This article, by guest poster, Cosmic Debris, provides an overview of some American oil related companies operating in Burma.
This essay will provide an overview of the four, perhaps five, American 'big oil' related companies that are still operating in Burma, and which, by their continued operation, are assisting the oppressive and brutal junta: The State Peace and Development Council.
A few days ago, Reuters published an article here that said: "U.S. energy companies are shrugging off pressure to end operations in Myanmar that critics contend help prop up the military junta and its hold over the country." So far, the protesting online and on the street is not moving them to change their policy and tactics.
Following some discussions about Chevron and other oil companies operating in Burma, I was left with several questions,including how these companies could continue to legally operate in Burma when the US had imposed economic sanctions. This essay attempts to answer these questions.
Burma and Oil: Some background and facts
In 1988 the military junta known as the State Peace and Development Council overthrew the Burmese government and has been in power ever since, in spite of the election won by Aung San Suu Kyi in 1990. Prior to the 1988 uprising and overthrow, the oil and gas industry had been nationalized after a socialist-leaning military regime seized power in 1962.
As the SPDC junta assumed power, the same year the country was opened up to foreign investment with the passage of the The Union of Myanmar Foreign Investment Law
Sectors eligible for foreign investment include manufacturing, oil and gas exploration and development, mining (except gold and precious stones), jewelry production, and agriculture.
As of January 2001, foreign investment under the liberalized regime of 1988 totaled about $7.4 billion. Of that amount, investment from the US totaled only $582 million, with the majority, 51.35%, coming from ASEAN countries, including $1.5 billion from Singapore, $1.2 billion from Thailand, $597 million from Malaysia, $240 million from Indonesia, and $147 million from the Philippines. The United Kingdom, however, was the second-largest source of approved investments, at $1.4 billion. Investments from France and Japan totaled $470 million and $233 mil, respectively. source
The CIA World Factbook provides the following statistics about Burma's oil and gas resources:
Oil Production: 9,500 bbl/day (2006 est.)
Oil Consumption: 20,460 bbl/day (2006 est.)
Oil exports: 5,000 bbl/day (2006 est.)
Oil imports: 19,180 bbl/day (2004 est.)
Oil proved reserves: less than 50 million bbl (1 January 2005)
Natural gas production: 10.2 billion cu m (2004 est.)
Natural gas consumption: 2.7 billion cu m (2004 est.)
Natural gas exports: 7.5 billion cu m (2004 est.)
Natural gas imports: 0 cu m (2004 est.)
Natural gas proved reserves: 283.2 billion cu m (1 January 2005 est.)
To explain what these numbers could mean in terms of dollars, here is a brief translation.
Myanmar's proven gas reserves were 19 trillion cubic feet at the end of 2006, according to BP PLC's World Review of Statistics. While that's only about 0.3 percent of the world's total reserves, at current production rates and Thailand's contract price for gas, the deposits are worth almost $2 billion a year in sales over the next 40 years. source
These resources are still rich enough to be enticing new investment in the country in spite of the human rights crisis. Even as the Saffron Revolution was underway and protesters were being maimed and murdered, the Indian Oil Minister Murli Deora was signing new oil and gas exploration contracts between state-controlled ONGC Videsh Ltd. and Myanmar's military junta. source
If possible, I'm sure Mahatma Gandhi was screaming from his grave.
Who Are the Oil Companies?
6001 Bollinger Canyon Rd.
San Ramon, CA 94583
P: +1 925.842.1000
Chevron, formerly the oil company known as Standard, is today one of the world's largest energy companies. The realm of its business includes: petroleum operations, chemicals operations, mining operations of coal and other minerals, power generation and energy services. Chevron operates in more than 180 countries, including Burma. It is a mega corporation that has merged with several other companies, including, Gulf in 1984, Dynegy in 1998, Illinova in 2000, Texaco in 2001 and Unocal (76) in 2005. It was the merger with Unocal that brought Chevron into Burma. source
Unocal was one of the companies that built the Yadana Pipeline, initiated in 1995 to provide power to Thailand. Unocal was sued for being complicit in human rights abuses involving forced labor and other violations with regard to the construction of the pipeline. You may read a transcript about the trial here on Bill Moyers Now and read about the ultimate legal settlement in this story from the LA Times, Myanmar: Unocal to Settle Rights Claims.
