Myanmar junta says Russia to step up as major energy supplier after more international oil, gas firms quit
- The two countries look set to establish a joint pipeline through India or China to supply Russian energy
- Malaysia’s Petronas, Thailand’s PTTEP to join Chevron, TotalEnergies in leaving oil and gas sector that accounts for about half of Myanmar’s foreign currency
Russia is shaping up to be a major energy supplier for Myanmar amid an exodus by international players from the country’s oil and gas sector, one of the junta’s biggest sources of foreign revenue.
Last month, Malaysian state-owned firm Petronas and Thailand’s PTTEP said they would stop operations in Myanmar’s US$700 million Yetagun gas field, located south of the country in the Andaman Sea. Petronas has a 41 per cent stake in the 24,130 square kilometre gas field, while PTTEP owns 19.3 per cent.
Their exit came several months after Chevron and TotalEnergies withdrew from the Yadana gas project, another important source of revenue for the military, which seized power in a coup in February 2021. The French firms cited the worsening human rights situation in Myanmar as the reason for their departures.
In response to the emerging power crisis, the Myanmar military invited an official from Tatarstan, a semi-autonomous region of 3.7 million population in the Russian Federation, to discuss the situation early last month.
US sanctions Russia-backed Iran oil smuggling network involving Chinese firms
Around the same time, two junta-appointed ministers, Maung Maung Ohn and Aung Naing Oo, held an online press conference with foreign media outlets to invite China to join the construction of hydropower dams, The Irrawaddy reported.
Also in April, the Myanmar military said it had reached an agreement with the Russian-led Eurasian Economic Union (EAEU) to establish a pipeline project through India or China to import energy from Russia. There are plans for the Thanlyin oil refinery and reservoir gate in Yangon to be upgraded as well, a source said.
The meeting was agreed upon by Head of the EAEU Secretariat Andrey Diansky, and a delegation of junta-led officials, according to a senior official from the State Administration Council (SAC) who spoke about the agreement to Cambodia’s NP News.
Union Minister Aung Naing Oo from the Myanmar junta’s Ministry of Investment and Foreign Trade on March 24 met EAEU members to sign a Memorandum of Cooperation to boost economic cooperation.
“The first project is to renovate and upgrade the Thanlyin plant. The pipeline will connect to the Yangon estuary like an offshore block. Yet the tankers are too big to enter the river, making it difficult for the oil storage and distribution system,” a senior SAC official told NP News last month.
According to reports, Russia is considering supplying energy to Myanmar via oil tankers through the Black Sea or via Japan to get energy from Russia to market at a reasonable price. Energy bought directly from Russia will be shipped to the port of Yangon by tankers and stored in storage tanks.
India, China potential
An alternative could be a joint venture with India.
But this approach has its limitations, as the Thanlyin refinery will be upgraded into main storage infrastructure, the NP News source said, adding that a large port would be built near the Yangon estuary and the Andaman Sea, where the oil (from tankers) would be transported to the Thanlyin refinery and pipeline storage. The source also said that the pipeline is the safest route for now.
The second option is a partial lease for a Chinese pipeline project in Kyaukphyu Township, Rakhine State, where the gas will be delivered to Thanbyuzayat Township in Minhla Township, Magway Division.
China, Russia tipped to power up energy ties as Europe steps back
Thanlyin Terminal produces 20,000 barrels of oil per day, and the refinery in Thanbyuzayat Township can produce up to 25,000 barrels.
Even with ready-to-use energy from Russia, the quality of Myanmar’s refineries is still uncertain, the official said, adding Myanmar will have to upgrade its storage infrastructure.
A group of pro-democracy activists, Justice for Myanmar, told This Week in Asia that Petronas might also be under pressure from the Malaysian government, which has taken a hard line on the coup, regarding its withdrawal from the Yetagun project.
The regime had shown considerable interest in payments from the Yetagun project owed to MOGE, according to leaked papers revealed by Justice For Myanmar in December last year.
Fighting junta, Russian interest
“The Yetagun project has generated significant revenue for the Myanmar military for most of its production period,” Yuka Kiguchi, Director of Mekong Watch, said.
He said Eneos must take responsibility for having benefited the military through payments to Myanma Oil and Gas Enterprise (MOGE), but this cannot be done by simply withdrawing from the project.
“Eneos must disengage with consideration for human rights and the environment,” Kiguchi said.
Justice For Myanmar spokesperson Yadana Maung told This Week in Asia: “The Myanmar military is waging a campaign of terror against the people of Myanmar, financed by funds from the oil and gas sector that is currently the junta’s biggest source of foreign revenue.”
Maung called on the oil and gas companies to withhold payments to the illegal junta or “responsibly exit”.
She added that Eneos and Petronas’ decision to exit the Yetagun project has prompted the junta to seek a new operator for funds to pay for arms. She urged their partners to prevent this and to close the nearly-depleted field.
According to Maung, a lack of coordinated, international action against the Myanmar junta is paving the way for Russian companies to enter the energy industry, which she said will “further enable the international crimes of the Russian regime and the Myanmar military”.
