On a humid July day in Shan state, a 12-year-old girl was playing under the monsoon rains falling over her tiny northern township of Ke See. The Myanmar army had been quietly building a presence there since 2009, after the government signed a deal with China to lay pipelines through the area to take oil and gas from the Rakhine basin in the west to Yunnan province. These pipelines, called the Shwe, would be a safe alternative to the strategically vulnerable Strait of Malacca — so the governments said.
But in 2011, ceasefires between the Myanmar army and ethnic armed groups began to collapse. The Myanmar army took the offensive, not only to protect the abundance of natural resources in Kachin and northern Shan states, but to ensure the construction of the Shwe — the Myanmar word for “gold”. And on that seemingly normal day in July, among summer rain and lush hills, troops from Battalion 513 marched into Ke See.
Photo: Bloomberg News
They took the 12-year-old girl first. An infantry soldier raped her, in front of her mother, while another woman, nine-months pregnant, was raped beside her. A third woman in Ke See was stripped naked, beaten and raped on the outskirts of the village.
“Northern Shan state is especially at risk because of the pipelines; with the extension of the military, women suffer. There’s rape and there’s sexual harassment,” said Hseng Moon, the head of Shan Women’s Action Network (Swan).
The organisation has compiled more than 300 cases of rape by the Myanmar Army in the state since 2002, including the incident in Ke See village. In the past two years, Hseng Moon said, more than 30 cases have been collected by Swan from Shan state for the Bangkok-based Women’s League of Burma (WLB).
“These acts of sexual violence can be linked to the fighting over investment projects like the Shwe,” she said.
In a recent report published by the WLB on the rise of sexual violence in eastern Myanmar, “Same Impunity, Same Patterns”, the organisation wrote: “Renewed military offences in Kachin state and nothern Shan state since 2011 are linked to control over the rich resources in Kachin and Shan areas, including where … the Shwe gas and oil pipeline is located. “The use of sexual violence in ongoing conflict areas is still systematic and structural in nature: it is central to the modus operandi of the army, as it has been in the past.”
Myanmar is ramping up for its largest offshore concession to date — and despite the gross human rights violations brought by the Shwe to Shan state and neighbouring Kachin state to the north, 30 blocks will soon be awarded to major contenders in the global energy arena. Nineteen of the blocks, which are deepwater, will be awarded by the government in full to multinationals, without a binding agreement for product sharing.
On the Myanmar side, the Shwe is operated by the state-run Myanmar Oil & Gas Enterprise (Moge) in a product sharing contract with South Korea's Daewoo; on the Chinese, it is operated by the state-run China National Petroleum Corporation (CNPC). Daewoo operates at the head of a consortium with partners Kogas, ONGC Videsh (OVL) and Gail. CNPC buys oil and gas directly from Daewoo’s partners.
OVL has bid on two of the offshore blocks while Gail has bid on three, and industry insiders expect the Indian energy giants to win the concessions, which analysts say will increase transport through the pipelines from Rakhine state to Yunnan province.
Myanmar has a total of 101 oil and gas blocks — 53 onshore and 48 offshore — which all fall under the ownership of Moge. Thirty blocks are still available and bidders submitted expressions of interest to Moge on June 14 last year. Multinationals that won 18 offshore blocks began operating in the Yadana and Yetagun offshore projects in the late 1990s, sending gas to Thailand by pipeline for use in power plants.
SPARKING OFFENSIVES: Ethnic insurgents in Shan state march in the thousands as a countermeasure to increasing pressure from the Myanmar army. Photos: Patipat Janthong
Operators include Thailand’s PTT Exploration and Production (PTTEP), France’s largest oil producer Total SA, Italy’s biggest oil company Eni SpA, and Oil & Natural Gas Corp of India. PTTEP’s Zawtika project is also almost ready to produce, and the company last week pledged to invest US$3.3 billion (147 billion baht) over the next five years for its current five offshore gas explorations.
Much of the production from Myanmar’s offshore fields will be transported through the Shwe gas pipeline, according to Moge, which went live at the end of October and gas shipments will begin in May. When the oil pipeline goes live, it will, along with its parallel gas pipeline, pump about $45 million worth of shipments daily from Kyaukphyu in the Bay of Bengal, Moge estimated.
