China bets on Myanmar status quo for gas

“Ensconced in their new capital north of Yangon, the generals will be acutely aware that similar protests toppled Suharto in Indonesia in 1998,” said CLSA analyst Nick Cashmore in a written comment.

For the moment, the country’s biggest investors like Total and Thailand’s PTT Exploration & Production as well as South Korea’s Daewoo International Corp, operator of a multi-billion-dollar gas project under way, say it’s business as usual.

“Politics is politics. Economics is economics,” said Cho Sang-hyun, spokesman for Daewoo, which operates the A-1 and A-3 natural gas fields, holding nearly 8 trillion cubic feet (tcf) of reserves and expected to cost up to US$3 billion to develop.

Total, which operates Myanmar’s Yadana gas field, says it deplores human rights abuses but its exit would only make matters worse and another, possibly less responsible, firm would take over.

Chevron, which inherited a share in the project when it bought Unocal two years ago, said it was hoping for a swift and peaceful resolution to the current situation.

Analysts say that while Western oil majors fear the sting of public criticism, the main reason they have stayed out is a U.S. ban on new investment, imposed to hurt the ruling generals.

That has left easy pickings for their state-backed rivals, who are more phlegmatic about criticism. As well as Chinese and Indian firms, Malaysia’s Petronas bought out UK-based Premier Oil in 2003 and Russian firms have also joined the hunt.

The company with the most existing exposure to Myanmar is Thailand’s PTT E&P, a subsidiary of PTT, which takes nearly a fifth of the gas needed for its power plants from Myanmar.

“We see quite a short-term problem in Myanmar. We don’t expect it to last too long,” said PTT spokesman Sarutt Sonbutsiri. “It’s possible that future prospects might be affected, it just depends how big the problem is.”

Sonbutsiri played down the impact from the unrest, since most of the gas operations are offshore or in remote areas. Asked about the possibility of a change of government, he said current supply deals were locked in long-term contracts.

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