Oil and Natural Gas

   Burma possesses abundant oil and natural gas resources, located both onshore and offshore. During the Konbaung Dynasty, "earth oil" was extracted from wells around Yenangyaung (Yaynangyoung), in present-day Magwe (Magway) Division. The wells were operated by twinza, "well-eaters," whose usufruct right was hereditary. During the British colonial period, the Burmah Oil Company, a Scottish-owned corporation, extracted oil from wells at Yenangyaung, Myingyan, and Chauk, and Burma exported oil products to India. The company continued its operations until it was nationalized by the Burma Socialist Programme Party regime in the 1960s. During the socialist period, the energy sector languished. Although attempts were made to increase oil production and discover new offshore fields with the cooperation of foreign oil companies, sustained increases in production could not be achieved. After the State Law and Order Restoration Council (SLORC) seized power in September 1988, socialist economic policies were dropped and the way cleared to exploit hydrocarbon resources with the full participation of foreign oil companies. Beginning in 1989, 18 European, American, and Japanese companies paid large "signature bonuses" to the SLORC to do onshore exploration from Mon State in the south to Sagaing Division in the north, but they failed to find major new deposits. Most had quit the country by 1993, after spending hundreds of millions of dollars. Burma became increasingly dependent on oil imports, and much locally produced oil was sold on the black market.

   Offshore, deposits of natural gas proved more promising. The US$1.2 billion Yadana Pipeline Project in the Andaman Sea became the largest foreign investment in Burma; this joint venture comprising the Myanmar Oil and Natural Gas Enterprise (MOGE), Total of France, Unocal of the United States, and the Petroleum Authority of Thailand to export natural gas to Thailand has gained the Burmese government as much as US$400 million in annual revenues. Asecond field, Yetagun, is also being developed. In early 2004, it was announced that a third natural gas field, called the "Shwe [Golden] Prospect," located off the coast of Arakan (Rakhine) State in the Bay of Bengal, was exploited by a consortium of MOGE, South Korean, and Indian energy firms. It will provide India with natural gas and bring the State Peace and Development Council between US$800 million and US$3 billion in yearly revenue.

   Energy exports are ideal sources of hard currency for the SPDC because the extraction of hydrocarbons takes place in remote areas offshore, has-unlike the establishment of new manufacturing industryalmost no impact on society in central Burma, and is completely under the control of MOGE and its foreign partners. Cases of forced labor and forced relocation associated with the Yadana and Yetagun projects have raised international concern, and many activists fear that construction of a pipeline to India in connection with the Shwe Prospect will result in similar hardship for people in western Burma.

   See also Oil Field Workers' Strike.