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BURMA: Natural Gas Project Threatens Human Rights

Human Rights Watch
March 24th, 2007

Proposed pipeline construction from gas fields off the coast of Burma is expected to exacerbate serious human rights abuses in Burma, Human Rights Watch said today.

Based on experience from previous oil and gas projects in Burma, Human Rights Watch expressed concern that the proposed construction of overland pipelines to transport the gas will involve the use of forced labor, and result in illegal land confiscation, forced displacement, and unnecessary use of force against villagers. Revenue from gas sales would also serve to entrench the brutal military rule in the country. Because of these well-founded concerns, Human Rights Watch urged companies with interests in Burma’s oil and gas deposits to suspend activity until they can credibly demonstrate that their projects can be carried out without abusing human rights.  
 
“The Burmese army is notorious for using violence and coercion to secure areas slated for major investment projects and commonly demands forced labor to build associated infrastructure,” said Arvind Ganesan, director of Human Rights Watch’s business and human rights program. “The construction of more gas pipelines across Burma is likely to line the pockets of the country’s leaders while causing suffering for thousands of people.” 
 
Human Rights Watch issued its statement in advance of the March 26 “Global Day of Action” when activists will mobilize to raise awareness of the effects this major energy investment will have on the people of Burma. 
 
Human rights conditions inside Burma are dismal. A recent report by the UN special rapporteur on Burma documented that the Burmese military continues to unlawfully confiscate land, displace villagers, demand forced labor, and use violence against those who protest such brutality. The military’s use of forced labor is so widespread and persistent that the International Labor Organization has previously threatened to take the matter to the International Court of Justice. Areas of Burma that are subject to major development projects experience some of the most pervasive abuses. Independent monitoring there is nearly impossible. There is virtually no fiscal transparency and accountability over the State Peace and Development Council’s (SPDC) use of funds, which enables widespread corruption by the military junta and deprives the population of the benefit of the country’s wealth. 
 
Major deposits of natural gas have been discovered off the coast of Arakan State in western Burma. One of the gas fields, known as Shwe (golden), is being developed by a consortium of South Korean and Indian firms, in partnership with the Burmese military government, the SPDC. Energy analysts estimate that Burma may have the largest natural gas deposits in Southeast Asia. Natural gas exports are now Burma’s main source of foreign exchange. 
 
The Shwe gas project is led by the South Korean company Daewoo International. Fourteen of its top executives went on trial in Seoul this month on charges that they secretly built an illegal arms factory in central Burma. Other consortium partners include several state-controlled companies: ONGC Videsh Ltd (OVL), which is a subsidiary of India’s Oil and Natural Gas Co. (ONGC); the Gas Authority of India Ltd (GAIL); and Korea Gas Corporation (KOGAS) of South Korea. This consortium has a production-sharing agreement with the Burmese government’s Myanmar Oil and Gas Enterprise (MOGE) for the Shwe gas fields, as well as for the adjacent A-3 block. 
 
A competition has erupted over access to the gas from the Shwe fields, which are the most developed of the new projects. China and India have each vied to secure agreements allowing them to buy much of the gas. Japanese and Korean companies also have submitted bids to buy the gas if it can be provided in liquefied form. The Burmese government, which has promoted the competition, says it will make a decision by May on whether to export gas and to whom. 
 
Different proposals are under consideration to transport this gas from the coast of Arakan to India or China. A natural gas terminal could be built to ship the gas to regional markets, but an overland route that would cut across Burmese territory is considered more likely because it would be less expensive. Separate pipelines might be built to deliver gas to the borders of India and China, or possibly through Bangladesh to India. 
 
The likelihood of major pipeline construction has sparked human rights concerns. Persecution against Arakanese civilians and Muslim Rohingya minorities by the Burmese military has been occurring for decades. Illegal land confiscation by the army and the government-controlled Union Solidarity and Development Association (USDA) is systematic and often closely tied to infrastructure projects. Some groups have reported that villages in Arakan State have already begun to experience forced relocations, forced labor and other abuses by troops whom they allege are expanding their presence in preparation for pipeline construction. 
 
In landmark lawsuits, Burmese villagers sued the US oil and gas company UNOCAL (now Chevron) and France’s Total for complicity in gross human rights abuses committed by the Burmese military. The lawsuits centered on charges that the companies knew about and benefited from the Burmese army’s use of torture, rape, and unlawful land seizures to remove villagers from areas slated for development, and also the military’s use of forced labor to facilitate the pipeline construction. The lawsuits were settled after the companies agreed to make large payments. 
 
“There is a track record in Burma of major abuses accompanying large-scale natural gas projects,” said Ganesan. “Foreign energy investors and buyers should know that when they do business with the SPDC they risk being partners in the military’s abuses.” 
 
Western companies have long been under public pressure to avoid investment in Burma, which is also under comprehensive US sanctions and more limited EU restrictions. As a result, new investors are increasingly from within Asia. This has sparked the formation of civil society campaigns in several countries opposed to investment projects that fuel human rights abuses in Burma. 
 
Burma’s gas business helps sustain military rule in the country and currently comprise at least 30 percent of the country’s exports. Revenue for the SPDC will only increase as the country’s new gas deposits are developed. Estimates of the gas yield of the Shwe deposits range between US$37-52 billion, and could lead to a gain in revenues to the SPDC or future Burmese government of US$12-17 billion, or US$580-824 million per year over 20 years. In 2006, government revenue was $2.18 billion, according to one estimate. The SPDC spends the bulk of Burma’s resources to maintain its enormous army, and has some of the lowest social spending of any country in the world. 
 
Several other exploration and development projects are under way in nearby gas fields, also through joint ventures with MOGE. 
 
Singaporean investors and firms registered in the British Virgin Islands have signed gas exploration deals with MOGE since January. 
 
Thailand’s largely state-owned PTT Exploration and Production Co Ltd (PTTEP) made a recent offshore gas discovery. PTTEP, which already controls several blocks, is also a partner in two other gas projects that have triggered major controversy over alleged human rights abuses associated with pipeline construction: the UNOCAL-Total “Yadana” field (where PTTEP is also the major purchaser of the gas for export to Thailand) and the “Yetagun” project with Malaysia’s state-owned Petronas and Japan’s Nippon Oil. 
 
China’s state-owned China National Offshore Oil Company (CNOOC) and China National Petroleum Corporation (CNPC) have stakes in both offshore and onshore blocks. Onshore deposits also have been assigned to various companies, including the Indian firm Essar Oil. Companies from Singapore and Russia have announced a deal to develop inland gas deposits. 
 
The major actors involved in the current development of Burma’s gas fields are also among the SPDC’s main military backers. These include: China, which has sold over US$2 billion worth of weapons since 1989; India, which has recently sold artillery pieces and offered helicopters and special forces training; and Russia, which has supplied Burma with fighter jets, helicopters and other military hardware. Earlier this year, China and Russia vetoed a UN Security Council resolution which would have addressed the grave human rights situation in Burma. 
 
“The SPDC leverages its natural resources to secure political and military support,” said Ganesan. “In effect, it trades its gas and other riches for guns and political backing. China, India and others should think twice about getting into bed with such an abusive government.” 
 
“The decision to invest in Burma’s extractive industries is no ordinary business move,” he added. “Lives are at risk. Companies have a responsibility to make sure their investments do not lead to abuses.” 
 
Human Rights Watch called on companies to conduct thorough and independent human rights impact assessments prior to proceeding with decisions about the pipeline construction, and to make the results of such assessments public. The group also said that these companies should disclose all payments made to the Burmese military, directly or through the entities it controls. 
 



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