Chevron in Burma

Chevron digs in its heels over Myanmar

by Christian Schmollinger and Dinakar Sethuraman

Bloomberg News, October 30, 2007, www.iht.com/

Chevron, one of the largest U.S. energy companies, will keep its stake in a natural gas project in Myanmar, defying calls to leave after a crackdown on protesters by the country's ruling junta.

The people around the Yadana natural gas project and pipeline have benefited from jobs and investments in health care and education, Chevron's chief executive, David O'Reilly, said during an interview in Bangkok. The company may lose any tax benefits from the project under a bill approved by a U.S. congressional committee Oct. 23.

"Our commitment is to try to stay to be a positive influence," O'Reilly said. "It isn't going to change anything if we leave. We are a minority investor in this project."

Chevron faces renewed calls to divest its 28.3 percent stake in the Yadana project, operated by the French oil company Total, after the Myanmar government last month crushed the biggest anti-government protests in almost 20 years.

The company may be forced out of the country, formerly known as Burma, under U.S. legislation introduced by Senator John McCain, Republican of Arizona, on Oct. 17 prohibiting investments made by U.S. companies in defiance of sanctions that were passed in 1997.

Total, for its part, said in September that shutting its operations in Myanmar could cause even greater hardship in the country. Its comments came despite a hardening attitude by France toward new investment in the wake of violence in the country.

The U.S. House Foreign Affairs Committee unanimously accepted legislation introduced by Representative Tom Lantos, Democrat from California. The bill would pressure Myanmar's military rulers, stating that no tax deductions would be allowed for the "joint production agreement" for Yadana, and prohibiting payments or property transfers to the government.

Chevron obtained the stake in the Yadana and Sein offshore natural gas fields in the Andaman Sea through its 2005 purchase of Unocal. The Yadana project sells natural gas by pipeline to Thailand.

Thailand has imported 26 percent of the 3.4 billion cubic feet, or 96 million cubic meters, a day of natural gas it has consumed in 2007 from Myanmar, according to the Thai Energy Policy and Planning Office. Yadana provided a little more than half of that. Thailand generated 66 percent of its electricity from the fuel through August.

"One must remember that most of the gas from this production comes here to Thailand to supply the electricity needs," O'Reilly said. "If we leave or are forced to leave, somebody else will step into our shoes and the gas will continue to flow."

A number of countries may buy up the Yadana stake should Chevron leave. China, India, Japan and South Korea are competing for a share of Myanmar's resources as more natural gas reserves are discovered. The country held about 19 trillion cubic feet of reserves last year, BP said in its annual energy report.

Chevron should disclose more of how it does business and explain how it takes responsibility for human rights abuses in Myanmar, the Church of Sweden, which owns shares in Chevron, said Oct. 18.

"Together with other shareholders the Church of Sweden will, among other things, demand that Chevron clearly shows how its business affects Burma's people," the church said.

Chevron's Pipeline Is the Burmese Regime's Lifeline

by Amy Goodman

www.zmag.org, October 4, 2007

The image was stunning: tens of thousands of saffron-robed Buddhist monks marching through the streets of Rangoon [also known as Yangon], protesting the military dictatorship of Burma. The monks marched in front of the home of Nobel Peace Prize winner Aung San Suu Kyi, who was seen weeping and praying quietly as they passed. She hadn't been seen for years. The democratically elected leader of Burma, Suu Kyi has been under house arrest since 2003. She is considered the Nelson Mandela of Burma, the Southeast Asian nation renamed Myanmar by the regime.

After almost two weeks of protest, the monks have disappeared. The monasteries have been emptied. One report says thousands of monks are imprisoned in the north of the country.

No one believes that this is the end of the protests, dubbed "The Saffron Revolution." Nor do they believe the official body count of 10 dead. The trickle of video, photos and oral accounts of the violence that leaked out on Burma's cellular phone and Internet lines has been largely stifled by government censorship. Still, gruesome images of murdered monks and other activists and accounts of executions make it out to the global public. At the time of this writing, several unconfirmed accounts of prisoners being burned alive have been posted to Burma-solidarity Web sites.

The Bush administration is making headlines with its strong language against the Burmese regime. President Bush declared increased sanctions in his U.N. General Assembly speech. First lady Laura Bush has come out with perhaps the strongest statements. Explaining that she has a cousin who is a Burma activist, Laura Bush said, "The deplorable acts of violence being perpetrated against Buddhist monks and peaceful Burmese demonstrators shame the military regime."

Secretary of State Condoleezza Rice, at the meeting of the Association of Southeast Asian Nations, said, "The United States is determined to keep an international focus on the travesty that is taking place." Keeping an international focus is essential, but should not distract from one of the most powerful supporters of the junta, one that is much closer to home. Rice knows it well: Chevron.

