OPINION: A week is a long time in politics” is a quote often attributed to former UK prime minister Harold Wilson.
Less than a week ago, Myanmar had a democratically elected government and 2021 was shaping up to be decent for the Southeast Asian nation’s upstream sector.
Australia’s Woodside Petroleum had just spudded the first in a three-well offshore exploration campaign; Thailand's PTTEP was evaluating platform bids for the next phase of its Zawtika gas field development; and South Korea's Posco was forging ahead with expansion of its giant Shwe offshore gas project.
There was also cautious optimism among some that this year could see a licensing round being launched after earlier plans were shelved in the wake of the coronavirus pandemic.
Now, doubt has been cast — at least in the short term — on these activities after a military coup in the early hours of Monday morning.
There were uneasy rumblings last week with some senior army officials becoming increasingly vocal in their allegations of voting irregularities in last November’s general elections that returned the National League for Democracy (NLD) party to power.
The NLD achieved a greater majority than in the 2015 polls, however 25% of parliamentary seats are reserved for the military and they still wield considerable power and hol some key positions.
Because of this privileged position, there were few observers who thought the military would actually do anything other than continue to bluster.
But move they did, and swiftly, detaining President Win Myint and Myanmar’s de facto leader Aung San Suu Kyi.
The coup has sparked condemnation from world leaders, with the US threatening action, likely in the form of sanctions.
Any sanctions, along with logistical challenges — the military has declared a year-long state of emergency and domestic and international flights are banned to 31 May — will impact upstream activities, at least in the short term.
There are potentially wider implications.
Operators in Myanmar during the earlier decades of military rule found themselves under pressure from human rights groups and some shareholders to pull out.
The assumption by some was that oil and gas companies, by their very presence in the-then pariah nation, were condoning any atrocities committed by the junta.
Some upstream players, such as the UK’s Premier Oil, did leave Myanmar, the former operator of the producing Yetagun field selling its stake to Petronas.
Others stood firm, notably Total, which engaged and stood up to the military, putting in place corporate social responsibility schemes along a corridor around its Yadana onshore gas pipeline project.
Although most of the gas produced today in Myanmar flows via pipeline to neighbours Thailand and China, upstream operations bring in significant dollar-denominated revenues to a relatively poor nation.
While it is difficult to see how this week’s coup can be positive for Myanmar’s population, the military’s move should not be a cue for oil and gas companies to consider selling out or slowing investment.
There are many basins globally that can give good returns and these continually compete for operators’ upstream budgets, but Total has stayed the course through years of turmoil in Myanmar and made a difference to the lives of people, as well as lining the government’s coffers.
(This is an Upstream opinion article.)