Energy Insecurity

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ENERGYINSECURITY

How Total, Chevron, and PTTEP Contribute to Human Rights Violations,

Financial Secrecy, and Nuclear Proliferation in Burma (Myanmar)

A Report by EarthRights International, July 2010


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RESEARCH AND WRITING TEAM

Naing Htoo, Matthew F. Smith, Paul Donowitz, Marco Simons, Jonathan Kaufman, Brad Weikel, Sandra Ray,Michelle Salomon, DOng Keun Lee, Eunice Mavhenyengwa, Anonymous EarthRights International Field Teams.

ABOUT EARTHRIGHTS INTERNATIONAL

EarthRights International (ERI) is a nongovernmental, nonprofit organization that combines the power of law and thepower of people in defense of human rights and the environment, which we define as earth rights. We specialize infact-finding, legal actions against perpetrators of earth rights abuses, training grassroots and community leaders, andadvocacy campaigns. Through these strategies, EarthRights International seeks to end earth rights abuses, to providereal solutions for real people, and to promote and protect human rights and the environment in the communitieswhere we work.

ACKNOWLEDGMENTS

EarthRights International would like to thank the generous individual and institutional supporters who make theactivities of the organization possible. Special thanks to the entire staff of EarthRights International for their direct andindirect assistance in preparing this report, and to the organizations esteemed board members for their support anddirection.

We could not do our work without the partnership and strategic collaboration of the many nongovernmentalorganizations and civil society organizations working for human rights and environmental protection in Burma,

especially those based on the Thailand-Burma border. We thank all of you.Most importantly, EarthRights International acknowledges the people of Burma. Many individuals from Burma tookgreat risks to offer their testimony or provide insight and information, for no reward other than participating in thetruth-telling process. Their names and other identifying information have been kept confidential for their own safety,but in time the restoration of respect for human rights and the environment in Burma will be theirs.

Southeast Asia Office

P.O. Box 123Chiang Mai UniversityChiang Mai, Thailand50202Tel: [email protected]

U.S. Office

1612 K Street NW, Suite 401Washington, D.C.20006Tel: +1.202.466.5188Fax: [email protected]

Visit www.earthrights.org for more information about EarthRights International.

Free reproduction rights with citation to the original.


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Table of Contents

Methodology ...................................................................................................................6Executive Summary ...........................................................................................................7

Chapter I: Continuing Abuses: Human Rights Violations and the Yadana and Pipeline, 2009-2010 .............9i. Targeted Killings ............................................................................................ 10ii. Mandatory Military Trainings: Protecting the Pipeline Corridor ................................... 10iii. Forced Labor .............................................................................................. 11iv. Whats Green is not Always Good: Land Confiscation for Forest Conservation Areas .......... 12v. The Companies Legal Liabilities for Complicity in Human Rights Abuses ....................... 13

Chapter II: Revenue Secrecy: Total, Chevron, and PTTEPs Payments to the Junta and Refusals toPractice Revenue Transparency ......................................................................................15

i. A Global Call for Revenue Transparency in Burma ............................................... 15ii. Totals Response............................................................................................. 16iii. Chevrons Response ........................................................................................ 17iv. Binding Mechanisms for Revenue Transparency ....................................................... 18

Chapter III: The Yadana Natural Gas Project Revenue ................................................................ 19i. Introduction: Financing the Worlds Newest Nuclear Threat ........................................ 19ii. Yadana Project Revenue Totals ............................................................................ 20iii. Yadana Project Revenue Distribution ................................................................... 21

Conclusion ....................................................................................................................25Recommendations ...........................................................................................................26Appendix A: Yadana Gas Revenue Calculations ......................................................................... 28Appendix B: A Call for Total, Chevron, and PTTEP to Practice Revenue Transparency in Burma

(Myanmar), April 27, 2010 ...........................................................................................37

Appendix C: Total and Chevrons Responses to the Global Call for Revenue Transparency .................... 43Endnotes ......................................................................................................................45


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6 EarthRights International July 2010

MethodologyEarthRights International began documenting human rights abuses connected to natural gas projects in Burma in 1994,collecting witness and victim testimony in the country and on the Thailand-Burma border. This report draws primarilyon original research and investigations by the organization from 2009-2010 in Burma and along the Thailand-Burmaborder. Numerous field reports and interviews were conducted with current residents and recent refugees from the

Yadana pipeline area, representatives of the International Labour Organization (ILO), and with shareholders andinvestors in oil companies operating in Burma. This report also draws on several hundred other pertinent interviewsand field reports conducted in Burma and on its borders from 1994-2010.

Due to the lack of freedom of information in Burma and the lack of voluntary revenue transparency by Total, Chevron,and PTTEP, gas-related revenue calculations in this report are estimates based on publically available sources, includingthe companies contracts and other supporting information, pieced together by EarthRights International.

This report references documents that became public through the 2004 partial trial of the lawsuit Doe v. Unocal, alandmark human rights case in which EarthRights International, representing Burmese villagers, sued Unocal in UScourt for the companys complicity in human rights abuses along the Yadana pipeline.

EarthRights International has over 15 years of experience documenting human rights abuses in Burma, reflected inprevious reports and publications including Total Impact 2.0 (2009),Total Impact (2009), Getting It Wrong (2009),Complaint to the South Korean National Contact Point(2008),The Human Cost of Energy (2008),Total Denial Continues (firstedition 2000; updated second edition 2003), More of the Same (Supplemental Report) (2001), and Total Denial (1996).These and other publications that informed this report are available at www.earthrights.org/publications.


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Executive SummaryThe oil companies Total (France), Chevron (US), and PTT

Exploration & Production (PTTEP) (Thailand) have failed

to stop human rights abuses occurring in relation to their

natural gas project in Burma (Myanmar), abuses for which

the companies bear responsibility and remain vulnerable toliability.1 The companies are nancing the worlds newest

nuclear threat with multi-billion dollar payments, and have

refused to practice nancial transparency, despite calls by the

Burmese and international community. As Burma braces itself

for its rst elections in 20 years, elections widely discredited as

unfair, it is not too late for the companies to change course.