Fueling the military junta that has ruled for decades are Burma's natural gas reserves, controlled by the Burmese regime in partnership with the U.S. multinational oil giant Chevron, the French oil company Total and a Thai oil firm. Offshore natural gas facilities deliver their extracted gas to Thailand through Burma's Yadana pipeline. The pipeline was built with slave labor, forced into servitude by the Burmese military.

The original pipeline partner, Unocal, was sued by EarthRights International for the use of slave labor. As soon as the suit was settled out of court, Chevron bought Unocal.

Chevron's role in propping up the brutal regime in Burma is clear. According to Marco Simons, U.S. legal director at EarthRights International: "Sanctions haven't worked because gas is the lifeline of the regime. Before Yadana went online, Burma's regime was facing severe shortages of currency. It's really Yadana and gas projects that kept the military regime afloat to buy arms and ammunition and pay its soldiers."

The U.S. government has had sanctions in place against Burma since 1997. A loophole exists, though, for companies grandfathered in. Unocal's exemption from the Burma sanctions has been passed on to its new owner, Chevron.

Rice served on the Chevron board of directors for a decade. She even had a Chevron oil tanker named after her. While she served on the board, Chevron was sued for involvement in the killing of nonviolent protesters in the Niger Delta region of Nigeria. Like the Burmese, Nigerians suffer political repression and pollution where oil and gas are extracted and they live in dire poverty. The protests in Burma were actually triggered by a government-imposed increase in fuel prices.

Human-rights groups around the world have called for a global day of action on Saturday, Oct. 6, in solidarity with the people of Burma. Like the brave activists and citizen journalists sending news and photos out of the country, the organizers of the Oct. 6 protest are using the Internet to pull together what will probably be the largest demonstration ever in support of Burma. Among the demands are calls for companies to stop doing business with Burma's brutal regime. __Amy Goodman is the host of "Democracy Now!," a daily international TV/radio news hour airing on 500 stations in North America.

Chevron's links to Burma stir critics to demand it pull out

by David Baker

http://www.sfgate.com/, October 4, 2007

Chevron Corp. of San Ramon is drawing harsh criticism for its business ties to Burma, the Asian nation conducting a brutal military crackdown.

The company owns part of a natural gas project in Burma, where soldiers crushed pro-democracy protests last week and killed at least 10 people.

U.S. sanctions prevent most U.S. companies from working in Burma, but Chevron's investment there existed before the sanctions were imposed and continues under a grandfather clause. As a result, the company is one of the few large Western companies left in the country.

Now Chevron faces pressure to pull out.

Human rights activists are calling on the company to either leave Burma or persuade the country's military rulers to stop killing demonstrators. Bloggers are encouraging people to flood Chevron's phone and fax lines in protest. Some are calling for a boycott.

"There's no question that the money from the pipeline project helps prop up the military government," said Marco Simons, U.S. legal director for EarthRights International. "If Chevron can stop people from getting killed by using its influence, we'd certainly like to see that. In the long run, we don't think anyone should be doing business with this government."

But Chevron doesn't intend to leave.

"Chevron is maintaining its interest in the ... project," said spokesman Alex Yelland.

The company has been trying to build up its portfolio of oil and natural gas projects in Asia, where energy demand is growing fast. Chevron also has a history of working under difficult political circumstances. In some cases, that history involved countries with questionable human rights records or nations that ran afoul of the U.S. government. In other cases, the company's own actions have been called into question.

Chevron has been the focus of repeated protests in Nigeria, for example, where soldiers paid by the company have been accused of shooting villagers and burning homes. And the company continues to work in Venezuela, despite constant sniping between Venezuelan President Hugo Chavez and the Bush administration.

Chevron has denied any part in any human rights abuses. Its executives argue that staying in troubled countries - even pariahs such as Burma - does more good than harm by employing locals and funding health and education programs.

"I'm convinced that hundreds of thousands of people in Burma have benefited," said Chevron Vice Chairman Peter Robertson, who pointed to the community doctors and teachers his company has paid for. "They benefit from us being there."

There's also the question of whether pulling out would work.

Chevron owns a minority stake in the Yadana natural gas field and pipeline, a little more than 28 percent. Both China and India have been eager to do business with Burma, hoping to secure some of the fuel supplies that their surging economies need. If Chevron left, one country or another would try to take its place, Robertson said.

"It's pretty clear that this is a very attractive asset, and other people would be interested," he said.