Chevron has an approximately 28% percent stake in the Yadana project and acts as an investor, not an operator. The project is operated by Total, a French oil company.
In spite of recent calls for Chevron to withdraw its interest in Burma, it has no intention of doing so. Here are some snips from a recent San Francisco Chronicle article, which summarizes Chevron's response.
"Chevron is maintaining its interest in the ... project," said spokesman Alex Yelland.
The company has been trying to build up its portfolio of oil and natural gas projects in Asia, where energy demand is growing fast. Chevron also has a history of working under difficult political circumstances. In some cases, that history involved countries with questionable human rights records or nations that ran afoul of the U.S. government. In other cases, the company's own actions have been called into question.
Chevron has denied any part in any human rights abuses. Its executives argue that staying in troubled countries - even pariahs such as Burma - does more good than harm by employing locals and funding health and education programs.
"I'm convinced that hundreds of thousands of people in Burma have benefited," said Chevron Vice Chairman Peter Robertson, who pointed to the community doctors and teachers his company has paid for. "They benefit from us being there."
The following text is from Chevron's own website with a statement, posted 10/2/07 addressing its continued investment in Burma. link
Chevron supports the calls for a peaceful resolution to the current situation in Myanmar in a way that respects the human rights of the people of Myanmar. Chevron's minority, non-operated interest in the Yadana Project is a long term commitment that will help meet the critical energy needs of millions of people in the region. Our community development programs also help improve the lives of the people they touch and thereby communicate our values, including respect for human rights.
The remainder of the statement includes the touting of several of their "Myanmar Community Development Programs" highlighting how much good they believe they are doing for Burma. I expect they want us to believe the same thing here at home with their "Human Energy" advertising campaign.
Out of interest, Total Oil also has a statement on its website regarding its operations in Burma with similar highly concerned language. link
First of all, the Group would like to express its deep concern over the present situation, which it is monitoring very closely. Under these particular circumstances, Total is deploying heightened vigilance to ensure the safety of its employees. We hope that the current tensions facing the country will quickly subside and that solutions will be found in order to safeguard the population and protect human rights.
We are convinced that through our presence we are helping to improve the daily lives of tens of thousands of people who benefit from our social and economic initiatives. By promoting responsible behavior, our local teams can serve as a model for business and political leaders looking for ways to address the country's human rights issues.We would like to thank all those who have encouraged us to pursue our actions to help the local people and enhance their well-being through the defense of common values. To those who ask us to leave the country, we reply that far from solving Myanmar's problems, a forced withdrawal would only lead to our replacement by other operators probably less committed to the ethical principles guiding all our initiatives. Our departure could cause the population even greater hardship and is thus an unacceptable risk.
Here is another article from the International Herald Tribune that discusses France's extensive business involvement in Burma.
Baker Hughes Inc
2929 Allen Parkway
Houston, TX 77019
P: +1 713.439.8600
Baker Hughes website
Deaton, Chadwick Chairman of the Board, Chief Executive Officer
Clark, James President, Chief Operating Officer
Ragauss, Peter Chief Financial Officer, Senior Vice President
Baker Hughes is the third largest oil services company in the world, behind Schlumberger and Halliburton. It provides the worldwide oil and natural gas industry products and services for drilling, formation evaluation, completion and production and operates in over 90 countries providing products and services to international oil companies, independent oil and gas companies and national oil companies. In 2006 it had a revenue of $9 billion and in 2007 employed 34,600 people worldwide. source
Here is more detailed information about the company.