In a remote, ethnically diverse area of southern Burma,Total, Chevron, and PTT Exploration & Production(PTTEP) partner with the Burmese military regimesstate oil company (the Myanma Oil and Gas Enterprise,or MOGE) on one of the worlds most controversialdevelopment projects: The Yadana Gas Project.Yadana, named for the Burmese word for treasure,brings gas from a deepwater offshore field to a 60kilometer (40 mile) onshore natural gas pipelineacross Burmese territory to Thailand, passing throughan environmentally sensitive region traditionallycontrolled and administered by ethnic Karen, Mon,and Tavoyan communities. Most of the Yadana gas isbought by the Petroleum Authority of Thailand (PTT);

relatively little of the gas or the revenue it generates isused to benefit the people of Burma or the countrysown energy security.2

The construction, maintenance, and operation of theYadana pipeline ushered the Burmese Army into thepipeline area, leading to severe human rights abusesagainst local people and causing unnecessary, adverseenvironmental impacts in the area. Income fromthe Yadana Project has been a financial lifeline forthe countrys oppressive ruling junta, thus fostering

harmful political outcomes that affect the entirecountry. Despite Totals efforts to improve locallivelihoods through an ambitious socio-economicprogram, the companies pipeline project has come toexemplify a development model that fails to benefit theleast advantaged citizens, leads directly to abuses theysuffer, and contributes to authoritarian rule that nowthreatens to re-order the regional strategic balance.

Locally, EarthRights International has repeatedlydocumented violations of villagers human andenvironmental rights caused by the Yadana pipelineproject, most recently in two 2009 reports, Total Impactand Getting it Wrong.3 In addition to the companiescomplicity in the abuses covered in the reports,

EarthRights International has since documented evenmore recent examples of appalling human rights abusesagainst local villagers committed by pipeline securityforces, including extrajudicial killings, forced labor,and uncompensated land confiscations. These abuses,dating from late 2009, are detailed in this report.

Along with the localized human rights abuses within thepipeline corridor and its surrounding areas, the YadanaProject has played an enormously significant role infinancially supporting the Burmese military regime4the same regime that is suspected by the UN and othersof committing crimes against humanity,5 and that isnow under international scrutiny for implementingan illegal, expensive, and clandestine nuclear weaponsprogram while participating in illicit military tradewith North Korea.6

In 2009, EarthRights International calculated that from2000-2008 the Yadana Project had generated US $7.58billion in revenue, and that a significant portion of thatmoney went directly to the Burmese junta, a claim thecompanies have never denied.7 In the same report,EarthRights International exposed that portions of thisrevenue found their way into private bank accountsin two of Singapores largest offshore banks, theOverseas Chinese Banking Corporation (OCBC) andDBS Group; these accounts could be used for manypurposes, including the illicit acquisition of nuclear

technology and ballistic weaponry.8 Unsurprisingly,both banks denied the allegation.9

This report presents new gas revenue calculationswhich suggest that from 1998-2009, the YadanaProject generated a total of over US $9 billionoverhalf of which, about US $4.6 billion, went directly tothe Burmese military regime. The project is widelyregarded as the single largest official source of incomefor the regime. The new calculations in this report arebased on newly considered documents admitted into

evidence at the trial of the Doe v. Unocal lawsuit; thecase was brought against Unocal Corp., one of theoriginal Yadana partners that is now part of Chevron,by victims of pipeline abuses. The case was settledconfidentifally in 2005.

While EarthRights International strives to continuallyimprove the accuracy of the Yadana Project revenuefigures, the best figures would be those provided bythe corporate partners themselves. On April 27,2010, EarthRights International, together with an

international group of over 160 nongovernmentalorganizations (NGOs), scholars, investment firms,political figures, and labor unions, urged Total,


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Chevron, and PTTEP to practice complete revenuetransparency in Burma and to publish details of theirlast two decades of payments to the corrupt militaryrulers of the impoverished country.10

PTTEP failed even to acknowledge the transparencyinitiative. On May 21 and May 24, 2010, respectively,

Total and Chevron responded with similar obstinacyand misrepresentations that have come to characterizetheir partnership with Burmas ruling State Peace andDevelopment Council (SPDC). In written statementssubmitted to the Business and Human Rights ResourceCentre, Total and Chevron explicitly refused topractice financial transparency in Burma.11

However, the companies curiously cited inconsistentreasons for maintaining their fiscal secrecy in Burma.Chevron claimed it is contractually bound to secrecy,

while Total simply implied the Burmese regime mightbe opposed to its transparency. This report parsesand clarifies the companies inconsistent public andprivate claims with respect to their legal ability topractice transparency in Burma and their overallregard for corporate responsibility. It also explains theinconsistency in the companies claim that publishingtheir payments to the junta would forfeit a rightfulcompetitive advantage the same companies haveelsewhere claimed publicly that revenue transparencyimproves their competitive advantage and is in their

fundamental interest, not against it.12

With regard to the human rights impacts of the pipeline,EarthRights International would like to report thatprogress is being made on the abuses associated withthe Yadana Project. Since releasing our latest reportsin 2009, third parties have confirmed to EarthRightsInternational that Total has in principle agreed tocooperate with the International Labour Organization(ILO) to facilitate local complaints of forced laborto the ILO complaints mechanism, per EarthRights

Internationals 2009 recommendation. This is veryreassuring, and represents a positive step for Total.

However, research presented in this report indicatesthat, since agreeing to cooperate with the ILO inlate 2009, Total has failed to facilitate even one localcomplaint of forced labor to the ILO.13This fact wasconfirmed by the ILO in Burma, which has neverreceived a complaint of forced labor from the pipelinearea, let alone in the last year.14 Instead, EarthRightsInternational has documented that Total has recently

provided direct financial compensation to villagerswho have been subjected to forced labor in connectionto their pipeline, with no direct involvement of the

ILO or its complaints mechanism. While villagersshould indeed be compensated for their labor, this actof payment is an acknowledgement of the companysresponsibility for the violation. It also demonstratesan inadequate access to justice for the people of thepipeline region, who are dependent in part on the

goodwill of a foreign corporation to receive anyremedy, however insufficient. Ideally, pipeline-arearesidents would be able to determine for themselveswhat type of justice they would prefer to seek, withoutthreats of persecution or intimidation and without thebiased handling of a multinational oil company.

EarthRights International is not advocating for Total,Chevron, or PTTEP to leave Burma, but rather isadvocating for access to justice for local victims ofhuman rights violations. EarthRights Internationalis principally concerned with preventing any morehuman rights violations against local people affectedby the project, with the genuine improvement of thelivelihoods of the people of Burma, and with ensuringthat Burmas natural resource revenues are managedresponsibly and benefit the people, particularly thecountrys least advantaged citizens. EarthRightsInternational also prioritizes holding companieslegally accountable for instances of abuses in whichthe companies are complicit. Total and Chevron areboth vulnerable to legal liability for any number of

abuses by pipeline security forces against local people.The companies could at present be sued by Burmesevillagers in their home states, just as Chevronspredecessor Unocal was sued.

