Woodside to pull out offshore drilling team amid Myanmar unrest

Australian energy giant Woodside has become the latest major company to reduce its presence in Myanmar until stability improves.

Riot police advance to clear protesters in Yangon on Friday. Picture: AFP

Australian energy giant Woodside has become the latest major company to reduce its presence in Myanmar, announcing it has placed all business decisions there under review and will pull out its offshore drilling team until the outlook for the country and its political stability improves.

The ASX-listed company made the announcement on Saturday after The Weekend Australian reported it was under rising pressure to reveal details of its gas exploration contracts in Myanmar and to rule out payments that could benefit the military junta that toppled the democratically-elected government of Aung San Suu Kyi this month.  The junta has since imposed a one-year state of emergency, draconian new security and cyber laws, and detained 728 people, including defacto civilian leader Aung San Suu Kyi and Australian economist Sean Turnell.

A letter sent to Woodside chairman Richard Goyder on Friday by the ACTU, Australian Council for International Development, Amnesty International, Union Aid Abroad and Publish What You Pay urged the company to reveal all details of its Myanmar contracts and explain how it would operate under the junta and still abide by its own human rights policy.

The note, obtained by The Weekend Australian, also raised concerns that Woodside could be contractually obliged to pay tax on profits from its projects to the junta, and up to 20 per cent in production payments directly to the Myanmar Oil and Gas Ministry which is now under direct military control. 

“Considering Woodside has formal concerns about engaging with regimes linked to human rights abuses, how does it justify ongoing operations in the now military controlled Myanmar?” it asked.

“Is it tenable for Woodside, as a member of the joint venture, to provide revenue now or

into the future to the junta-controlled Myanmar Government?”

Woodside has said it has no producing assets in Myanmar and does not currently generate

revenue there, though the company has previously said it expects its gas developments to

generate significant long-term revenue streams for Myanmar and to pay taxes and royalties

to its government.

It has interests in eight offshore gas blocks and a 40 per cent joint venture stake with Total

and local company MPRL in Block A-6, a gas-rich field off the coast of Rakhine state which is to begin piping gas to Myanmar and Thailand by 2023.

The company confirmed that it has a production sharing contract with Myanmar’s Ministry

of Oil and Gas Exploration — which is now directly controlled by the military junta — but had no direct commercial arrangements with any Myanmar military-linked organisations though.

However, on Saturday Woodside released a new statement describing as “deeply distressing” reports of violence against people protestors in Myanmar _ where at least four people have now been killed by security forces _ and condemning human rights violations.

“We have watched with growing concern since the events of February 1, 2021. Woodside supports the people of Myanmar and we hope to see a peaceful journey to democracy,” the new statement said.

“We are reducing our presence in country and expect full de-mobilisation of our offshore exploration drilling team over the coming weeks. Until we see the outlook for Myanmar and its political stability has improved, Woodside will keep all business decisions under review.”

The announcement has been welcomed by rights groups, including Publish What You Pay which was one of the signatories to Friday’s letter to Mr Goyder. It urged other extractive companies operating in Myanmar — including Chevron, Total and Australian companies Myanmar Metals, ROC, Tap Oil and Transcontinental Group — to “follow Woodside’s leadership and support the people of Myanmar”.

“Any mining, gas or oil company operating in Myanmar is at risk of legitimising the rule of the Myanmar military. The offshore oil and gas sector is a major earner for the Myanmar military, and has historically helped prop up the military operations,” Publish What You Pay Australian director Clancy Moore said.

“The Australian government should also follow this lead and support targeted sanctions against the military generals and their families.”

The US, UK, NZ, EU and Canada have all announced targeted sanctions on Myanmar military leaders, family and businesses. More are expected amid concerns of a violent crackdown on

daily protests. Australia already has some targeted sanctions in place against military commanders in response to the 2017 military crackdown on Rohingya civilians. But it has announced no new measures since the coup, saying only that its ties with the Myanmar military are “under review”.

A number of multinational corporations — including Thai property giant Amata and Japanese car maker Suzuki — have already suspended business in Myanmar, while the Wold Bank has

halted all new lending to Myanmar.

Japanese brewer Kirin has withdrawn from its joint venture with military-owned conglomerate MEHL, and Singaporean tycoon Lim Kaling is selling his stake in a tobacco joint venture with Myanmar military-linked Virginia Tobacco.

A confidential advisory issued this week by the Monetary Authority of Singapore warned Singaporean financial institutions to take measures to manage risks arising out of business with Myanmar “including reputational, legal and operational risks”.

On Friday, Australian human rights lawyer Chris Sidoti — part of a three person UN Fact Finding Mission that found the Myanmar military had committed crimes against humanity

against Rohingya civilians _ warned Australian companies in Myanmar risked reputational damage, shareholder pressure and significant economic loss due to the situation there. Mr Sidoti urged them to suspend operations pending fresh due diligence.

“Companies should not be in a situation where directly or indirectly they enable money to flow into the pockets of generals individually, or the military institutionally to fund its operations,” Mr Sidoti said. 

But Chris Hughes, a founding partner of SCM Legal in Yangon, said he saw no need for investors to suspend operations given investors in Myanmar had “long taken care about who they do business with and the need to do that is even clearer in the current circumstances”.

Woodside CEO Peter Coleman came under fire earlier this month over comments suggesting the now-deposed civilian government’s failure to address a list of military grievances over last November’s elections, which it won in a landslide, had triggered the coup.

The military has justified its actions by claiming widespread electoral fraud, while offering no evidence for those claims.