Baker Hughes Incorporated (Baker Hughes) is engaged in the oilfield services industry. The Company is a supplier of products and technology services and systems to the worldwide oil and natural gas industry, including products and services for drilling, formation evaluation, completion and production of oil and natural gas wells. Baker Hughes operates in three segments: Drilling and Evaluation, Completion and Production, and WesternGeco. The WesternGeco segment consisted of the Company's 30% interest in WesternGeco, a seismic venture with Schlumberger Limited (Schlumberger). On April 28, 2006, Baker Hughes sold its 30% interest in WesternGeco to Schlumberger. The Drilling and Evaluation segment consists of the Baker Hughes Drilling Fluids (drilling fluids), Hughes Christensen (oilfield drill bits), INTEQ (drilling, measurement-while-drilling and logging-while-drilling) and Baker Atlas (wireline formation evaluation and wireline completion services) divisions. The Completion and Production segment consists of the Baker Oil Tools (workover, fishing and completion equipment), Baker Petrolite (oilfield specialty chemicals) and Centrilift (electrical submersible pumps and progressing cavity pumps) divisions and the ProductionQuest business unit. The Company operates in over 90 countries worldwide. In January 2006, Baker Hughes acquired Nova Technology Corporation (Nova), which is a supplier of permanent monitoring, chemical injection systems and multi-line services for deepwater and subsea oil and gas well applications. source
According to this article dated March 29, 2000 Baker Hughes was pulling out of Burma, transferring its interest in the Mann oil fields to Myanmar Petroleum Resources Limited (MPRL). Yet, it is in fact still operating in the country today. The author of this article published just last week, contacted the company about the recent unrest and wrote, "Baker Hughes said it supplied products to customers in Myanmar, although it did not have an office or operations there and it was constantly reviewing its presence in nations around the globe." It is not completely clear whether Baker Hughes has divested its interests from Burma or not. It still maintains an office in Myanmar on its website.
BJ Services Co
4601 Westway Park Blvd.
Houston, TX 77041
BJ Services website
Stewart, J. W. Chairman of the Board, President, Chief Executive Officer
Smith, Jeffrey E. Chief Financial Officer, Senior Vice President - Finance
Dunlap, David D. Chief Operating Officer, Executive Vice President
Yust, Paul Vice President, Chief Information Officer
BJ Services Company is a Fortune 500 company in the oilfield services industry. It is a provider of pressure pumping for the petroleum industry. It was founded in 1872 as the Byron Jackson Company and now operates in more than 50 countries worldwide. Its revenue in 2006 was $4.367 Billion source
Here is more detailed information about the company's products and services:
BJ Services Company is a provider of pressure pumping and oilfield services for the petroleum industry. Pressure pumping services consist of cementing and stimulation services used in the completion of new oil and natural gas wells, and in remedial work on existing wells, both onshore and offshore. Oilfield services include completion tools, completion fluids, casing and tubular services, production chemical services, and precommissioning, maintenance and turnaround services in the pipeline, and process business, including pipeline inspection. The Company conducts its operations through four principal segments: U.S./Mexico Pressure Pumping Services, International Pressure Pumping Services, Canada Pressure Pumping Services and Oilfield Services Group. During the fiscal year ended September 30, 2006 (fiscal 2006), the Company generated approximately 85% of its revenue from pressure pumping services and 15% from the oilfield services group. Over the same period, it generated approximately 60% of its revenue from United States operations and 40% from international operations. source
In 2003 an stockholding investment group called Trillium Investments issued a proposal to BJ Services asking that the company divest it's operations in Burma. The proxy may be found as a pdf on BJ's site or as html on Trillium's site
Here is some of the content of the Proxy statement:
In the summer of 2003, Congress overwhelmingly passed and President George W. Bush signed into law new restrictions banning imports of goods produced in Burma to the U.S.;
Secretary of State Colin Powell wrote in a column in The Wall Street Journal, calling the ruling government of Burma "thugs" and wrote, "We also should further limit commerce with Burma that enriches the junta's generals.";
BJ Services Company provides pipeline service operations in Burma and maintains a district office in Rangoon, Burma; and
BJ Services Company also does business in other countries with controversial human rights records, including Angola, Cameroon, and Nigeria;
THEREFORE BE IT RESOLVED, that shareholders request that the Board of Directors prepare a report to shareholders, at reasonable cost and omitting proprietary information, evaluating financial risks posed by company operations in countries with a pattern of ongoing and systematic violation of human rights (including Burma) and the financial impact to the company of divesting from these countries.
Given this context, we believe that B.J. Services' operations in Burma face significant new financial risks and could damage our company's reputation. A report outlining the company's assessment of the financial risks of continued operations in Burma and other countries with systematic patterns of violating human rights would help shareholders better assess how human rights controversies may affect the company's future growth and how the Board and management are managing risks associated with this issue.
