S Korea ups stake in Burma gas

South Korea announced yesterday that investments in Burma are set to rise following an agreement to jointly exploit with the Burmese government two more gas blocks.

The agreement follows a visit to Burma on 9 June by a five-member Korean delegation composed of legislators of the ruling Grand National Party. Lee Jong-heuk, who led the delegation, told Yonhap news agency that the joint development of eight more offshore blocks was mooted.

Seoul has keenly targeted Burma’s gas sector, with the Korean Gas Corp (KOGAS) and Daewoo International holding sizeable stakes in the Shwe gas pipeline project, which will transport oil and gas across Burma to southern China and is set to net the ruling junta nearly $US30 billion over the next 30 years.

The B-2 gas block that is earmarked for exploitation by Seoul is in northwestern Burma’s Sagaing division, and is the first onshore block targeted by Korea. It is jointly operated by the state-run Myanmar Oil and Gas Enterprise (MOGE) and Russia’s Silver Wave Energy group, which arrived in Burma in early 2007.

The A-7 block off the coast of Burma’s western Arakan state was operated by Indian gas company GAIL until 2007, when it withdrew after alleged preferential treatment by the Burmese government of Chinese companies.

Lee said that the agreement between South Korea and Burma, which he described as “a resource-rich country trying to change into a free democracy”, marked a “new era in our history of energy diplomacy with Myanmar [Burma]. With this as a ground, we will work harder for energy diplomacy in the future.”

More than 27 companies from 13 countries, including France, Australia and the US, hold investments in Burma’s oil and gas sector. Official government data shows that Burma has 90 trillion cubic feet (TCF) of gas and 3.2 billion barrels of recoverable crude oil reserves, although outside estimates of oil quantities are far less.

South Korea has played a mixed game of diplomacy with the Burmese government, occasionally criticising its human rights record whilst continuing to invest in the energy sector. It is currently Burma’s tenth largest foreign investor.

“With respect to South Korea, one should ask what sort of government funds this [investment] is using, and whether the government has any sort of criteria that they use to determine which projects are worthy of government funding,” said Matthew Smith, senior consultant on the Burma program at EarthRights International (ERI).

“My sense, from meetings we’ve had in Korea in the past, is that the Korean government doesn’t have adequate social and environmental criteria and obviously with Burma, that’s a big problem.”

Rights groups, including ERI, have accused governments and companies investing in Burma’s energy sector of providing an economic crutch for the regime in the face of US and EU sanctions, as well as being complicit in human rights abuses that occur close to gas and oil pipelines.

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