Total, Chevron, and PTTEP have thus far refusedto implement many of the recommendations ofEarthRights International and other stakeholders, but itis not too late for the companies to change course. Weurge Total, Chevron, and PTTEP to heed the realisticand reasonable recommendations in this report.


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Continuing Abuses: Human Rights Violations andChapter I:the Yadana and Pipeline, 2009-2010

[T]here is a pattern of gross and systematic violation of human rights [in Burma] which has been inplace for many years and still continues. Given the extent and persistence of the problem, and thelack of accountability, there is an indication that those human rights violations are the result of a

State policy, originating from decisions by authorities in the executive, military and judiciary at alllevels.15

- Toms Ojea Quintana, UN Special Rapporteur on the situation of human rights inMyanmar, March 2010

Before the company, the situation was normal. No military presence, no forced labor.

- Local resident, Michauglaung Village, 200916

EarthRights International has collected information

from inside Burma since the early 1990s that clearlyshows a pattern of serious and widespread abusesassociated with large-scale, extractive developmentprojects, particularly in the countrys ethnic areas.Forced labor, killings, and other abuses are committedby the Burma Army providing protection for theseprojects, related personnel, and infrastructure.EarthRights International has also presented evidencethat large-scale extraction projects cannot proceed inBurma without the direct involvement of Burmas statesecurity forces and that this involvementper seleads towidespread and systematic human rights abuses.17

EarthRights International is not alone in its witnessto corporate complicity in these crimes in Burma,committed under the misnomer of development. InMarch 2010, the UN Special Rapporteur (UNSR)on Human Rights in Myanmar Tomas Ojea Quintanaacknowledged in his progress report to the UNHuman Rights Council that the Special Rapportuerhad received multiple reports of human rights abusesassociated with natural gas projects in Burma, including

abuses committed against people living in the area ofthe Yadana project.18The Special Rappartuer went onto note that the oil companies operating the Yadanapipeline have a close relationship with the armed forcesin Burma, and that companies still have a responsibilityto protect human rights under these conditions.19Quintana found that the Yadana pipeline companiesand other companies rely on the Myanmar military toprovide security for their projects,20and he wrote ofreports of rampant use of forced labour connected to

the countrys four main natural gas projects, includingTotal, Chevron, and PTTEPs Yadana pipeline.21The senior UN official also stressed that extractionactivities have directly resulted in an increase in human

rights and environmental abuses.22

EarthRights Internationals most recent reporton the adverse human rights, environmental, andfinancial impacts of the Yadana project, Total Impact(2009),draws on hundreds of interviews with currentresidents and recent refugees from the pipelineregion, defected soldiers from the Burma Army andNavy, former expatriate staff on the Yadana Project,shareholders and investors in Total and Chevron, andcurrent and former staff of the International LabourOrganization (ILO). These testimonies revealed

instances and patterns of forced labor and violations ofproperty rights, along with killings and other seriousabuses committed by the Burma Army that providessecurity for Total, Chevron, and PTTEPs Yadana gasproject. The report and its companion report GettingIt Wrong (2009) revealed Totals lies and distortionssurrounding the human rights situation in the pipelinearea, including the untrue claim that the ILO hadcertified that Total had eradicated forced labor in theYadana project area, a claim the company repeated toinvestors, the media, and others for seven years, until

effectively retracting the statement under pressurein 2009. The ILO explicitly disavowed the claimas false and categorically untrue when EarthRightsInternational brought it to its attention in 2009.23

Total Impact and Getting It Wrong were only the latestin a long line of reports linking human rights abusescommitted by state security forces and the companiessince EarthRights International released its first reporton the pipeline, Total Denial, in 1996.24 Since then,Total and Chevron have been subject to numerous

advocacy and divestment campaigns, consumerboycotts, shareholder resolutions, and even lawsuitsbrought against the companies for their complicity


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in murder, rape, forced labor, and crimes againsthumanity committed in the pipeline corridor.25

Yet, since EarthRights International released thereports in 2009, instances of human rights abusesconnected to the companies presence in Burmacontinue. The following specific instances documented

by EarthRights International in Burma in 2009-2010reflect trends of abuses ongoing in the Yadana pipelinearea.

Targeted Killingsi.

[The soldiers] arrested them for one nightand the next day the soldier came in to

the village to get a digging tool and later

people found out that both of the villagers

were killed by the soldier.26

Local villager in theYadana pipeline corridor,Lawther, Burma, 2010

The right to life is fundamental to the enjoyment of anyother human right, and the prohibition of extrajudicialkillings is codified in numerous international treaties andconventions that are binding on Burma.27EarthRightsInternational has previously documented numerousinstances of the Burmese Army breaching theseobligations through extrajudicial killings committed

for the protection of the commercial interests of theYadana pipeline companies from the early 1990s to2010.28In direct response to EarthRights Internationalsallegations of killings documented in the 2009 reportTotal Impact, Total acknowledged that the claims wereparticularly grave, but the company did not refutethat killings occurred or that they were committed bysoldiers tasked with providing security for the companyand their pipeline.29 Instead, Total claimed that theydid not have knowledge of these cases.30

After being put on notice by EarthRights Internationalthrough Total Impact and the follow-up report, TotalImpact 2.0, Total and Chevron can no longer deny thatthey have knowledge of these abuses. Yet, far fromdemonstrating that they take the instances seriously(beyond their serious desire to avoid the appearanceof complicity),31 the Yadana Project companies havefailed to demonstrate to EarthRights Internationalor local villagers that they respond in action to theseallegations, while uniformly failing to publicly acceptresponsibility for these serious abuses.

Meanwhile, in the pipeline area, killings continue.

In February 2010, EarthRights International

documented the killing of two ethnic Mon villagersfrom Ahlersakan village in the pipeline area,perpetrated by soldiers from Infantry Battalion (IB)282. IB 282s sole mandate is to provide security forthe companies personnel and pipeline. As told toEarthRights International from villagers in the pipeline

are, the brutal orders were given by the battalionsofficer, Balay (aka) Nyi Nyi Soe.32

According to a local villager from Lawther village:

Two villagerswere killed by IB 282soldiers, their officer Balay (aka) NyiNyi Soe is the one who gave the order.They suspected these two villagershad connections to the Mon armedgroup so they questioned them. Theyarrested them for one night and the

next day the soldier came in to thevillage to get a digging tool and laterpeople found out that both of thevillagers were killed by the soldiers.33

Mandatory Military Trainings:ii.

Protecting the Pipeline Corridor

Villagers from the pipeline area are forced by localbattalions to attend abusive militia trainings, in whichvillagers are required to train as an armed militia in

partnership with the Army. The villages themselvesare forced by the Army to finance these trainings andto provide a varying quota of otherwise unwilling localparticipants. Upon graduation, villagers are tasked withproviding security in the pipeline area and patrollingvillages in the pipeline corridor.