Needless to say, at a January 2004 stockholders meeting BJ Services voted against this proposal and still operates in Burma today. The Board of Directors rationale for their rejection of the proposal included the following:
*The Company believes that management currently has in place a system and procedures to adequately evaluate and manage risks, including general political and social conditions, associated with conducting its operations in all of its locations.
*The Company believes that the subject of the proposal does not provide sufficient guidance as to how it should be implemented.
*The Company's activities in Burma, Angola, Cameroon and Nigeria, the countries named in the proposal, represent a small fraction of the Company's financial position and results of operations.
Regarding allegations of violations of human rights by the government of Burma, the Company believes that decisions as to the nature of such governments and their actions are better made by governmental authorities and international organizations such as the United Nations, as opposed to individual persons or companies. Where the United States government has mandated that United States companies refrain from commerce, the Company has complied.
5599 San Felipe
Houston, TX 77056
P: +1 713.513.2000
Gould, Andrew F. Chairman of the Board, Chief Executive Officer
Ayat, Simon Chief Financial Officer, Executive Vice President, Treasurer
Sbiti, Chakib Executive Vice President
Boutte, Dalton Executive Vice President
Schlumberger Limited is the world's largest oilfield services company. It supplies products and services relating to seismic acquisition and processing; formation evaluation; well testing and directional drilling to well cementing and stimulation; artificial lift and well completions; and consulting, software and information management. It had an operating revenue of $19.23 billion in 2006 with a market capitalization $74.5 billion in January of this year.. The company employs 70,000 people and operates in 80 countries worldwide. source
Here is more detailed information about the company's products and services.
Schlumberger Limited (Schlumberger) is an oilfield service company supplying a range of technology services and solutions to the international petroleum industry. The Company consists of two business segments: Schlumberger Oilfield Services and WesternGeco. The Oilfield Services segment provides virtually all exploration and production services required during the life of an oil and gas reservoir. WesternGeco, wholly owned by Schlumberger, is an advanced surface seismic company. The principal owned or leased facilities of Oilfield Services in the United States are located in Boston, Massachusetts, and Houston, Rosharon and Sugar Land, Texas. Schlumberger's products and services include the evaluation and development of oil reservoirs (controlled digging, pumping and testing services), well construction and production consulting, and sale of software programs. The Company also offers storage tank and seismic monitoring services. The principal owned or leased facilities of Oilfield Services outside the United States are located in Beijing, China; Clamart, France; Fuchinobe, Japan; Oslo, Norway; Singapore, and Abingdon, Cambridge and Stonehouse, United Kingdom. The principal owned or leased facilities of WesternGeco are located in Bergen and Oslo, Norway; Gatwick, United Kingdom; Houston, Texas, United States, and Mumbai, India.
In May 2007, the Company acquired Insensys Oil & Gas Ltd. On April 28, 2006, Schlumberger acquired the remaining 30% interest in WesternGeco from Baker Hughes Incorporated, thereby making it a wholly owned subsidiary of the Company. During the year ended December 31, 2006, the Company acquired 49% of PetroAlliance Services in Russia; TerraTek, which is engaged in the geomechanics measurements and analysis; Odegaard, which is engaged in advanced surface seismic data inversion software, and Reslink, which is a supplier of advanced completion solutions, which offer a spectrum of engineering applications and products for sand management, zonal isolation and intelligent well completions.
According to the Reuters article referenced above,
"Schlumberger is very concerned about the developments in Burma, but views its presence as positive -- particularly for the Burmese people that it employs. Wherever it operates, the company follows business practices that conform to internationally accepted standards of behavior," Schlumberger spokesman Stephen Harris said in an e-mailed statement. source
Halliburton has not been noted in any of the lists I've seen about companies currently involved in Burma, and yet... I came across this VERY interesting article by Peter Waldman in the Wall Street Journal dated, October 27, 2000 and titled, Pipeline Project in Myanmar Puts Cheney in the Spotlight , which should be read in its entirety. Here are some excerpts:
The announcement, in December 1996, trumpeted the "success story" of a Halliburton joint venture that builds undersea pipelines, unveiling several large contracts in Asia and Europe for the London-based operation. Missing from the rundown, however, was any mention of one of the venture's biggest contracts that year -- in Myanmar, formerly known as Burma.