Kyaukphyu, the site of Myanmar’s newest special economic zone, sits on nearly 120 km2 of land on Ramree island in Rakhine state. It poses the most immediate security concern to new entrants that are awarded offshore concessions. There has been a long-standing issue of violence stemming from ethnic tensions with the Muslim Rohingya minority that could affect onshore support facilities there.
FRAGILE ACCORD: The Shwe serves to undermine a ceasefire between ethnic armed groups, including the Shan State Army, above, and the government, as tensions over resources flare.
“The widespread discrimination against Muslim communities in the region also poses a serious reputational risk to multinationals,” said Maplecroft senior Asia analyst Ryan Aherin. “The Rohingya are often subject to forced labour in support of government infrastructure development projects throughout Rakhine state. Furthermore, state security forces have been accused of participating in violence meant to displace Rohingya communities.”
With the country’s enormous energy concession on the horizon, Daewoo’s consortium will soon begin pumping gas, and then oil, from its offshore explorations to sell to CNPC. And before the quasi-civilian government has addressed issues of sexual and civil violence, land displacement, and civil war between ethnic armed groups and the Myanmar army, shipments will pulse through areas most susceptible to human rights abuses: from Rakhine state in the west, where ethnic strife sparks forced labour, and the war-torn Shan and Kachin states in the east.
“We don’t know if it will take 30 or 50 years for the government to change, but by the time it does, we’ll be left with no resources,” Hseng Moon said. “We’ll just be left with poor and broken families.”
While the government moves slowly closer to striking a nationwide ceasefire accord through peace talks with insurgents in Shan and Kachin states, an increase in activity through the Shwe will only serve to aggrieve the ethnic armed forces there and undercut efforts to end civil strife in these eastern states, analysts say.
“The increase in government forces brought by the Shwe pipeline has been inflammatory,” said Jens Wardenaer, a research analyst at the International Institute for Strategic Studies (IISS) in London. “The pipeline’s importance will go up with the discovery of more fields, so the security presence is unlikely to decrease, and will thus remain an obstacle to the peace process.”
While fighting first flared in 2011 over the construction of the Shwe, there have been recent multiple attacks on the pipelines and associated infrastructure. On Jan 26, more than 20 employees of a pipeline site in Rakhine state were detained for allegedly setting fire to it. An ethnic Ta’ang women’s group released a report last week to local media claiming that the government had been increasing its army presence in Shan state to secure a pathway to the lines, and alleging repeated cases of sexual harassment by soldiers, forced labour and shelling in villages.
PLIGHT OF THE PETRODOLLAR: Oil tanks at a site operated by CNPC at an offshore block near the Kyaukphyu, an area entrenched in ethnic strife and notorious for forced labour.
“To date there is not a single major oil or gas pipeline in Burma [Myanmar] which has not been associated with serious human rights abuses and conflict,” said Mark Farmaner, the head of Burma Campaign UK. “The impending oil and gas rush could undermine attempts to secure a nationwide ceasefire and negotiations for a political settlement, as ethnic people have seen only negative impacts from past investment.”
Maplecroft’s Mr Aherin said that offensives by the Myanmar army occur often during security patrols around the Shwe, and occur particularly in the vicinity of Lashio in Shan state. Skirmishes often break out with the Kachin Independence Army and while “these incidents remain relatively minor, they could escalate if peace talks between the Kachin Independence Organisation and the government begin to falter”.
Mr Wardenaer, from IISS, added that a national ceasefire might already be be in place by the time oil and gas was actually acquired by the new entrants, given the time needed after the exploration stage. However, the surge in exploration could pose significant damage to what would be an already fragile accord.
“It is possible that expected hydrocarbon revenues could become problematic for the negotiations or even a signed ceasefire, if the proposed distribution of expected revenues is perceived as unfair — revenue-sharing is a long-standing demand for armed ethnic groups,” Mr Wardenaer said.
But despite the threats posed by ethnic armed insurgents to transporting oil and gas overland on the Myanmar-Chinese border, China believes the solution is still better than the Strait of Malacca as tensions continue escalating in the South China Sea. US Secretary of State John Kerry last month cautioned China against sparking regional tensions after the passage of a major flotilla covering an unusually large range incensed its Southeast Asian neighbours. And with 80% of its oil still transported through Malacca, the strait is squeezed to China’s alarm by Singapore, a US ally, and India, a direct competitor.
