Thailand a key to new Myanmar
sanctions By Andrew Symon
BANGKOK –As international condemnation
mounts against Myanmar's military government and
its recent armed crackdown on street
demonstrators, the country's money-spinning
oil-and-gas sector could soon be the target of new
and tighter Western-led sanctions. Should new bans
on energy trade and investment come to pass, more
than any other regional country Thailand will find
itself caught between a diplomatic rock and an
economic hard place.
Natural gas exports
to Thailand are by far the Myanmar government's
largest source of foreign revenues, accounting for
nearly US$160 million per
month in take-or-pay contracts negotiated before
the 1997-98 Asian financial crisis - and well
before the recent spike in global energy prices.
According to statistics from the Asian Development
Bank, gas exports contribute nearly one-third of
Myanmar's total official export revenues. And
there are several big new bilateral investment
plans underway to pump up further natural gas and
electricity exports from Myanmar to Thailand.
Under former prime minister Thaksin
Shinawatra, Thailand came under US criticism for
expanding its business ties with Myanmar's junta.
His government's so-called "forward engagement"
policy towards Myanmar was out of line with US-
and European-led trade and investment sanctions,
but was in accord with the Association of
Southeast Asian Nations (ASEAN), which, since
admitting Myanmar into the grouping in 1997, had
preferred economic engagement over isolationism to
influence the regime.
After the recent
military crackdown, however, ASEAN has been openly
critical, signaling to some analysts that the
grouping might try to throw its lot in with
whatever punitive measures Western countries may
move to impose. However any meaningful collective
action would need to include Thailand and it seems
doubtful the country's interim military government
would be willing to pull the plug on crucial
energy supplies for morality's sake.
That
means any new sanctions against Myanmar's energy
industry are likely to have as marginal an impact
on Myanmar's ruling junta's staying power as the
punitive measures the US first imposed in 1997.
China and India are both bidding to negotiate
greater access to Myanmar's untapped energy
resources. And both countries have notably
refrained from criticizing the regime after last
week's crackdown. Energy analysts note that if
Thailand were to abandon its contractual
arrangements in Myanmar, China and India would
likely move to take up the slack.
Natural
gas is Myanmar's hotly contested prize, with
several regional countries bidding to explore new
blocks up for tender. In the early 20th century
Myanmar, then known as Burma, was an important
regional oil producer from its deep onshore
fields. However, oil production had dwindled in
recent decades and large - although not massive -
natural gas resources have more recently been
discovered and foreign investments have helped to
boost output.
New sanctions targeting
existing rather than only new investments in
Myanmar's energy industry would at least
temporarily dent the regime's ability to profit
from these resources. Potential targets of
Western-led and ASEAN-upheld sanctions could hit
some of the largest energy companies in the world,
including France's Total, the US's Chevron,
Malaysia's Petronas, South Korea's Daewoo and
Korea Gas Corp, and, hypothetically, Thailand's
PTT Exploration and Production (PTTEP).
There are also several small and medium
sized Western upstream oil and gas companies -
including so-called larrikin outfits - which
currently operate below the political radar, but
if forced to withdraw due to new sanctions on
existing investments would at least temporarily
disrupt Myanmar's ability to tap offshore wells,
until China, India or another non-Western-aligned
country moved in to fill the technology gap.
Energized competition The
politics of imposing new sanctions against Myanmar
would be highly complex and potentially damaging
to the Thai economy if Bangkok were to take part.
Myanmar is already expanding its energy export
base, emerging as a key new supplier to China and
possibly also to India and South Korea. China and
India are locked in competition for gas supply
from fields now operated by South Korean companies
offshore near western Myanmar.
China has
secured at least the initial advantage for a gas
pipeline plan approved by the Myanmar government
to send supplies to southwest China and the idea
for another pipeline taking product landed in
Myanmar from Africa and the Middle East - giving
China an additional supply route to the congested
Malacca Strait - is also on the table.
India has mooted a similarly ambitious
pipeline plan with Myanmar, which conceivably
would send gas through Bangladesh and supply areas
in eastern India. But it's still unclear if Dhaka,
which has stonewalled other energy projects with
India, would support any India-Myanmar initiative
which passes through its territory.
Thailand's own supplies of natural gas,
which currently fuel 65% of the country's total
electricity output, are fast diminishing at a time
industrial demand for the resource is
simultaneously rapidly rising. According to BP
figures, proven gas reserves in the Gulf of
Thailand will likely run dry over the next 17
years. There are still untapped resources in the
joint Thai-Malaysia development area as well as in
the contested overlapping claims area with
Cambodia - but even if maximized are not expected
to bridge the emerging shortfall.
Meanwhile, state energy company PTT
predicts that national natural gas demand will
grow from 3.32 billion cubic feet per day (cfpd)
at present to 6.1 billion cfpd by 2015. Thailand's
power generation capacity, meanwhile, is projected
to increase to 58,000 megawatts by 2021 from its
current level 28,500 megawatts in the current
power plan. Myanmar gas currently meets over 25%
of total Thai demand and plans to steadily
increase those volumes are now on the cards.
Gas is now piped from the offshore Yadana
field, operated by France's Total in partnership
with the US's Chevron, as well as from the
offshore Yetagun field in the eastern Andaman Sea.
These two fields alone supply an average of 900
million cfpd to Thailand. Volumes from those same
fields are set to increase by another 300 million
cfpd by 2011 in a big new offshore project
operated by Thailand's PTTEP.
Additionally, there are a growing number
of joint Thai-Myanmar hydropower projects planned
or under development on the Salween River, which
forms part of the shared border between the two
countries. These include the 7,110 megawatt
Tar-Hsan and 1,500 megawatt Hut Gyi dams, both of
which were signed by Myanmar's junta and Thai
companies, including the state-run monopoly the
Electricity Generating Authority of Thailand.
Both controversial projects are designed
specifically to supply power to Thailand, but
analysts say could conceivably be rerouted to
China if Bangkok were to back new Western-led
sanctions. China is currently backing other
hydropower projects on the upper reaches of the
same river designed to supply power to its fast
growing south-western regions.
So far Thai
officials have sent mixed signals about their
intentions and have downplayed Thailand's
significance to new sanctions imposed against the
regime. Defense Minister Boonrawd Somtas told
reporters that the current protests were unlikely
to unseat Myanmar's junta and that political
change was unlikely unless China, India and Russia
exerted "serious pressure".
Meanwhile, top
Thai energy official Piyasavati Amranand has said
Myanmar's recent troubles have prevented his
officials from negotiating any new gas supply
deals and that any planned talks would be delayed
until the political situation stabilizes. At the
same time, he said that Thailand's intention to
secure new natural gas supplies from Myanmar
remains unchanged.
Andrew Symon
is a Singapore-based journalist and analyst
specializing in energy and mining issues.
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