There is a “high possibility” that revenues from a Japan-backed offshore gas project in Myanmar are being used by the military dictatorship to buy weapons, a minister of the National Unity Government (NUG) has said.
Japan’s government owns half of Nippon Oil Exploration (Myanmar), which in turn owns roughly a fifth of the Yetagun Gas Project off Myanmar’s southern coast in the Andaman sea. The project has generated hundreds of millions of dollars in revenues since 2000.
Yetagun is also part-owned by Myanma Oil and Gas Enterprises (MOGE), an entity that is now under the junta’s control. Thailand’s PTTEP and Malaysia’s Petronas are also major shareholders.
“There is a high possibility that the funds from this project will be used in the military’s purchases of arms,“ Maw Htun Aung, the NUG’s Deputy Minister for Electricity and Energy, told Myanmar Now.
As the junta controls the judiciary, the legislature and the executive, it can do as it sees fit with any funds from state-owned enterprises like MOGE, he said, adding that Yetagun’s owners should call emergency meetings with their shareholders and then meet with the NUG.
“What they can do is call a special emergency meeting with all shareholders and arrange to meet with the NUG as quickly as possible so that we can guide them on how the company can continue operating as an ethical business,” he said.
So far, Japan has dismissed the idea that its involvement in the project could be helping to fund the Myanmar junta’s atrocities.
In August Japan’s trade ministry, then led by Hiroshi Kajiyama, said in response to a question from a legislator that Nippon Oil Exploration was “not aware of any funds related to the Yetagun project going to the Myanmar military regime.”
“It is extremely difficult to ascertain whether the funds are going to the Myanmar military,” the statement said.
But Maw Htun Aung said the ministry’s claim was not credible, given that it is clear the military controls MOGE. “I believe anyone who understands budgeting wouldn’t say this,” he said.
Japan’s government made the same claim in response to criticisms that land rents from the Y-Complex real estate project in Yangon were paid to the Myanmar military.
In a statement to Myanmar Now, Nippon Oil Exploration suggested it is now considering its position at the Yetagun project.
“The Company is deeply concerned about the large number of casualties and detainees in Myanmar and the significant impact on the lives of the Myanmar people,” the statement said. “We are closely monitoring the situation in Myanmar and discussing the future of the project with the Japanese government… and our partners in Yetagun.”
Highly profitable
Even though gas production at Yetagun is in decline, the project is still one of the biggest single sources of state revenue for Myanmar. Myanmar is entitled to corporate income tax and a share of profits from the pipeline as well as income tax on the profits of the other investors.
The Japanese trade ministry will not reveal how much revenue from Yetagun goes to the Myanmar junta, saying it is confidential.
But this information has been made public in the past under the Extractive Industries Transparency Initiative, an international effort to promote better reporting and public debate about the oil, gas and mining industries.
Those figures showed that in the financial year to 2018, Myanmar earned 214 billion kyat ($159 million) from selling its share of gas from Yetagun and another 55 billion kyat ($41 million) in royalties.
Myanmar was suspended from the transparency initiative after the military coup in February.
The pipeline from Yetagun is also known to be highly profitable. The Taninthayi Pipeline Company, which owns the pipeline, paid out $308 million in dividends to its owners between 2017 and 2019, Myanmar Now reported in July.
MOGE, which owns just over 20 per cent of the pipeline, would have collected $63 million in dividends in that time.
The environmental groups Mekong Watch and Friends of the Earth Japan have called on Japan’s government to ensure that Myanmar’s share of revenues from the Yetagun project is kept out of the hands of the military regime.
This means retaining money in a bank account outside of Myanmar until the junta is gone or, if that is not possible, suspending production from Yetagun altogether, activists have said.
Petronas shut down the Yetagun project in April because of technical problems, then reopened it in July, according to a statement by the Japanese ministry, before closing it again in August after some employees caught Covid-19.
Myanmar Now asked Petronas whether the gas project and pipeline are in operation and whether revenues are flowing to the military regime, but the company declined to comment.
PTTEP did not respond to requests for comment.
This story is a collaboration between Myanmar Now and Finance Uncovered
