EU Sanctions Myanmar Oil Firm for Providing Junta Resources

EU Sanctions Myanmar Oil Firm for Providing Resources to Junta

The European Union imposed fresh sanctions against Myanmar’s military regime, focusing on a lucrative state-owned oil and gas company that has been a key source of revenue for the junta more than a year after the coup.

The new listings target 22 individuals including government ministers, as well as high-ranking members of the Myanmar Armed Forces, the European Council said Monday. It also targets four entities, including state-owned companies like Myanma Oil and Gas Enterprise, which were found to provide the regime with “substantive resources.” 

Myanmar’s oil and gas sector has become a target of international pressure of late as one of the junta’s most important sources of income and foreign exchange given oil products are priced in U.S. dollars. MOGE is the operator and regulator of the oil and gas sector, overseeing exploration and the distribution of petroleum products. It also grants permits and collects tax on profits made by private companies that are in production sharing contracts or joint ventures. 

“MOGE is thus controlled by and generates revenue for the Tatmadaw, therefore contributing to its capabilities to carry out activities undermining democracy and the rule of law in Myanmar,” the European Union said in an update of its legislation, referring to the armed forces by its official name.

Military regime spokesman Zaw Min Tun dismissed the EU measures, saying it won’t have much impact on a sector that survived for years under sanctions.

“When it comes to sanctions there are companies that strictly follow them, but there are also companies that neglect them,” he said by phone. “But there is one thing, we are likely to face some difficulties in bank transactions, so we have to address some bank issues, more or less.”

The sanctions came after TotalEnergies SE and Chevron Corp. last month said they would pull out of Myanmar to protest against the junta’s continued violence against civilians since the military coup. Both these companies have operated in Myanmar for decades in production sharing contracts or joint ventures with MOGE and have come under criticism for engaging in business with military government.

“History shows that when the junta was previously in place in the 1990s, gas revenues from Total and Chevron/Unocal helped them to withstand international sanctions as their reserves dwindled,” a group of U.S. senators advised Treasury Secretary Janet Yellen and Secretary of State Antony Blinken last year in a letter.

Japanese trading house Mitsubishi Corp. followed suit last week with plans to sell its stake in a natural gas field in Myanmar. While some companies are leaving, others are planning to step up engagement. Earlier this month, a junta spokesman said PTT Pcl, Thailand’s state-controlled energy company, is bidding to take control of Myanmar’s Yadana gas field with PTT Exploration and Production Pcl offering to acquire the combined 59.5% stake held by TotalEnergies and Chevron.

Zaw Min Tun said there are other foreign companies that are ready to replace those who are pulling out of the oil and gas sector. “We have them ready but I can’t tell the companies’ names at this point,” he added. 

The U.S. has recently targeted Myanmar government officials and businessmen as well as a private logistics company and an army-run procurement agency in sanctions marking one-year since the coup, though it has yet to impose any against MOGE.

The EU’s restrictive measures against Myanmar now apply to a total of 65 individuals and 10 entities, and include an asset freeze and a prohibition from making funds available to the listed individuals and entities.

©2022 Bloomberg L.P.