The two pipeline corridor villagers who were shotand killed by pipeline security battalion 282 had justfinished mandatory militia trainings by pipeline Armybattalions.34 These trainings were ordered by the

military in the pipeline corridor, lasted the wholemonth of February 2010, and villagers could not refuseto go to the training.35

The series of forced militia trainings are another exampleof how the pipeline and the Armys related presence inthe Yadana corridor have forced local people to changetheir way of life for the sake of the pipeline and thecommercial interests of Total, Chevron, and PTTEP.

Since 2009, when EarthRights International exposedthe forced militia trainings and related abuses such as

violent beatings endured by villagers in attendance atthe trainings the trainings have been re-named firefighting trainings in the 25 villages recognized by the


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Energy Insecurity 11

companies as within the pipeline corridor. The actualtrainings have not changed. Outside the corridor, thetrainings are referred to for what they are forcedmilitia trainings. This re-branding in the pipelinecorridor appears to be a crude attempt to suggest thereis some civic merit to the trainings, when in effect the

trainings are unwelcomed by villagers and designed tobuild the local security apparatus.

One villager told EarthRights International: Eachvillage in the area had to send representatives dependingon the number of households in the village. Our villagehad to send two people. Our villagers had to pay theirexpenses during the training. Now that they are donewith the training each night they have to patrol thevillage and check for guests.36This increased securityapparatus designed to have villagers locate guests inthe pipeline area and report them back to the pipelinesecurity battalions underscores the military regimesrepression. It is related to the juntas desire to controlthe population from being influenced by armed ethnicopposition forces, but it also represents its desire tokeep the reality of the pipeline corridor a secret fromthe international community.

This type of security is in some ways a direct response tothe documentation work of EarthRights Internationaland other organizations collecting sensitive humanrights information in the area, such as the Human Rights

Foundation of Monland (HURFOM).37 The militaryregime is actively involved in attempts to prevent thedocumentation of the reality in the pipeline corridor.Villagers and others found to be documenting thehuman rights impacts of the pipeline face threats andviolent persecution.

Moreover, since 2009, EarthRights International hasalso documented instances of villagers who, becauseof their ethnicity, were excluded from the militiatrainings, but could not refuse to fund the training for

others an expense poor villagers can ill afford.38This reflects the reality of the ethnic divisions betweenthe Karen and Mon villagers and the predominantlyBurman authorities at the local level, as well as simpleand common discrimination by the Burman Armyagainst the many ethnic groups in the region.

Forced Laboriii.

Earlier publications from EarthRights Internationalhave documented numerous incidents of villagers

within the pipeline corridor forced to porter goods forsoldiers providing security for the pipeline, forced toconstruct military buildings, or forced to participate in

security watches against their will, sometimes directlyover the Yadana pipeline or related infrastructure.39The use of forced labor is prohibited by customaryinternational law,40 the Universal Declaration ofHuman Rights,41the International Labour Organization(ILO),42 and even domestic Burmese law,43 all of

which bind the Burmese regime to refrain from thismanifestly unacceptable practice. The Rome Statuteof the International Criminal Court even allows theprosecution of systematic forced labor as a crimeagainst humanity.44

Despite the international communitys categoricalintolerance for such abuse, it remains commonplace inBurma and for villagers in the Yadana pipeline area.

After the release of Total Impact and Getting it Wrongin2009, EarthRights International was informed through

third parties that Total agreed in principle to facilitatelocal complaints of forced labor to the ILO rather thankeep incidents of forced labor hidden and subject tothe companys decided remedy. This cooperationwith the ILO involved a special training by the ILO inRangoon (Yangon) attended by two staff from Total one Burmese, one international staff. In principle, thisis a positive development.

However, despite its tacit agreement to cooperatewith the ILO, instances of forced labor connected to

the pipeline project have continued and have not beenfacilitated by Total to the ILO, even since the Totalstaff attended the training in December.45 This factwas confirmed by the senior ILO representative inRangoon.46

Between late 2009 and early 2010, EarthRightsInternational documented numerous occurrences ofvillagers being forced to porter goods over several daysfor pipeline security soldiers.47According to a villagerin Zinba, a village Total recognizes as within its sphere-

of-responsibility:In late 2009about 20 soldiers cameinto our villageThey stayed therefor about two nights. I dont knowwhat they are doing there but I knewthat [name withheld] had to give themone of his goats to feed the soldiers.And the next day when they left theyhad the son of a house owner go toMichaunglaung through the jungleroute. It took one night and the nextday they let him come back.48

Another villager explained to EarthRights International


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another recent instance of forced portering:

In late 2009, during the harvestseason, around 25 soldiers from LIB410 came to our village and theyordered [three villagers] through thevillage headman to porter for them.

They had to carry food for the soldiersas well as be the guide for the soldier.They went into the jungle to checkon the armed opposition group. Itwas happening not so far away fromthe Total pipeline route. This time, ittook about five days for them to comeback. This kind of portering happensas needed by soldiers.49

Villagers have also recently been forced to construct

huts for military commanders,50 dig ditches next topipeline roads,51 and provide the materials for otherforced constructions.52 All of these abuses haveoccurred in 2009-2010.

According to one villager from Michaunglaung (old)village:

In early 2010, the Kaleingaungauthorities ordered our village headto collect 200 bamboos...They calledour village head to attend a meeting in

Kaleinaung and they told him there.We cut bamboo around the village.Since [the demand] was for 200bamboos the villagers had to cometogether and cut it. It took severalhours to cut it. We also had to bringthe bamboo to Kaleinaung. We carriedthem by bullock cart. Those who ownthe bullock carts didnt have to cut thebamboo but they had to bring them

to Kaleinaung. In our village somevillagers own bullock carts. There areabout five or six bullock carts in ourvillage. These people had to bring thebamboo to Kaleinaung.53

EarthRights Internationals research indicates thatTotal has not attempted to work with local villagers tofacilitate the filing of forced labor complaints with theILO. Instead, Total compensated villagers who wereforced to cut grass in the pipeline area. A villager fromZinba told EarthRights International:

In late 2009, I myself I had to goand clean the LIB 410 battalion

compoundour village head told usthat we will have to go and cut thegrass for the soldiers. Later, Totalcame and gave us 3,000 kyat [approx.US $3] to each for us who had to goand cut grass with our machines.54

This villagers testimony and others reveal howTotal recognizes its complicity and responsibility inthese orders given by the Army for villagers to dolabor against their will and without compensation.Haphazard payments to only a handful of those forcedto do work associated with the pipeline do not absolveTotal, Chevron, or PTTEP of responsibility for theforced labor being demanded of the ethnic nationalitiesliving in the pipeline corridor. Moreover, ex post factofinancial compensation is an unacceptable remedy forlocal people. Local people should be able to determinefor themselves what sort of justice they would prefer toseek, in an environment free from intimidation, bias,and threat. Given the ongoing threats of persecutionfrom the Burmese authorities for complaining aboutforced labor, Total would appear to be well-positionedto facilitate complaints to the ILO.