Halliburton's Myanmar connection is a potentially embarrassing episode for Mr. Cheney, now in the final stretch of his campaign as the Republican vice presidential candidate.
The sanctions don't cover service contractors such as Dallas-based Halliburton and the energy-services giant's subsidiaries, nor do they affect U.S. investments in Myanmar prior to 1997. Hence, Halliburton, which today remains one of the last U.S. companies to keep an office in Myanmar, doesn't appear to have violated any laws by working there. Most U.S. companies, including oil giants Texaco Inc. and Atlantic Richfield Corp., pulled out of Myanmar years ago.
Mr. Cheney, according to his press secretary, was kept "generally aware" of Halliburton's foray into Myanmar to work on a major pipeline project. He has long opposed unilateral U.S. business sanctions on the grounds that they put American businesses at a disadvantage to foreign rivals... more at this link.
Interestingly enough, as with BJ services, in 2001 some Halliburton stockholders proposed the company divest from Burma as well. The text of the proposal is available here:
Here is some text:
RESOLVED: The shareholders of Halliburton Company ("Halliburton" or theHalliburton participated in constructing the Yadana pipeline. According to an
"Company") urge the Board of Directors to create a committee of independent
directors to prepare a report at reasonable expense that describes projects
undertaken by the Company or any subsidiary in Burma, with an emphasis on what steps have been and are being taken to assure that neither Halliburton nor any of its subsidiaries is involved in or appears to benefit from the use of forced labor or other human rights abuses in Burma.
October 2000 Wall Street Journal article, European Marine Contractors, a
Halliburton subsidiary, contracted in 1997 to lay 365 kilometers of the
pipeline undersea. A report by the United Nations Special Rapporteur on Burma
found that Burmese villagers were forced to work on offshore portions of the
Yadana project. EarthRights International, a human rights organization,
reported that "from 1992 until the present, thousands of villagers in Burma
were forced to work in support of these pipelines and related infrastructure,
were raped, tortured and killed by soldiers hired by the companies as security guards for the pipeline." The Journal reported that Halliburton refused to comment on whether it was aware of human rights concerns in Burma.
And here are excerpts from Halliburton's Board's response:
The Board of Directors recommends a vote AGAINST this proposal for the following reasons:
. Halliburton's activities in Myanmar (Burma) represent a tiny fraction of
Halliburton's overall business operations.
. Halliburton's limited operations in Myanmar have been performed primarily
by personnel sourced from outside Myanmar.
.Halliburton's operations in Myanmar are immaterial. For the fiscal year ended
December 31, 1999, Myanmar represented approximately $21 thousand of
Halliburton's total assets of $10.7 billion or 0.0002%; approximately $120
thousand of Halliburton's net earnings of $438 million or 0.03%; and
.approximately $1.1 million of Halliburton's gross sales of $14.9 billion or
.Halliburton employs only one Myanmar national in its limited operations in
Myanmar. All other personnel on Halliburton projects come from outside the
country. Therefore, there is absolutely no basis for attributing human rights
abuses to Halliburton's activities.
While the Board shares the Proponent's concern about human rights abuses in
countries such as Myanmar, Halliburton has not engaged in, or condoned, such
conduct. Thus, the requested report will serve only to increase administrative burdens and costs.
How are they able to operate in Burma?
This section explains further how these companies continue to operate in Burma in spite of the US Embargos.
First some background on foreign trade and the oil industry in Burma.
Since Myanmar liberalized its investment code in late 1988, it has attracted its largest foreign investments in the energy sector. It has signed oil and gas exploration contracts with France's Total SA, Unocal Corp. of the United States, Malaysia's Petronas, Thailand's PTT Exploration & Production PCL and Daewoo of South Korea.
It also has deals with companies from India, Australia, Canada and Indonesia.
