US president Joe Biden has promised an "immediate review" of sanctions against Myanmar (Burma) following yesterday's military coup, potentially complicating western energy investment in the country.
"The US removed sanctions on Burma over the past decade base on progress toward democracy. The reversal of that progress will necessitate and immediate review of our sanction laws and authorities, followed by appropriate action," Biden said.
Myanmar's armed forced forces yesterday arrested Myanmar's de facto leader Aung San Suu Kyi and other officials in the ruling National League for Democracy (NLD) and declared a year-long state of emergency, placing commander in chief Min Aung Hlaing in power. The coup derailed uneven moves to establish democratic rule in recent years that helped the NLD to win power in 2015 and encouraged Washington to lift long-standing sanctions on the country.
Global energy firms with upstream investments in Myanmar include majors Chevron, Total and Shell, Italy's Eni and Australian independent Woodside Petroleum. Total operates Myanmar's largest gas field, the offshore Yadana project, in which Chevron has a minority stake. The companies' investments date back to the 1990s.
Shell owns a 45pc stake in offshore block A-7, which is operated by Woodside, while Eni has stakes in several blocks. The companies were awarded acreage in Myanmar's first offshore licensing round in 2013, just as the country's liberalisation process was starting to encourage more international investment. Lower oil prices, together with political and regulatory uncertainty in Myanmar, have restricted interest in the country's upstream sector since then.
It is unclear how any new US sanctions might impact upstream investment. Total and Chevron's Yadana investments were exempted from the previous sanctions regime. A more immediate impact could be on companies that sell oil products to Myanmar, with traders yesterday expressing concerns about whether banks would be prepared to deal with the country following the military takeover.
Asian energy firms are the biggest investors in Myanmar's oil and gas sector, notably Thailand's state-controlled PTTEP, Malaysia's state-owned Petronas and Indian and Japanese companies.
Many of these firms invested in Myanmar under the previous military government and have long-established relationships in the country. PTTEP, which has stakes in three producing gas fields and four exploration blocks, late last year committed to a $2bn investment in upstream gas projects, pipelines and power plants in the country.
Thailand, which is ruled by a party strongly allied with the military, said yesterday that the army takeover in Myanmar was an "internal affair". Thailand and China are the biggest buyers of Myanmar's natural gas, which they import through pipelines from the country's offshore fields.
