Will US Oil Companies Return to Burma?

By WILLIAM BOOT

BANGKOK — Burma watchers are wondering if US oil and gas developers might return to the country after the Barack Obama government announced it is reviewing its policy towards Burma’s military regime.

Statements by US Secretary of State Hillary Clinton that sanctions against
Burma’s military regime are not working came shortly before she also began urging China to try to influence change in the repressed Southeast Asian country.

China is seen by many, including evidently Clinton, as pivotal to any improvements in Burma.

While Western countries have continued to tighten economic sanctions against the Burma regime, China has increasingly engaged.

The result has been a big upsurge in Chinese access to Burma’s natural resources of oil, gas and river-fed hydroelectric dams.

China will this year begin building two 1,000-mile-plus pipelines to carry both gas and oil from Burma’s coastline up into Chinese Yunnan Province.

Chinese state companies have exclusively bought up the gas from two blocks of Burma’s biggest-to-date offshore field, the Shwe complex in the Bay of Bengal.

The Burmese military leadership is also allowing China to build a large crude oil transshipment port at a remote location on the central coast to transfer Middle East and African oil through the country into China.

All this has happened while the US and the European Union have pressured their oil companies to withdraw.

Chevron of the US and Total of France still remain to manage their pre-existing gas concessions in the Yadana and Yetagun fields of the Andaman Sea, but there has been no new Western investment in oil and gas for some years, apart from small activities by several Australian firms.

The Clinton-led US State Department has repeated old American calls for the release of political prisoners in Burma, but also underlined that under Clinton’s stewardship it is reviewing the sanctions policy “to figure out a way to better influence the behavior of the regime.”

This contrasts with the final months of the George W Bush presidency which saw a tightening of financial sanctions against the Burmese generals, and new pressure on Chevron to completely pull out.

Political observers have made much of Clinton’s high-level talks in Beijing in recent days in which human rights issues took a back seat in favor of economic issues.

The emphasis of her talks was on a US-China partnership to revive the world’s economies.

“Two things stand out really in this about-face scenario,” said a commercial attaché with an EU embassy in Bangkok, who spoke to Asia Oil & Gas Monitor on agreement of anonymity this week.

“First, White House policy in Asia is definitely changing to one of closer engagement. Bush was aloof to Asia, eight years in which China’s influence in particular has grown considerably, both politically and economically.

“Second, Clinton wants closer White House ties specifically with China.

“With regards to Myanmar [Burma], well, it will not have escaped the attention of Obama and Clinton, and their advisers, that the Chinese have dug in deep. Burma is now not only a rich source of raw essentials for China, it’s become an important geo-strategic client state giving Beijing access to the Indian Ocean.”

During her talks in Beijing, Clinton asked the Chinese government to try to use its influence to persuade the Burmese regime to talk with the political opposition, many of whom are jailed, with a view to democratic reform.

Clinton may have just been paying lip service here to human rights pressure groups. She must know that it is not really in Beijing’s interests to see a democratically elected government in Burma that might tell the Chinese to go home.

On the other hand, if regime change should occur, China would benefit from being seen as not supporting the regime in total disregard to the people’s interests.

Just what kind of policy change the White House has in mind on Burma remains to be seen, but given the current political and economic chill it would have to involve some form of engagement.

“Will it mean US oil giants queuing to get at Burma’s gas? There might be some carrot-and-stick economic diplomacy, but Burma’s generals already have plenty of that, from all its neighbors,” Bangkok-based energy industries consultant Collin Reynolds told AOGM. “There would have to be a lot of carrot.”

Clinton steered clear of Burma on her just-finished Asian tour but visited Indonesia, a key member of the Southeast Asian “club” Asean that Burma also belongs to, as well as two countries which have some economic sway in Burma—Japan and China.

Indonesia has been critical of the Burmese regime and has called for it to engage in political dialogue with detained opposition leader Aung San Sui Kyi.

The 10 member countries of Asean are holding a summit this weekend in Thailand with discussions on closer economic integration and closer trade ties with, among others, China.

But with the global financial crisis increasingly biting in Southeast Asian, the issue of Burma will likely receive a lower priority.

Thailand’s new government as current leader of Asean under the revolving chairmanship system has made clear it wants a happy and harmonious summit on its territory—after its own political chaos forced postponement last December.