Shwe gas field

The Shwe Gas Project is a project of the Myanmar Oil and Gas Enterprise (MOGE) – a company 100 per cent owned by the junta – in partnership with an international consortium of private and state-owned companies from South Korea and India. South Korea-based Daewoo International is the largest stakeholder (60 per cent) while the remaining 40 percent is divided between the state-owned Korean Gas Corporation (10 per cent), India’s state-owned Oil and Natural Gas Corporation (ONGC) (20 per cent) and the Gas Authority of India Ltd. (GAIL) (10 per cent). In August 2000, Daewoo International partnered with the Myanmar Oil and Gas Enterprise (MOGE) to explore and potentially develop offshore natural gas deposits in the Bay of Bengal off the coast of Arakan State. Exploration commenced and in 2004 Daewoo International announced the discovery of a large offshore natural gas field off the coast of Sittwe, the capital of Arakan State. The gas field comprises several blocks of gas of unconfirmed size. The A-1 gas block is estimated to be the largest, containing 2.88 trillion to 3.56 trillion cubic feet of natural gas, with an estimated market value over US$80 billion. There are preliminary plans to develop several gas blocks in the Bay of Bengal. For over two years, it was presumed that gas from the A-1 Block was destined exclusively to India via a proposed overland pipeline through Burma’s Arakan and Chin states, and through Bangladesh, for consumption in Kolkata, India. This gained the attention of EarthRights International in part because pipeline construction in Burma has historically brought severe human rights abuses and environmental degradation, as well as further entrenching the junta.3 The project, however, reached a diplomatic stalemate when India refused a bilateral agreement proposed by the government of Bangladesh. Using India’s growing demand for natural gas as a leverage point, Dhaka set forth the following bilateral conditions in order for any pipeline to pass Bangladeshi territory: trade routes for commodities from Bangladesh to Nepal and Bhutan through Indian territory; the transmission of hydro-electricity from Nepal and Bhutan to Bangladesh through Indian territory; and pursuing measures to reduce Bangladesh’s trade imbalance with India.4 India found these conditions disagreeable and the project was stalled indefinitely. In December 2005, while India and Bangladesh deliberated to a standstill, the junta and the Shwe gas consortium indiscriminately signed a memorandum of understanding (MoU) with PetroChina, a private oil and gas company based in Beijing, for the sale of gas from the A-1 Block. This MoU includes preliminary plans for the construction of an overland pipeline through Burma to Kunming in China’s Yunnan Province.5 All was not lost for India, however. The junta guarantees gas deposits off Arakan State are plentiful enough to supply the needs of both India and China. India recently hired Brussels-based consulting firm Suz Tractebel to conduct a feasibility study for pipeline routes circumventing Bangladeshi territory. The only possible route for an Indian pipeline that avoids Bangladesh will be overland to Northeastern India. Any undersea route will necessarily pass through Bangladeshi waters and encounter the same bilateral demands, not to mention that route involves considerably more advanced technology and higher construction costs. The findings and recommendations of Suz Tractebel are expected in May 2006.6 The Shwe consortium and the Myanmar Oil and Gas Enterprise (MOGE) oversee development of the Shwe Gas Project, which will include drilling and transporting the gas to end-users. Considering that the Shwe consortium includes India’s ONGC and GAIL, the advent of China as an end-user created what appeared to be the awkward situation of India effectively supplying gas to China, their biggest competitor for oil and gas. However, assuming India finds an economically attractive way to transport gas avoidin