Frank Verrastro, head of the energy program at the Center for Strategic & International Studies think tank, said Burmese law also would force Chevron to fork over much of the company's capital gains on the project if it sold its stake. That could amount to hundreds of millions of dollars, depending on the sale price. The project cost roughly $1 billion to build in the mid-1990s and is doubtless worth far more today.

"That goes straight to the Burmese government," Verrastro said. "The biggest conundrum right now is how to deal with bad actors who have a resource that the world needs. And we haven't come to grips with that in any way, shape or form."

Chevron's involvement in Burma - called Myanmar by the military junta that rules it - already has a complicated and controversial history.

It started with Unocal Corp., one of Chevron's historic rivals. Unocal invested in the Yadana project in the 1990s along with three other companies: France's Total, Myanmar Oil and Gas Enterprise and the Petroleum Authority of Thailand. When Washington decided to impose sanctions on Burma's military junta in 1997, Unocal was allowed to stay under a grandfather clause.

Chevron acquired the stake when it bought Unocal in 2005. By then, however, the Yadana project had become a public relations disaster for Unocal. Burmese exiles sued the company in a U.S. court, saying the pipeline's construction had involved forced labor and other human rights abuses committed by the military. Unocal denied the accusations but settled the case out of court for an undisclosed sum.

Burma isn't the only place where Chevron has faced questions about human rights.

The company's operations in Nigeria have triggered frequent protests by poor Nigerians who say they see little of the money flowing from the nation's rich oil fields. Some have sued Chevron, saying that soldiers paid by the company have killed protesters and villagers.

And in Ecuador, Chevron is fighting a long-running lawsuit concerning oil-field pollution that residents say has contributed to a wave of illnesses in part of the Amazon jungle. The suit alleges that Texaco, which operated an oil-field in Ecuador years before Chevron bought the company, left pools of petroleum and hazardous chemicals scattered around the field, eventually covering them with thin layers of soil rather than removing them.

In both countries, Chevron has denied the allegations, both inside and outside court.

In Burma, Chevron acts mainly as an investor. The company does not operate the Yadana field. That role falls to Total, which has the biggest stake in the project, at 31 percent.

Despite its strategic location for Chevron, Yadana has its limits. The U.S. sanctions prevent Chevron from expanding its investment, even as the company pours money into exploring for oil and natural gas off neighboring Thailand. And the existing operations are small compared to many of the company's projects worldwide.

Even so, Yadana represents a key source of cash for Burma's government.

Human Rights Watch, one of the groups trying to pressure Chevron, says natural gas sales are the government's single largest source of income, although economic data from Burma are unreliable. Gas sales to Thailand brought the government $2.16 billion in 2006, according to Human Rights Watch. Most of the Yadana project's gas flows to Thailand.

"President Bush should order Chevron to cease operations in Burma immediately," said Nyunt Than, president of the Burmese American Democratic Alliance. "That would cut hundreds of millions of dollars from this military. It would create great pressure on them to come to the table."

A White House spokesman referred questions about Chevron's presence in Burma to the National Security Council, which did not respond to a query.

Chevron pays for social programs in communities along the Yadana pipeline's route, funding teachers, libraries and doctors. The company reports significant declines in local deaths from malaria and tuberculosis since the programs began.

But exerting political pressure on Burma's government is another question entirely. Chevron has typically resisted calls for that kind of involvement.

Chief Executive Officer David O'Reilly defended that position in a Chronicle interview last year.

"You have to be apolitical and try to remember what you're doing. What we do well is we invest in oil and gas exploration, refining and whatnot," he said. "We were in Angola during years and years of civil war and years when there were clearly people in the United States who felt that Angola was an inappropriate place to invest. And yet Angola's civil war is over. We've had a very positive influence there. We've created a lot of jobs."

E-mail David R. Baker at dbaker@sfchronicle.com.

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Big Oil Trumps Freedom

[Chevron in Burma]

by Marco Simons

www.tompaine.com, September 26, 2006

Marco Simons is the U.S. Legal Director for EarthRights International, which represented the plaintiffs in Doe v. Unocal Corp. and is currently representing villagers suing Chevron for human rights abuses in Nigeria.

Recent media reports have suggested that Western oil and gas companies are increasingly looking to investment in Burma, also known as Myanmar, which has languished under a brutal military dictatorship for nearly two decades. The Bush administration's attitude toward U.S. oil companies in Burma is, sadly, emblematic of its general policy of valuing petroleum over human rights and democracy. Whatever efforts Bush has made to promote human rights stop at the well, the pipeline, and the pump.

