How TotalEnergies is facing dilemmas in Myanmar and implement concrete actions
TotalEnergies values a transparent relationship with all its stakeholders, particularly regarding sensitive human rights situations such as the one in Myanmar.
As per TotalEnergies’ Code of Conduct, our actions are guided and abide by the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.
TotalEnergies condemns the violence and human rights abuses occurring in Myanmar and is appalled by the repressive action taking place in Myanmar. Respect for human rights lies at the heart of our Code of Conduct and our values and is deeply rooted in our company’s culture.
In the current situation, we have decided to discontinue the project to develop our gas discovery on the A6 block as soon as the crisis began. We have also given instructions to cease drilling operations and decommission the drilling rig and do not intend to further invest for the future in light of the current circumstances.
Moreover, following a joint proposal by TotalEnergies and Chevron at the occasion of a shareholders’ meeting of MGTC (Moattama Gas Transportation Company Limited) held on 12th May 2021, cash distributions to the shareholders of the company have been suspended, effective from 1st April 2021, for all the shareholders: TotalEnergies (31.24%), Chevron (28.26%), PTTEP (25.5%) and MOGE (15%).
What remains of our business is our offshore gas production in Myanmar which provides half of the electricity for the city of Yangon, almost 5 million inhabitants, and which also supplies western Thailand, where most of the gas is exported.
TotalEnergies E&P Myanmar (hereafter “TEP Myanmar”), the subsidiary of TotalEnergies SE operating the Yadana gas field, has been conducting business, namely with its stakeholders, as it has ordinarily been doing in the past and has not altered this course since the coup happened. Namely, TEP Myanmar has ordinary course of business relations with MOGE. MOGE has been created by the laws of Myanmar and has been under the sole control of the Myanmar State ever since its inception, without any changes being made between 2016 and 2021, or since 1st February 2021 for that matter. As Myanmar’s national oil company, MOGE is placed under the supervision of the ministry of energy and electricity, and acts as a regulator for the oil and gas sector. Given that TEP Myanmar operates the Yadana field, it is and has logically been in contact with MOGE for the operational management of our activities. It is worth noting that our exchanges with MOGE occur through MOGE’s personnel (and not through any military personnel), most of whom were already in charge before the 1st February 2021 coup.
With regards to payments to the State of Myanmar, most of the revenues accruing to the government of Myanmar come from gas exports and - under the applicable contractual agreements that have not changed since 1st February 2021 - are not paid by TotalEnergies, but by a Thai company (PTT) that buys the gas. Please also note that tax payments by TotalEnergies are made to the benefit of the State Treasury as was previously done under the civilian government.
An important thing to remember is that not paying taxes is a crime under local law. We have considered putting the monthly taxes into an escrow account instead of paying them to the Government, but such non-payment would expose our affiliate's management to arrest and imprisonment. This is our first human rights dilemma. What is more, local law but also rules of international public law make it so that TEP Myanmar would be in breach of its domestic and international legal obligations if it were to suspend payments, and more generally if it were to breach the contractual arrangements that bind the various Yadana partners and the State of Myanmar through MOGE namely.
The facts are that in order to close off this source of revenue, we would actually have to stop producing gas. But this gas is being used to supply electricity to a large population in Yangon. For their part, the Thai authorities have alerted us to the importance of this source of energy, which is vital for their population in the west of the country. It is our belief that our Company currently cannot cut such supply of electricity to millions of people as it would disrupt vital activities such as hospitals, businesses, and generally everyday life. This is our second human rights dilemma.
Even if we did decide to stop production in protest against human rights abuses, we would be putting our employees in a terrible situation by exposing them to forced labor. Having seen the practices of the junta in other economic sectors, and given the vital importance of this gas for the generation of power, there is a high risk that the junta would force our employees to produce the gas by forced labor. This is our third human rights dilemma, as our first priority is to ensure the safety and security of our workforce.
These are the reasons why, although we have decided to discontinue our projects and drilling in Myanmar, we are currently continuing to operate the existing Yadana gas production. Not because we want to maintain our production share and related profits (our share of production represents less than 1% of TotalEnergies’ whole production), but to guarantee the safety of the people who work for us, for some of them since the beginning in 1992, to protect them from prison or forced labor, and to avoid further worsening the living conditions of the population by depriving millions of electricity.
Resolving these three Human Rights dilemmas by a simplistic switch-off move at the expense of our local employees and the Myanmar population which is already suffering is not the choice we have made.
However it is important to note that TotalEnergies would stop producing gas on the Yadana field if we could no longer produce in the safety conditions required by our internal rules. We are not at that stage today, because these facilities are not affected by the dramatic events unfolding onshore.
TotalEnergies will also comply with any decision that may be taken by the relevant international and national authorities, including applicable sanctions issued by the EU or the US authorities.
With regard to the prevention and mitigation of human rights risks in relation to our operations, TEP Myanmar applies stringent internal rules and procedures defined by TotalEnergies SE. Thus, TEP Myanmar:
- has an internal alert system designed to manage situations involving human rights abuses in the onshore village used for Yadana’s operations and in all the villages around the gas pipeline area.
- has for years set up a "grievance mechanism" to manage complaints from community members who believe they are experiencing negative impacts as a result of TEP Myanmar's operations, based on a permanent and direct dialogue through “Communities Liaison Officers”.
- commissioned seven external Human Rights reviews of its activities since 2002 by the independent Collaborative Learning Project (CDA), the reports of which are made public on the CDA website. A new review by the CDA initially scheduled for 2020 was postponed due to the current sanitary context. It is scheduled for October 2021, subject to the security context.
- has been deploying a financial support program for communities for several years, particularly in villages located around the pipeline. To date, this program covers 33 villages and 45,000 inhabitants, although implementation has been disrupted since 2020 by inter-regional mobility restrictions due to the Covid-19 pandemic.
- In the current situation and since the military coup took place, could not access, neither third party experts, the villages around our operations. As soon as practical, we will resume regular human rights due diligence and will conduct a human rights impact assessment to take into account any change in the local social circumstances.
- TotalEnergies has signed the Statement by Concerned Businesses Operating in Myanmar, which has also been signed by 68 other entities and 164 Myanmar companies.
- TotalEnergies has issued a statement as an answer to the call of the “Business and Human Rights Resources Centre” to 18 companies that have activities in Myanmar.
- TotalEnergies issued a statement to explain why the company is continuing to produce gas from Yadana field to keep electricity supply to millions of people in Myanmar and Thailand and what are the main dilemma TotalEnergies is facing, based on human rights considerations.