“The Malacca Strait, which would still provide the route for most of China’s energy imports, could potentially be blockaded by an enemy navy that the PLA Navy would find it difficult to dislodge. The risk to the pipeline from ethnic armed groups may be more immediate than a hypothetical Malacca blockade, but the amount of imports that could be blocked there is much smaller,” Mr Wardenaer said.
“For China, it’s mainly a question of reducing risks through diversification of supply — two risky supply lines are still better than one.”
Another wildcard in the energy trade between Myanmar and China is the Wa secessionist insurgency: a minority ethnic armed group supported by China that is demanding its own state. In the United Wa State Army (UWSA)-occupied area to the east of the Salween, a pulse point of organised crime, drug production and weapons, the insurgency deters the Myanmar army from entering China.
Throughout negotiations for a nationwide ceasefire accord UWSA has declared that they would not be party to it. But according to Mr Aherin, if the government is successful in negotiating a ceasefire with armed ethnic groups in Shan and Kachin states, it will need to find a resolution for the stand-off with the UWSA.
Otherwise, “war with UWSA would make war in Kachin state look like a kindergarten brawl”, said Anthony Davis, an analyst for IHS-Jane’s.
If a ceasefire accord is reached with armed ethnic groups leaving the UWSA the “last man standing”, Mr Davis explained, Nay Pyi Taw could have significant leverage in its relations with Beijing. Asserting the long-standing issue of playing host to an armed state within a state, oil and gas via the Shwe pipelines could be Myanmar’s trump card over China as it sheds its status as a client state.
China, aware the UWSA would react violently to the Myanmar army, would be likely to cave in to Myanmar’s demands given the possibility of a conflict with severe implications on its doorstep.
“All the triggers and incentives are in place for a ramping up of violence, as numerous groups scramble for the spoils from Myanmar’s energy and extractive sectors,” said Sean Turnell, a Myanmar economics expert at Macquarie University.
While major security risks loom over energy concessions, tackling corruption and transparency issues which have historically tainted Myanmar administrations is also proving problematic.
At the core of Myanmar’s efforts is the Extractives Industry Transparency Initiative (EITI), a global index that requires the disclosure of taxes and other payments made by oil, gas and mining companies to governments in an annual report. It grew out of rising corruption problems at oil fields in Africa in 2002 amid investment tensions with the UK and has been increasingly adopted as a benchmark for good corporate practice.
President Thein Sein announced in December, 2012, that to promote transparency in Myanmar’s energy sector, a working committee would be established to meet EITI requirements.
The committee was supposed to have complied with the EITI by December, but only held its first meeting last month.
“International initiatives for non-binding responsible investment rules in Burma seem to be more about public relations protection for Western investors than addressing the deep-rooted problems such investment could create,” Burma Campaign UK’s Mr Farmaner said.
Wong Aung, a human rights activist who sits on the multi-stakeholder committee as a representative of civil society, said “we are still sceptical at the process. We would like to use the EITI to encourage transparency and accountability, but we are not sure yet how much the government ministries are ready.”
Dyveke Rogan, the regional director of the EITI International Secretariat, said that “the EITI by itself will not resolve the social and environmental challenges in these industries”.
“While there are clearly important and complex links between the fight against corruption, the promotion of accountability and the respect for human rights, it is important to note that the EITI is not designed to be a human rights initiative and we do not expect it to become one,” she said.
The government has not yet begun to even skim the surface of the link between control over natural resources and sexual violence as troops are beefed up around the Shwe.
Maplecroft human rights analyst Gabriella Sethi said the government had an apathetic approach to the issue.
“The government has failed to adequately respond to the issue of sexual violence and its recent refusal to sign the new UN Declaration of Commitment to end Sexual Violence in Conflict reflects its apathy to the perpetration of sexual violence by state security forces,” she said. “Given that investors, in most cases, will be dependent upon Myanmar’s security forces for protection and, in some cases, acquisition of land, legal and reputational risks associated with investments will be very high.”
For Mr Farmaner, who has been campaigning for Myanmar’s human rights awareness for more than a decade, too many questions about the risks of energy investment haven’t even been asked, let alone answered.
“The way natural resources such as oil and gas are being exploited in Burma is a textbook example of how it should not be done,” he said. “The fragile political context, ethnic tensions, ongoing conflict, and lack of domestic laws to regulate this kind of investment are being ignored in the rush for petrodollars.”