New contracts continue to be signed despite condemnation of the ruling military regime by Western nations for its poor record on human rights and failure to hand over power to a democratically elected government. The United States and the European Union have imposed economic sanctions on Myanmar in recent years as a result. Myanmar's current junta took power in 1988 after crushing the pro-democracy movement led by Aung San Suu Kyi. In 1990, it refused to hand over power when Suu Kyi's party won a landslide election victory. source
Here is the some relevant text from the summary of the Executive Order 13310 of July 28, 2003 "Blocking Property of the Government of Burma and Prohibiting Certain Transactions" (pdf)
On May 20, 1997, in response to the Burmese Government's large scale repression of, and violence against, the Democratic opposition, President Clinton issued Executive Order 13047 declaring a national emergency with respect to these actions and policies of the Government of Burma. The order, issued under the authority of section 570(b) of the Foreign Operations, Export Financing and Related Programs Appropriations Act, 1997 (Public Law 104-208) and the International Emergency Economic Powers Act (50 U.S.C. 1701- 1706)(IEEPA), prohibits new investment in Burma by U.S. persons and U.S. persons' facilitation of new investment in Burma by foreign persons.
On July 28, 2003, the Burmese Freedom and Democracy Act of 2003 (BFDA) was signed into law, to restrict the financial resources of Burma's ruling military junta, the State Peace and Development Council (SPDC). The BFDA requires the President to ban the importation into the United States of products of Burma, beginning 30 days after the date of enactment of the BFDA, as well as to consider blocking the assets of certain SPDC members and taking steps to prevent further financial or technical assistance to Burma until certain conditions are met.
Here is the section that deals with restrictions for new investments. I emboldened the section that relates to how Chevron is able to continue to operate in the country. Chevron, unlike the other companies listed above is not an oilfield services company, but a full fledged oil company.
NEW INVESTMENT - The sanctions prohibit new investment in Burma by U.S. persons on or after May 21, 1997, unless such investment is pursuant to an agreement in place prior to May 21,1997. A number of criteria are used to determine whether or not a specific activity is "grandfathered." Factors taken into account include the clarity of the scope of the agreement, the degree of specificity with which the activity is described, and the extent to which the terms of the agreement are legally enforceable. New investment in Burma is defined as a contract with the Government of Burma or a nongovernmental entity in Burma for the development of resources (including natural, agricultural, commercial, financial, industrial and human resources) located in Burma. The prohibition includes purchasing a share of ownership (an equity interest) in a project or entering into an agreement that provides for a participation in royalties, earnings, or profits from the economic development of resources located in Burma. Executive Order 13047 and the BSR also prohibit a U.S. company from entering into a contract that provides for the general supervision and guarantee of another person's performance of an agreement for the economic development of resources located in Burma. U.S. persons with pre-May 21, 1997 agreements for the economic development of resources located in Burma should contact the Department of the Treasury's Office of Foreign Assets Control for a determination as to whether or not their project is exempt from the sanctions. source
Here are links regarding US sanctions in general and in Burma specifically.
The Business & Human Rights Resource Centre has become the world's leading independent resource on the subject. Our website is updated hourly with news and reports about companies' human rights impacts worldwide - positive and negative.
The site covers over 3600 companies, over 180 countries. It receives over 1.5 million hits per month. Topics include discrimination, environment, poverty & development, labour, access to medicines, health & safety, security, trade.
ERI is a 501(c)(3) nonprofit group of activists, organizers, and lawyers with expertise in human rights, the environment, and corporate and government accountability. ERI has offices in the U.S. and Southeast Asia. Their activities include documenting human rights and environmental abuses, organization of activist communities, litigation, education, and advocacy.
The United States Campaign for Burma is a U.S.-based membership organization dedicated to empowering grassroots activists around the world to bring about an end to the military dictatorship in Burma. Through public education, leadership development initiatives, conferences, and advocacy campaigns at local, national and international levels, USCB works to empower Americans and Burmese dissidents-in-exile to promote freedom, democracy, and human rights in Burma and raise awareness about the egregious human rights violations committed by Burma's military regime.
And here are links to a two part article that argues against divestment.
Given all the information you now have at your disposal about these American companies operating in Burma, do you believe divestment and further sanction is the best approach? Boycotts? New government policy?
I leave the conclusion to all of you.
Cosmic Debris is a regular participating member of the blogging communities of Docudharma and Daily Kos.