Thailand. Oil and gas are by far Myanmar’s largest source of foreign income, and the military’s ruthless repression of anti-coup resistance prompted renewed calls from the shadow National Unity Government and activist groups for Western countries to cut off this source of income for the junta.
Chevron initially resisted calls to pull out of the country. Indeed, according to the New York Times, it dispatched lobbyists to Washington, D.C. to ensure that the U.S. did not sanction Myanmar’s oil and gas industry. In the end, like TotalEnergies, it judged that the ethical and reputational costs of remaining involved with the Yadana field outweighed the potential profits. This decision may have also been influenced by the fact that the gas field is nearing the end of its productive life.
As Reuters reported, the nearly 13-month-long gap between Chevron’s announcement of its withdrawal and the sale of the company reflects its attempts to ensure that as few proceeds as possible from the sale ended up flowing to the military junta. Chevron said in a statement last July that it would “be working to ensure our exit is conducted in a planned and orderly manner.” TotalEnergies sold its Myanmar assets the same month.
Complicating matters was the fact that among the joint venture partners in the Yadana gas field was the Myanmar Oil and Gas Enterprise (MOGE), a state company that collects oil and gas revenues on behalf of the government. The firm, which a United Nations human rights expert once described as “the single largest source of revenue to the state,” has been public enemy number one for many Myanmar activists, who have urged Western nations to place it under sanction. Shortly after the coup, the U.N.’s special rapporteur on Myanmar, Tom Andrews, said that MOGE was “now effectively controlled by a murderous criminal enterprise” and called for sanctions.
While the EU imposed sanctions on MOGE last year, shortly after Chevron and TotalEnergies announced their impending withdrawal from Myanmar, the U.S. government has refrained from doing so, likely out of concern that sanctions could ensnare interests in Thailand, a U.S. treaty ally.
Before putting its Yadana stake for sale, Chevron temporarily increased its participation in the project from 28 percent to 41 percent, Reuters reported, absorbing an interest TotalEnergies. This was a purposeful decision “to gain greater control over the joint venture, and reduce what MOGE could make from the transaction or the asset in the future.”
Chevron’s formal withdrawal marks the next incremental step in the vacating of Western business interests from Myanmar’s contracting and conflict-torn economy. Chevron, via its affiliate Unocal Myanmar Offshore Co. Ltd., has been invested in Myanmar since the early 1990s, as had TotalEnergies. The fact that both of these firms have left the country after weathering years of criticisms from activists and defending their investment in Myanmar speaks to just how inhospitable the country is for Western investment and how far the country’s reputational stocks have fallen.