The Shwe Gas Project and its Impacts on the People of Arakan State and Burma
Arakan State is situated by the Bay of Bengal in western Burma. The state is blessed with an abundance of natural resources; however in recent years, its bountiful supply of oil and gas has become more of a curse than a blessing for the local people.
Arakan’s potential natural gas reserves became the object of major foreign interest in August 2000, when a Production Sharing Contract (PSC) was agreed by Daewoo International Corporation and Myanmar Oil and Gas Enterprise (MOGE) to explore, produce and market underwater gas reserves from just off the Arakan coast. Today, the oil and gas sector attracts more foreign investment in Arakan State, and in Burma, than any other industry.
However, far from being used to address Arakan State’s acute lack of power, which means that 97% of the state’s population currently does not have consistent access to electricity, one hundred percent of the gas extracted from the Shwe gas fields discovered by Daewoo will be sold to China, generating billions of dollars of revenue for the Burmese military regime. This transaction will also require the construction of a 4,000 km pipeline across Burma to China’s Yunnan Province. A parallel oil pipeline will also be built to transport oil from the region and from the Middle East and Africa to China.
Approximately 85% of the population of Arakan lives in rural areas and generally below the poverty line. According to Aung Marm Oo, the general secretary of the All Arakan Students’ and Youths’ Congress (AASYC), the founding organization of the Shwe Gas Movement, “Over 80% of the entire population of the state rely heavily on agriculture and fishing to eke out a living, due to the region’s underdevelopment as a consequence of long-term military misrule in Burma.”
These civilians can not participate in local or state-level decisions and policies; this is especially true when it comes to deciding what happens to their natural resources. Due to the lucrative construction of gas platforms, and gas and oil pipelines, local authorities have heavily restricted the rights of Arakanese people to fish in their own waters in order to achieve tighter “security” in the production and transport areas.
In addition to such restrictions on one of their primary sources of food and income, civilians are also in danger of being forced off of their land, the other major source of livelihoods. Aung Marm Oo noted that “Many areas of farmland will be confiscated and sometimes destroyed to facilitate the construction of the pipelines. This will severely devastate small businesses and damage local economies across Burma, as these are the main local businesses.”
The current Burmese Military Government has demarcated a total of 9 offshore and inland blocks that are considered to be highly favorable for hydrocarbon finds. 7 of these blocks, the A-1 to A-7 blocks, are offshore and the remaining two are inland, namely the L and M blocks.
Today, Daewoo hold a 51 % share in the Shwe Gas Project, the name of which is taken from the Burmese word for gold, ‘Shwe’. The remaining 49% is owned by South Korean, Indian, and state-run Burmese companies, who all stand to make substantial profits from the project.
The biggest gains will accrue to the ruling State Peace and Development Council (SPDC), which stands to make at least US $24 billion over a 30 year period. The Gas and Oil sector is already the junta’s biggest earner, bringing in almost US $3.5 billion annually. This figure is likely to rise by approximately US $1-2 billion after 2013, once the pipeline is complete.
This has raised concern among those opposed to the project, who claim that the majority of profits will then be spent on expanding and modernizing Burma’s already excessively powerful military.
According to Aung Marm Oo, ““If we look at current gas sales to Thailand from the Yadana/Yetagun Gas Pipeline Project, we can see that the majority of revenue has been used to expand the military and fill the generals’ pockets. They never use their funds for the benefits of Burma’s population on the whole.”
“It is clear that the income from the Shwe Gas Project also will not be used for the betterment of Burmese civilians’ lives; rather it will be spent on ‘defence’ and the continued and deepened oppression the people of Arakan and Burma.”
Exact figures are hard to come by, but it is widely believed that the junta currently spends 40% of its budget on defence, despite having no external enemies.
Burma is sandwiched between two of the world’s largest and most energy-hungry countries, India and China. These states rely on crude oil imports for 70% and 40% of their energy needs respectively, and are engaged in a competitive global search for gas and oil. Of late, China has often come out on top, with India’s Oil and Natural Gas Corporation (ONGC) losing out to Chinese companies in Kazakhstan, Ecuador, Angola, and most recently Nigeria. Until 2007, the Shwe Gas Project significantly raised the stakes in this diplomatic game.
According to Kim from the Shwe Gas Campaign in India, who has been campaigning against the project since the creation of the Shwe Gas Movement in 2004: “India’s foreign policy on Burma is based upon its Look East Policy, which is essentially a realist policy. This policy emphasizes India’s own economic and security interests by neglecting human rights and democratic principles.”
“A significant fact is that India invested US $ 150 million for the exploration of gas in Arakan state at the same time that the Burmese junta brutally cracked down on peaceful protesters, who were demanding reductions in fuel prices in September 2007. The demonstrations were in response to a 500% increase in fuel prices due to the regime’s decision to remove subsidies,” he added.
Discovery of the Shwe gas reserves has made Burma the venue of yet another competitive scramble between the two Asian giants; andonce again, China has come out on top. In addition to the energy resources at stake, regional power politics are a key factor at play in the states’ decision to invest in their internationally isolated neighbour, as neither China nor India wants the other to exert too much influence in Burma. Underlying India’s economic and political interests in Burma is a desire to counter China’s growing influence on the country. In some ways, the gas can be seen as microcosm of the contest for global resources and political clout in the region between the two rising Asian powers.
Another major threat this project has imposed on the people of Burma is that of excessive militarisation in the development regions. Since 1988, the number of infantry battalions based in the Western Command, an area that includes Arakan State and Paletwa Township of Chin State, has increased from 3 to 43 battalions. Furthermore, figures from 2006 show there are at least ten specialized battalions (such as engineering and communications), three tactical command centres, and three naval bases. The Western Commander, headquartered in the town of Ann in Arakan State, controls many of the lucrative businesses in the state as his permission is needed for any licensing and administrative procedures.
This increase in militarisation has led to human rights abuses including forced labour, confiscation of land and other property, extortion, and violence. More than 53,000 acres of civilian-owned land in Arakan has been confiscated in the past to make way military infrastructure. According to Aung Marm Oo, these abuses will “surely be exacerbated by a further increase of troop levels to secure the pipelines in the central part of Burma.”
Indeed, the effects of the project are already being felt by local fishermen. In April 2004, soldiers of the Burmese navy on the Arakan coast in the Bay of Bengal arrested fishermen inside an exclusion zone around exploratory rigs in the gas fields. The men were not aware of the restrictions, as they had previously fished that area regularly. Regardless of this, they were beaten and thrown in jail.
The two pipelines are also expected to destroy vast areas of forests, which will disrupt the migration patterns of important local species, and cause droughts and floods. Further environmental dangers also are also inherent in the commercial production and transport of natural gas, such as chemical leakage into the sea and gas blowouts. This is of grave concern to communities that will benefit very little from the project itself, yet are disproportionately at risk from the dangers the project entails.
As construction proceeds, promising the junta a massive boost in its revenue, the people of Arakan continue to be neglected and indeed actively oppressed, without being given any choice about what happens to their natural resources.
Aung Marm Oo has urged that: “All corporations involved in the Shwe Gas Project must freeze all current business with the Burmese military regime and refrain from further investment until the affected people of Burma, through a democratically elected government, can decide on the use of their natural resources without fearing persecution.”
