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Investing in Myanmar
Empowering the junta
Statues of ancient myanmar kings at the parade ground in
 Nay Pyi Daw,the new capital

When history repeats itself in Burma last September it came as a tragedy. Five months later, the world’s outrage has given way to ineffectual responses and the military junta looks as strong ever.

It is business as usual for overseas investors, oblivious to accusations that by investing in Burma (Myanmar) they are supporting the repressive junta. Those are big time investors, energy companies in particular, ignoring calls for them to pull out of the country.

Map of the Yadana gas field

But how can they get out of it, having injected hundreds of million of dollars in offshore gas exploration and production, especially when the resources are becoming more lucrative as global prices rise. And

Burma had gas reserves estimated at 19 trillion cubic feet at the end of 2006, according to BP's World Review of Statistics, and this figure is expected to have kept risen with more large finds in the following months.

Based on current purchase prices with the state-owned Myanmar Oil and Gas Enterprise (MOGE), those reserves are worth about $2 billion a year for at least the next three decades.

Main foreign investors include Total (France), Petronas (Malaysia), PTTEP (Thailand), Daewoo (South Korea), onGC and GAIL (India) and China National Offshore Oil Corp. and China National Petroleum Corporation. In addition, smaller companies from Singapore, Australia and Russia are engaged in oil and gas exploration.

• Burmese military top brass

These investments require by law a 50:50 joint-venture partnership with the Burma’s state-owned (MOGE). Foreign companies receive a contractual right to explore for oil and gas, and bring the capital and expertise the junta lacks.

In the event of a commercially viable discovery, MOGE steps in at the production phase to collect half the revenue, having risked nothing in the process. Nearly all the natural gas is exported.

Approximately 35 percent of foreign direct investment in Burma is in the oil and gas sector, and exports to Thailand last year generated $2.16 billion.



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