Analysis: Gas, oil get Myanmar off hook
Washington (UPI) Sep 27, 2007
Despite international condemnation of the Myanmarese government, competition for oil and gas will likely limit pressure on it from China and others in the region.
"A humanitarian catastrophe might shift Chinese behavior, but right now Beijing probably believes that access to Burma's energy potential and its strategic location still outweigh the political costs," said Roberto M. Herrera-Lim, an Asia analyst at the Eurasia Group in Washington.
This week's protests against Myanmar's ruling junta, which are being called the most strident in 20 years, have littered international newspapers and shed new light on Myanmar's problem with human rights. Given its political and economic ties with Myanmar, China is widely considered the most capable, though perhaps not the most willing, to force reforms from the junta.
"Regionally, the consensus is that China is No. 1. China is the one that can move Burmese behavior," said Herrera-Lim.
In January, however, China disappointed many by vetoing a U.N. Security Council resolution that criticized Myanmar's human-rights record.
"People are focusing their attention not just on Burma but on China, and seeing China as Burma's enabler," said William A. Callahan, a fellow at the Woodrow Wilson Center in Washington.
China's support of the former Burma, as well as its silence on the protests, is often attributed to its neighbor's oil and natural gas reserves.
"China needs to diversify its sources of petrochemicals and Burma is one source," Callahan said.
According to 2006 figures from the Energy Information Administration, the data arm of the U.S. Department of Energy, Myanmar has approximately 150 million barrels of crude oil reserves, while its natural gas reserves are between 10 trillion cubic feet and 13 tcf. Although modest by the standards of Iran and Russia, Myanmar's natural gas reserves place it in league with countries such as Brazil and Syria. And more importantly its location provides it a captive market in China, India and South Korea.
Foreign direct investment in Myanmar's oil and natural gas sectors totaled $69 million between 2005 and 2006, according to the U.S. State Department.
Natural gas accounted for approximately 30 percent of its total exports in the same period, and the State Department expects such exports to increase when production begins at the Shwe and Shwephyu fields.
The race between China and India to buy those exports has already begun, giving Myanmar the upper hand.
"Burma hasn't made a decision yet whether to sell the gas to China or India, and it's trying to get them both to bid up the price," said Herrera-Lim. If China criticizes the regime and then "the situation stabilizes, then suddenly it's the Indians that get (the gas) or the South Koreans," he said.
As such, China is likely to reserve its criticism of the junta. India's leverage is similarly restrained.
China's willingness to do business with countries considered "rogue" by the West is often attributed to its sense of being a latecomer to the energy market.
"The U.S. and Europe already have oil. ... China is a late entrant into the oil market," said ZhongXiang Zhang, senior fellow at the East-West Center in Honolulu. "It's very difficult for China to get access to good resources. There are only a few places where China, India can come."
Moreover, he said, "China ... (doesn't) interfere with a country where they have business."
China is by no means alone in its non-interference.
"It's not just China," said Callahan. "French and American oil companies are also in Burma. (Currently,) there's very little pressure being put on them."
Total and Unocal (now Chevron) made headlines in 1996 when Myanmarese nationals brought a case against Unocal for human-rights violations related to the Yadana Project, in the Gulf of Martaban. Cases were also brought against Total.
Both companies maintain interests in Myanmar.
"Total's decision to stay in Myanmar, unlike a number of Western companies that have withdrawn, was a deliberate choice, but it does not signal approval of any regime. Rather, it expresses the Group's deep-seated belief that economic development and human-rights progress go hand in hand," stated Total on the company Web site.
Complicating interests further, the Yadana Project now provides Thailand with one-third of its gas, according to Herrera-Lim. And gas, in turn, fires the plants that generate approximately 70 percent of Thailand's electricity.
"If (Thailand) pressures the regime, what if the regime cuts off its gas supply?" he said.
Yet in a Eurasia Group Note, Herrera-Lim conceded Myanmar's government is not completely immune to foreign pressure.
"Violent suppression will likely turn Burma into more of a pariah, making it more difficult for China to defend," he wrote.
On Thursday, however, it was reported that nine protesters were killed in the junta's crackdown in Yangon, the capital.
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