Whats Green is not Alwaysiv.

Good: Land Conscation for Forest

Conservation Areas

The right to property, and the right to be free fromhaving ones property free from arbitrary interferenceby the state, is recognized explicitly in numerousinternational treaties and conventions, among whichis the Universal Declaration on Human Rights.55 Inaddition to binding international agreements, Burmasdomestic laws prevent the state from confiscatingland for public purposes without abiding by certainprocedures, including those found in Burmas LandAcquisition Act, which protects the privacy and

security of the home and property.56The Act lays out aprocedure for the acquisition of land by the authoritiesthat includes giving generous notice of any intendedsurvey of the land, providing for just compensation forthe land owner for both the surveying and acquisitionof the land, and providing an opportunity forinterested persons to have their objections to any suchproceedings heard. The Act even sets out proceedingsfor a complaint process to be followed if the amountof compensation for the land is in dispute.57Accordingto EarthRights Internationals research, this law goesunenforced in Burma, particularly for residents wholive in the vicinity of large-scale development projectslike the Yadana pipeline.


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In Total Impact (2009), EarthRights Internationaldocuments numerous testimonies of local people andformer Total and Chevron company staff, and citesdocuments obtained from the Yadana consortiumcompanies that demonstrate the companies neglectof earth rights58 through inadequate environmental

planning.59

The report also notes the adverse impactsof a Total-sponsored environmental protectiongroup which designated areas as protected that weretraditionally relied upon by villagers for farming orgathering. There are no effective or apparent strategiesto compensate lost livelihoods in connection to thisprogram.60 Land for this conservation program hasbeen confiscated from local people.

According to a villager from Zinba interviewed byEarthRights International in 2010:

They only marked a few areas ofland around the village in whichthe villagers can farm. Some of theareas which they marked for forestconservation go through somepeoples plantation land, as well. Iknow one villager, about six acres ofhis cashew nut plantation was markedfor the conservation area.61

According to EarthRights Internationals research,

these land confiscations were done without adequatecommunity input or compensation, and were part ofa program founded by local authorities and fundedby Total.62 According to villagers testimonies, theenvironmental protection program is limited andmisguided, failing to address the real environmentalissues facing the region. The impoverished villagersin the region rely on their ability to practice shiftingcultivation, an impossible practice if their land isconfiscated or if access to their land is restricted.63

Highland farming and gathering forest products arebasic sources of income for numerous villagers in thepipeline area. Limiting the forest area in which villagerscan farm and gather poses a significant problem formany, leaving some to feel as though they have nooption for survival.

While EarthRights International recognizes theimportance of forest conservation for the people ofBurma, Total should not be complicit in practicesthat deprive villagers of their land without inputor adequate compensation. The company shouldinstead embark on an ongoing process of accurateand impartial environmental impact assessments,mitigation of environmental impacts of their projects,

and conservation programs that take into account therights and needs of the local population.

The Companies Legal Liabilitiesv.

for Complicity in Human Rights

Abuses

The risk to both Chevron and Total over the abusescommitted in their service by the Burmese military isnot just reputational they also face the real potentialfor legal liability. For nearly nine years, between1996 and 2005, Unocal Corp. faced litigation for itscomplicity in the murders, torture, rape, and forcedlabor perpetrated against villagers by the Burmesemilitary providing security along the Yadana pipeline.Although that case eventually settled before a verdictcould be rendered, the courts confirmed that the

company could be held liable for complicity in thehuman rights abuses committed abroad many ofwhich were disturbingly similar to those cataloguedin this report and previous reports by EarthRightsInternational and others.64 This liability arises underthe Alien Tort Statute, which allows foreigners tobring suit in US federal courts for certain violations ofuniversally recognized human rights principles, as wellas the long-standing and basic maxim that a defendantmay be sued for his torts (assault and battery, forexample) wherever he is found, even if the torts werecommitted abroad.

By virtue of its acquisition by Chevron, all of Unocalsliabilities now belong to Chevron. Chevron couldconsequently be held liable for its own conduct alongpipeline, as well as for any of Unocals conduct before,during, or after the Doe v. Unocal lawsuit that was notexplicitly addressed in the settlement. Total, too,was a party to the Unocal litigation, until the courtsfound that the French company did not have a strongenough connection to the United States to be subject

to jurisdiction.65 However, future potential plaintiffswould have their own chance to prove that Total canbe sued in the United States. Moreover, regardless ofwhether the company may be sued in the US, thereis no question that Total does face potential liabilityin France in fact, in 2005, Total was compelled tosettle the claims of a group of Burmese villagers whosued Total in French courts for complicity in forcedlabor.66Moreover, as more countries ratify and passdomestic legislation pursuant to their obligations underthe Rome Statute, the possibility of both criminal andcivil penalties for companies which are complicit inacts constituting war crimes, crimes and humanity,and genocide rises.67


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In other words, there is no doubt that the abuses in thepipeline corridor are taking place, and that forums existin which companies could be held legally accountablefor facilitating them. The potential for liability,therefore, is limited only by the willingness and abilityof plaintiffs to take the risks necessary to bring suit,

the expense and difficulty of litigation, and statutes oflimitation, which require that claims be brought withina limited time after the occurrence of an abuse.


