Oil and gas sector plays a vital role in Burma economic, and the survival of Burmese military regime totally rests on the revenues from foreign investment, mainly in oil and gas production. Over and above, the energy industry is now turned out to be the central theme of regional and international politic.  At present, the right of entry to Burma’s oil and gas resource is awfully high on the agenda of its neighboring coun- tries like, Thailand, Malaysia, Singapore, India and China, as well as South Korea and Japan.

In early 1980s, the socialist-military regime imposed the law, which prohibited foreign companies investment and partici- pation in oil exploration and production. The prohibition to for- eign operators in the oil industry has notably declined the produc- tion due to technical and financial inadequacy. Nevertheless, af- ter controlling power for 26 years, the military regime under- stands how the role of oil-politic is important. It is obvious that the military junta invited foreign companies by promulgating the Foreign Investment Law and its related procedures particularly for investment and exploration of oil and gas in Burma in No- vember 1988, just after two months of bloodshed military coup in September 1988.

Two major offshore gas fields, Yadana and Yetagun, with estimated gas reserves of more than 9.7 trillion cubic feet dis- covered in the Gulf of Martaban in earlier 1982. Production from the Yadana field started in 1st July 1998, and production from Yetagun started in 1st July 2000. The gas from both Yadana and Yetagun has been sold to Thailand through pipelines. The Gas Sales Agreement (GSA) was for 30 Years.

The latest discovery of a new gas field off the coast of Arakan was announced in 2004. In August 2005, Daewoo Inter- national has completed its test drilling at A-1 block offshore off Shwe gas field in Arakan state of western Burma and confirmed the existence of a huge mine containing more than 10 trillion cubic feet of gas. The gas will be sold to China or India.

 

The current fuel price hike in Burma has been welcome by public’s resentment and objection followed by series of pro-test demonstrations. Emerging questions regarding hike in fuel prices are: how can a country so rich in gas and oil be unable to provide its own citizens with affordable supplies? And how can a government raise prices such a huge extent, especially when it is selling gas for what must be an incredible profit?

 

An obvious fact is that junta did not use petroleum pro- duction revenue for development of the state as well as better- ment of civilians, in spite, production revenue were used for en- trenchment and modernization of Army. The military regime pur- chased of USD 130 million worth 10 MiG-29 jet fighters from Russia in July 2001. The military junta made down payment for MIGs (30 percent of the total), in the same week that the state- owned Petroleum Authority of Thailand paid Burma USD 100 million in royalties for purchase of gas. The military junta has been receiving US$ 400 million per year from the Yadana/Yetagon project. 

 

Editorial SGM Bullettin Sept 2007