It's no secret that the Bush administration is far from a standard-bearer for human rights. But if there's one place in which Bush has been a consistent, strong advocate for human rights and democracy, it would be in Burma. Under President George W. Bush, the U.S. government has reauthorized the prohibition on new investment in Burma by U.S. companies, enacted a ban on imports, and frozen the assets of Burma's military leaders. The U.S. has also been a driving force behind recent efforts to bring the situation in Burma to the attention of the U.N. Security Council. By any measure, Bush has been at least as committed to human rights and democracy in Burma as his predecessors.

Even in Burma, however, Bush's support for human rights yields to his fondness for the oil and gas industry. Burma has large natural gas reserves, and multinational oil corporations want to cash in. Chevron Corporation is currently the largest U.S. investor in Burma, with a partnership stake in the multi-billion-dollar Yadana gas pipeline project. The Yadana project was originally developed by Unocal, another American oil company, which was acquired by Chevron last year. (Although new investment in Burma is prohibited, the pipeline is grandfathered in under an exception, pushed by Unocal, for preexisting projects.)

The Yadana pipeline has been repeatedly condemned by human rights and environmental advocates as one of the most destructive "development" projects in the world. The Burmese military government is a direct partner in the project, and Burmese soldiers providing security and other services to the pipeline project have conscripted villagers for forced labor on a vast scale, as well as committing murder, rape and torture. These abuses have been widely acknowledged; before Bush took office, the U.S. Department of Labor concluded that "refugee accounts of forced labor" on the project "appear to be credible."

The Bush administration has close ties to Chevron. Secretary of State Condoleezza Rice was a member of the Chevron Board of Directors for 10 years before Bush was elected, and even had a Chevron oil tanker named for her until it was quietly renamed after Bush took office. And Halliburton, the oilfield services giant formerly headed by Vice President Dick Cheney, has numerous ties to Chevron, signing several multimillion-dollar contracts during Cheney's tenure. And yet there is no evidence that the Bush administration has used its connections to convince Chevron to divest its Burmese holdings, despite the evidence of abuses committed on the Yadana project and Bush's public position on promoting human rights and democracy.

Indeed, even before Chevron acquired Unocal and the Yadana project, Bush's government actively took steps to thwart accountability for the Yadana project. When refugees who had suffered rape, torture, enslavement, and murder at the hands of soldiers protecting the Yadana pipeline sued Unocal in U.S. court, the Bush administration intervened to try to convince the courts that the lawsuit should not proceed. The administration essentially argued that, even if the case would not actually interfere with U.S. relations with Burma, holding Unocal liable would create a precedent that could conflict with U.S. foreign policy in other parts of the world. (The lawsuit, Doe v. Unocal Corp., was ultimately resolved before the courts considered the administration's position, with Unocal compensating the victims in a historic settlement-see http://www.earthrights.org/legal/unocal/.)

If the Bush administration opposes accountability for human rights violations committed by the oil and gas industry in a pariah state such as Burma, the situation is even worse when oil companies commit abuses in countries friendly to the United States. In the troubled Indonesian region of Aceh, security forces hired by ExxonMobil have committed rape, murder and torture against local villagers. When the victims filed suit in federal court against the oil giant for compensation, the Bush administration sent a letter to the court stating that the case could cause a "serious adverse impact" on "the ongoing struggle against international terrorism." The judge subsequently dismissed parts of the case.

In Colombia, Los Angeles-based Occidental Petroleum has employed military contractors to protect its pipeline from suspected attacks by insurgents. When Occidental's contractors directed the Colombian military in a misguided air raid on the village of Santo Domingo, killing three civilians, their relatives sued the oil company in federal court in California. As in the case against ExxonMobil, the Bush administration argued that the case could have "negative consequences for our bilateral relationship" with Colombia, which it called a "partner in the vital struggles against terrorism and narcotics trafficking." Relying on the administration's position, the federal court dismissed the case.

In the Occidental lawsuit, the Bush administration went a step further than it had before, and turned its favoritism for oil production over human rights into an actual pronouncement of policy. Adjudicating whether an oil company committed human rights abuses, the administration argued, could deter other oil companies from getting involved in unstable regions such as Colombia, and "reduced U.S. investment in Colombia's oil industry may detract from the vital U.S. policy goal of expanding and diversifying our sources of imported oil." In other words, oil production is, in and of itself, such an important "policy goal" that it trumps human rights.

This is the essence of the Bush administration's diplomacy. Increasing oil production is "vital," while accountability for human rights violations is inconvenient at best. When it comes to Bush's foreign policy, oil remains king.

Marco Simons is the U.S. Legal Director for EarthRights International, which represented the plaintiffs in Doe v. Unocal Corp. and is currently representing villagers suing Chevron for human rights abuses in Nigeria.

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