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Revenue Secrecy: Total, Chevron, and PTTEPsChapter II:Payments to the Junta and Refusals to Practice Revenue

TransparencyThe least we should expect from the companies operating inside Burma is full revenue transparency. Weve seendecades of military dictatorship and years of irresponsible management of Burmas natural resource wealth hence

this initiative is a positive step towards changing that.68

Mr. Kjell Magne Bondevik, former Prime Minister of Norway speaking for the initiativeurging Total, Chevron, and PTTEP to publish their last 18 years of payments to theBurmese authorities, April 27, 2010

[R]evenue transparency must be practiced for the citizens of Burma, who can use the information to monitor thegovernments use of natural resource wealth and demand accountability where none presently exists.69

Wong Aung, Coordinator, The Shwe Gas Movement

The people of Burma have a right to know the nancial details surrounding the countrys natural resources,

including payments made by foreign oil companies.70

Naing Htoo, EarthRights International

A Global Call for Revenuei.Transparency in Burma

On April 27, 2010 at a press conference in Bangkok,EarthRights International and the Shwe Gas Movementlaunched a new global initiative that called for Total,

Chevron, and PTTEP to practice revenue transparencyin Burma.71 The groups released a two-page lettersigned by over 160 NGOs, policy leaders, scholars,academics, labor unions, and investment firms calling onthe three Yadana Project partner companies to publishdetailed information about their revenue paymentsto the Burmese authorities since the project began in1992, including taxes, fees, royalties, bonuses, andsocial benefits. Among the signatories of the initiative isa former president of Ireland, a former prime ministerof Norway, investment firms managing US $15 billion

in capital, labor unions representing over 24 millionworkers, and over 60 Burmese NGOs representingevery major ethnicity in the country and advocating ona broad range of issues from democratic freedom towomens rights to environmental justice.72

As explained in Chapter III of this report, EarthRightsInternational estimates that the Yadana Pipeline hasgenerated over US $9 billion in revenues, over half ofwhich went directly to the military regime in Burma.This revenue has financed a military administration that

continues decades of systematic human rights violationsand has been accused of crimes against humanity andwar crimes. The revenue has also financed a military

command exposed for developing a clandestineand illegal nuclear weapons program, while alsoparticipating in illicit weapons trade with North Koreain violation of UN sanctions against Pyongyang.

Needless to say, the multi-billion dollar benefits ofBurmas gas riches have yet to accrue to the rightful

recipients: the people of Burma. Revenue transparencycan help change that.

As a resource-rich country ruled by a military junta,and as the third most corrupt nation in the worldaccording to Transparency Internationals CorruptionPerceptions Index, Burma desperately needs revenuetransparency.73 Empirical studies show a causalrelationship between natural resource wealth indeveloping countries and slow economic growth,74civil war,75 increased corruption,76 and gender

inequality.77 Natural resource wealth has also beenshown to make states less democratic.78According toUCLA Political Scientist Michael Ross, in too manycountries, dictators use natural resource wealth tokeep themselves in power. Revenue secrecy makes thispossible. Revenue transparency can help change it.79

The global transparency initiative to get Total, Chevron,and PTTEP to publish their payments to the Burmeseauthorities is an effort to break the cycle of corruption,poverty, and human rights and environmental abuses

in the beleaguered country. At its core it is an effortto encourage the responsible management of thecountrys natural resource wealth; a long-term issue


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that will be critically important for Burmas futuredevelopment.

According to Publish What You Pay, an internationalmovement working for revenue transparency in oil,gas, and mining firms:

Regular reporting by corporationsof payments made to foreigngovernments for oil, gas and mineralextraction would aid efforts to endcorruption, make producing countriesand their energy supplies more stable,and enable citizens of these countriesto hold their leaders to account forthe misuse of their abundant naturalresource wealth.80

Both Total and Chevron have publicly recognized theimportance of revenue transparency and are activemembers of the Extractive Industries TransparencyInitiative (EITI). Total itself has identified transparencyas an important part of socially responsible business andbelieves that it is in the interest of all stakeholders.81Likewise, Chevron has asserted, as detailed below,that revenue transparency is good for business. Bothcompanies publish payments to other countries, someof which (like Burma) are not members of EITI, andChevron is transparent about its financial agreements

with Burmas neighbor Thailand, where the companyhas significant interests.

Totals Responseii.

Total has a history of negative responses to its criticsallegations that the companys Yadana Project hascontributed directly to human rights violations andcontributed to authoritarianism through multi-billiondollar support to the Burmese junta. The company hassummarily rejected requests to meet with EarthRightsInternational, i.e. requests made by EarthRightsInternational itself were rejected as well as requestson behalf of EarthRights International by investors,NGOs, and high-level UN officials. Some of thesegroups and individuals suggested directly to Total thatthe company give EarthRights International the sameguided tour of their companys operations as thatoffered to others, but the suggestion was categoricallyrejected by Totals leadership.82In 2009, former CEOChristophe de Margerie told Newsweek magazine thatcritics of his companys activities can go to hell.83

Against this background, Totals response to thetransparency initiative is unsurprising: In a writtenstatement, the company rejected the transparency

initiative, citing two primary reasons: 1) a (vaguelyarticulated) failure to have the permission of theBurmese authorities; and 2) maintaining competitiveadvantage (through secrecy). The company impliedthat it is refusing to disclose its payments to the militaryregime because the military regime may be averse to

it: Total cannot disclose any financial or contractualinformation if the host country is opposed to suchdisclosure.84The company states its argument as such:Total would accept to disclose individually, and notonly collectively, amounts paid to a given government,provided that such disclosure: 1) is permitted by therelevant government; and 2) would not compromisethe Groups commercial position.85

The first reason appears to be carefully crafted to avoidmaking the claim that Total is contractually forbiddenfrom making disclosures. Prior to issuing this statement,Total repeatedly told investors, shareholders, laborunions, and other interested parties that its contractswith the Burmese authorities restrict it from practicingrevenue transparency. As discussed more fully below,these contracts are now publicly available from UScourt files; EarthRights International recently publishedand analyzed the contracts, and found nothing in themthat would prohibit Total from disclosing its paymentsto the authorities in Burma.86 This fact was exposedpublicly in the Global Call for transparency,87and the

companys unsupported arguments to investors andshareholders about its contractual obligations in Burmahave also been documented and refuted.88

Totals public statement also states that it fully concurswith a statement claiming that if a company wantsto disclose but the government does not want to,disclosure may be possible but is unlikely, primarilybecause the company does not want to jeopardizetheir relationship with the government.89This furtherindicates that Total is not contractually restricted from

disclosing payments to the junta if it so desired. Indeed,in October 2009, in direct response to EarthRightsInternational, Total disclosed that its portion of theYadana natural gas project in Burma generated US$254 million for the Burmese authorities in 2008.90This admission further confirms that any claims byTotal that it cannot legally disclose its payments to thejunta are not truthful. (It should also be pointed outthat this disclosure in 2009 was not a disclosure of thepayments the company made to the authorities, but anaggregate sum of the amount of money Totals interest

in the project earned for the state.)Although Total has now omitted the contractualargument from its public statement, EarthRights


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International has confirmed that the company continuesto privately claim to inquiring parties that its contractsprohibit transparency. The company has never providedany evidence supporting this claim. The company hasprivately claimed it is legally forbidden from sharingits contracts with third parties, but again EarthRights

Internationals analysis has found nothing that wouldrestrict the company from doing so; 91moreover, mostof the relevant contracts are already in public courtfiles.

