Oil majors TotalEnergies and Chevron have jointly indicated discontinuity of a major gas project, which they are partners in Myanmar, citing the worsening humanitarian situations after the coup last year.
Shell, in its first open reaction to this decision made by its peers, also said today, January 21, 2022, that it no longer held exploration licenses in Myanmar as of last year.
As a prelude to this, Myanmar has been plunged into disorder since the army overthrew the elected government in February 2021 and detained its leader Aung San Suu Kyi. The military rule immediately mounted the use of brutal force to quell protests that were sparked as a result.
By this announcement, TotalEnergies and Chevron are now the latest Western companies to decide to pull out in the wake of the coup.
“The situation, in terms of human rights and more generally the rule of law, which have kept worsening in Myanmar since the coup of February 2021, has led us to reassess the situation and no longer allows TotalEnergies to make a sufficiently positive contribution in the country,” TotalEnergies said in a statement.
“As a result, TotalEnergies has decided to initiate the contractual process of withdrawing from the Yadana field and from MGTC in Myanmar, both as operator and as shareholder, without any financial compensation for TotalEnergies.
“This withdrawal has been notified today to TotalEnergies’ partners in Yadana and MGTC [Moatama Gas Transportation Company] and will be effective at the latest at the expiry of the 6-month contractual period.”TotalEnergies
Myanmar Represents Minor Part of Total Revenues
TotalEnergies, however, did not quantify the financial impact of the withdrawal, but said Myanmar represented a minor part of its revenues.
“The agreements also stipulate that, in the event of withdrawal, TotalEnergies’ interests will be shared between the current partners, unless they object to such allocation, and that the role of operator will be taken over by one of the partners”.TotalEnergies
A spokesperson of TotalEnergies was cited by Reuters to have said:
“Financial considerations have never been crucial in this matter. Our operations in Myanmar amounted to $105 million in 2021, equivalent to less than 1% of the company’s income.
Myanmar amounted to 0.6% of TotalEnergies’ total oil and gas production in that period.
TotalEnergies is the biggest shareholder in the project with a 31.24% stake, while Chevron holds 28%. PTTEP, a unit of Thai national energy company PTT, and Myanmar state-owned oil and gas group Myanmar Oil and Gas Enterprise (MOGE) hold the remainder.
A Chevron spokesperson also said: “In light of circumstances in Myanmar, we have reviewed our interest in the Yadana natural gas project to enable a planned and orderly transition that will lead to an exit from the country.
“As a non-operator with a minority interest in the project, our immediate priority remains the safety and wellbeing of employees, safe operations and the supply of much-needed energy for the people of Myanmar and Thailand.”Chevron
TotalEnergies and Chevron have been slow with their move, as Shell, an equity shareholder in offshore Block A7 with partners Woodside Energy and Myanmar Petroleum Exploration and Production Company, said it had relinquished its exploration license in Myanmar last year.
“Exploration blocks have been relinquished, therefore there is no production, revenue nor related payment to government,” as cited by Reuters in an interview with a Total spokesperson.