Shock move by French and US oil giants heaps pressure on military and international businesses
Myanmar’s junta could lose tens of millions of dollars after French oil giant, Total announced yesterday that a hugely profitable gas pipeline company it owns with the Myanma Oil and Gas Enterprise (MOGE ) has suspended dividend payments.
Total, the operator and biggest shareholder in the Yadana offshore natural gas project, confirmed that “cash distributions” to shareholders of Moattama Gas Transportation Company (MGTC) “have been suspended”.
MOGE is a Myanmar state-owned company which means that, since the coup, it has been under the control of the generals. It owns 15% of MGTC.
The shock decision follows intense pressure from campaigners and opposition figures on Total and Chevron, the US oil firm which also owns a share of MGTC.
Campaigners have urged extractive industry giants to come together and withhold all gas revenue payments to the junta.
MGTC pipes natural gas from Yadana off the coast of Myanmar to Thailand and Yangon and is immensely profitable.
Based in the Bermuda tax haven, MGTC’s financial details were kept secret for two decades until they were obtained by Distributed Denial of Secrets, a non-profit transparency collective, earlier this year.
Analysed by Justice for Myanmar working with Finance Uncovered, the UK based journalism organisation, the MGTC accounts show that the company was so profitable it could afford to distribute dividends to shareholders worth an enormous $872.8 million in the three years to 2019.
This means that MOGE, with a 15% stake in MGTC, received $130.9m during that period – or an average of $43.6m per year.
It is this flow of money to MOGE that has been halted.
It is not clear when the move would start to have a financial effect. Total said that the suspension began last month, which is the start of the new financial year in Myanmar. Dividends are normally paid in the middle or at the end of a financial year.
The decision to suspend pipeline dividends would not affect other, bigger flows of gas revenues from the Yadana project to the junta, including Myanmar’s share of gas sales revenues as well as payments of royalties and corporate income tax.
The decision by the shareholders of Moattama, which also includes PTTEP from Thailand, could set a precedent for other natural gas projects and other international businesses in partnership with Myanmar state entities.
If this happened, it would spark considerable economic problems for the military generals.
In its statement, Total said it will maintain “the production of gas in accordance with applicable laws, so as not to disrupt the electricity supply that is vital to the local populations of Myanmar and Thailand.”
But earlier this week, interviews of Yadana workers seen by Myanmar Now suggested Total’s own workers would prefer gas production to stop in an effort to thwart the military.
Total in its statement yesterday added that it “condemns the violence and human rights abuses occurring in Myanmar and reaffirms that it will comply with any decision that may be taken by the relevant international and national authorities, including applicable sanctions issued by the EU or the US authorities.”
This is a Myanmar Now story in association with Finance Uncovered.