The second part of Totals argument for continuedrevenue secrecy that releasing these figures wouldcompromise their commercial position is refuted byevidence, common practice, and the companys ownstated position regarding its interests in Burma. Thecompany itself has said generally that transparency isin its own interest,92and in its response the companynotes it currently practices revenue transparency withthe government[s] of Angola (which is not an EITImember), Cameroon, Gabon, Nigeria, and Norway93without any indication that the company sufferedfrom compromised commercial positions in thesecountries.

Totals revenue transparency in these other countriesdemonstrates that it has no general concern thatpracticing transparency in one country will hurt itscompetitiveness globally. As for its competitiveness

in Burma itself, French President Nicolas Sarkozyhas called on all French companies including Total tomake no new investments in Burma, and Total itselfsaid explicitly that it planned no new investmentsin the country beyond the Yadana project.94 Anycompetitive disadvantage in Burma would be decidedlyirrelevant.95

Chevrons Responseiii.

Chevron also issued a cursory response to EarthRights

Internationals release of the Revenue Transparencyinitiative and, like Total, it did so with little effort totruly engage the request. In its one-page response,Chevron simply cites its efforts at socioeconomicassistance in the pipeline corridor (which was the subjectof the 2009 report by EarthRights International96) anda 2009 Human Rights policy (without engaging in anymeaningful effort to refute the allegations of ongoingabuses against the people in the pipeline corridor). Indirect response to the call for revenue transparency,Chevron states:

Chevron believes that the disclosureof revenues received by governments

and payments made by extractiveindustries to governments could leadto improved governance in resource-rich countries. The transparent andaccurate accounting of these fundscontributes to stable, long-term

investment climates, economic growthand the wellbeing of communities.97

Thus, the company claims to understand that revenueopacity can be harmful in relation to Burma. Chevronthen goes on to excuse its own role in the wrongfulpractice of revenue secrecy in Burma by claiming thatthe contracts it holds with the Burmese governmentdo not allow these figures to be released, claimingcontractual obligations related to the Yadana Projectdo not permit disclosure of payments or otherconfidential information relative to the Project.98This claim falls under the weight of the same criticismsalready discussed in relation to Totals similar assertion,i.e. that the companys contracts do not in fact restrictrevenue transparency.

Indeed, the contracts themselves do not supportChevrons claim. Chevrons predecessor in theYadana Project, Unocal Corporation (which Chevronacquired in 2005), introduced the governing contractsat the partial trial in the human rights suit Doe v. UnocalCorp. in 2004. In those contracts, there is nothing that

would prevent the companies revenue transparencyin Burma. Moreover, as part of its defense at trial,Unocal introduced dozens of actual payment recordsto the junta as exhibits without suggesting that theirdefense was hampered by contracts that requiredconfidentiality.99 If the companies contracts did infact restrict transparency, Unocal presumably wouldhave noted this in the litigation, and sought to keepthese records under seal rather than in the public courtfile. Therefore, unless the companies contracts with

the Burmese authorities have changed significantly,Chevron (and privately, Total) appears to be misleadingthe public and their shareholders about their contractualobligations in Burma.

Moreover, EarthRights International has documentedthat, like Total, Chevron has systematically misled itsshareholders and the public regarding its contractualobligations in Burma. EarthRights Internationalreceived communications from a longtime Chevronshareholder the manager of an investment firm indicating that Chevron has made its dubious argumentthat its contracts require revenue opacity in Burma,both to him personally and also to several investmentfirms, including the one he represents, and to two of


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Americas largest labor unions. This shareholder citedphone calls with Chevron executives and his notesfollowing the phone calls. In these communications,Chevron rejected requests to be transparent in Burma,claiming their contracts with the junta preventeddisclosure of any payment information to anyone,

including the companys own investors. Like Total,the company also claimed their contracts could not beshared, which is belied both by the lack of any suchrestrictions in the contracts themselves and the factthat most of the contracts are in fact already in thepublic domain.

Binding Mechanisms foriv.

Revenue Transparency

The global call for extractive companies and host

governments to practice revenue transparency hasincreased dramatically in the last several years, withthe promulgation of both voluntary schemes andbinding standards. Recently, the Hong Kong stockexchange began requiring all companies currentlylisted and those applying for listing to make publicpayment information, including: payments made tohost country governments in respect of taxes, royaltiesand other significant payments on a country by countrybasis. In the United States, the Energy Security ThroughTransparency Act (ESTT) (S.1700) was introduced

in the Senate in 2009. This legislation would amendSection 13 of the Securities Exchange Act of 1934 (15USC 78m) (Periodical and Other Reports) by addinga new section (m) Disclosure of Payment by ResourceExtraction Issuers and would require companiesregistered with the U.S. Securities and ExchangeCommission (SEC) to disclose payments to foreigngovernments for the commercial development of oil,natural gas, and minerals. This disclosure would applyto all companies that file with the SEC, regardlessof where they are based, meaning that most of the

worlds top extractive companies would be coveredby this law; it would set a new international standardfor transparency in the extractive industry.

If passed, the ESTT Act would require Total andChevron to disclose their payment to the Burmesejunta going forward. While far short of disclosing allhistorical payments, this legislation would compel thesecompanies to disclose their payments while providingthe people of Burma with critical information on theresource-revenue their country receives. Despite

extolling the virtues of revenue transparency, Chevron,through their membership in the American PetroleumInstitute, has lobbied strongly against this legislation.


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The Yadana Natural Gas Project RevenueChapter III:

Introduction: Financing thei.

Worlds Newest Nuclear ThreatIt has long been known that the Yadana Project islikely to be the single largest source of revenue for theBurmese military regime; the revenue, much of whichmay be kept outside the country, enables the regimeto engage in international hard-currency transactionsto buy arms and other acquisitions. Little if any of themoney is used for the benefit of the people of Burma.

Burma became a party to the Treaty on the Non-Proliferation of Nuclear Weapons in 1992, the same

year it signed a contract with Total for the YadanaProject.100 This agreement obligates Burma not tomanufacture or otherwise acquire nuclear weaponsand not to in any way assist in the transfer of nuclearweapons technology.101 Burma is also a party to theTreaty on the Southeast Asia Nuclear Weapon-FreeZone, which prohibits the development or placementof nuclear weapons in its territory.102

In 2009, evidence surfaced from several sourcesindicating the military regime had ambitions to develop

a nuclear weapon of mass destruction, despite thecountrys lack of external enemies and despite its owninternational obligations to nuclear nonproliferation.103These fears and others were recently confirmed witha detailed five-year study released by the DemocraticVoice of Burma (DVB), analyzed and written by theformer president of the International Atomic EnergyAgency (IAEA) Robert E. Kelley.104The information inDVBs 30-page report Nuclear Related Activities in Burmaformed the basis of a documentary on Al Jazeera.105Itis based on hundreds of pages of top secret documents

and photographs, largely provided to DVB by aformer Army Major, Sai Thein Win. The accumulatedintelligence led Kelley and DVB to conclude thatwhile a functioning nuclear warhead in Burma may beyears off, the military dictatorship is without a doubtpursuing nuclear technology that can only be used fora bomb. The informationsuggests that Burma ismining uranium, converting it to uranium compoundsfor reactors and bombs, and is trying to build a reactorand or an enrichment plant that could only be usefulfor a bomb. There is no chance that these activitiesare directed at a reactor to produce electricity inBurma.106

This news came just one month after a leaked UNreport suggested that North Korea is exporting

nuclear and ballistic missile technology to Burma usingmultiple intermediaries, shell companies, and overseascriminal networks to circumvent UN sanctionsagainst Pyongyang.107 Adding to these concerns aremountains of evidence that detail the military regimesconstruction of an intricate nationwide system ofbunkers, caverns, and tunnels throughout the entirecountry, at exorbitant costs and in partnership withNorth Korea.108

In 2009, EarthRights International reported that

rather than being used to benefit the people of Burma,portions of the countrys natural gas revenue foundtheir way into private bank accounts in two offshorebanks in Singapore the Overseas Chinese BankingCorporation and DBS Group.109This revenue and itsconvenient offshore location would enable the regimeto engage in international hard-currency transactionsto buy arms and technologies for nefarious purposes.

In a 2009 filmed interview with PLTV in France,Total Vice President of Public Affairs Jean-Francois

Lassalle was asked about the prospect of revenue fromTotals presence in Burma being used to fund an illicitnuclear weapons program. The executive dismissedthe possibility on the grounds that Burmas nuclearambitions were merely rumors.110 These rumorsare now far more substantiated.111

For years, EarthRights International has remainedconcerned that Total, Chevron, and PTTEP havefinanced authoritarianism in Burma and that Burmasnatural resource wealth has been misappropriated and

used irresponsibly. Now, it appears that the Burmesegenerals are intent on shifting the global politicalbalance, following in the authoritarian footsteps ofallies such as North Korea, while the countrys leastadvantage citizens continue to languish beneath theweight of repression and grossly irresponsible spendingpriorities of the ruling junta.

EarthRights Internationals new and revised calculationsbelow detail the estimated amount of revenues Total,Chevron, and PTTEPs Yadana gas pipeline hasgenerated for the Burmese military regime from 1998-2009.


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Yadana Project Revenue Totalsii.

EarthRights International has revised its previousestimates of the revenue and revenue distributionsfrom the Yadana project, taking into consideration anumber of additional documents released as part of theDoe v. Unocal casemost of which were introducedat trial by Unocal itself, and which recently came intoEarthRights Internationals possession.112 Althoughwe strive for the most accurate figures possible, untilTotal and its partners release full payment data ouranalysis will continue to be an approximation of theactual numbers. Our present estimate is that, from1998 through the end of 2009, the Yadana Project hasgenerated about US $9.031 billion, of which US $1.679billion has been used to pay development and operatingcosts. The Burmese regimes share of the income, after

costs, is estimated to be US $4.599 billion, of whichUS $915 million is taken in kind as gas for domesticuse, and the remainder is taken in cash. The remainingrevenue is split among the corporate partners Total,Chevron, and PTTEP.

The total sales value of the Yadana gas is based on theheating value (or calorific value) of the gas measuredin British Thermal Units (BTU), not volume. Thecontracts specify an initial price of US $3 per millionBTU (mmBTU), with a subsequent pricing formula

based on inflation and the spot price of Singaporefuel oil.113 (The apparently strange pricing referencemay have been used because fuel oil was Thailandsalternative energy source.) Although the contractsspecified that the partners would deliver gas with aheating value of at least 715 BTU per cubic foot (cf),the documents suggest that the actual heating value isabout 711.8 BTU/cf.114

In the early years of the Yadana Project, PTT was notprepared to accept the full contract quantity of the gas,which started at 65 million cubic feet per day (mmscfd)in August 1998 and built up to 525mmscfd by September1999.115Although the actual production of the Yadanapipeline from 1998-2000 was well below the contractquantity, the contract required PTT to pay for the gasanyway. We have added these take-or-pay payments(and, in some cases, interest on the payments) to thecontract year, regardless of when the payment wasmade. For 1998, PTT negotiated a discount for thetake-or-pay gas, arguing that the producers had failedto deliver gas with the agreed-upon heating value,

reducing the price to about US $2.44/mmBTU for thisperiod.116After the initial period, the price presumablyreverted to the usual formula.

Since PTT paid for this gas but did not take it, however,it was entitled to take the pre-paid gas in later years.Pursuant to the contracts, we have assumed that allproduction in later years over the contract quantityof 525mmscfd was not sold in that year, but wascharacterized as make-up gas and applied toward

the gas that PTT had already purchased. (PTT laterincreased this contract quantity to 565mmscfd startingon September 1, 2006.117) PTT paid for so muchun-used gas during the early years of the project that,according to our calculations, it still has yet to make upall of the prepaid gas.

This turned out to be a good deal for PTT. While thetake-or-pay gas was purchased at US $2.44/mmBTUfor 1998, an average of US $2.75/mmBTU for 1999,and an average of US $3.52/mmBTU for 2000, PTTis taking the make-up gas in years when the price is farhigheran estimated US $7.09/mmBTU for the lastquarter of 2009, and as high as US $10.51/mmBTU inthe last quarter of 2008. It may have been a mistake forthe partners to insist that PTT pay for the gas up front,rather than allowing PTT to simply pay the prevailingprice when it took the gas. In 1998, however, theBurmese regime was struggling financially; in Marchof 1998 The Economist magazine estimated that theregimes foreign exchange reserves had fallen belowUS $100 million.118 Perhaps the Burmese generals

pushed for immediate payments from PTT, even if itmeant foregoing greater value later on, because theydesperately needed a financial lifeline, a lifeline theYadana consortium was happy to provide.

From August 1998 until mid-2003, we have used theactual revenue figures for the project;119thereafter wehave estimated the revenue based on published dataand formulas. We have calculated the gas price in thesame way as the Yadana consortium, based on weightedaverages of fuel oil prices, adjusted for inflation, and

using the best production quantity information wecould find; when available, we have used quarterlyproduction figures for greater accuracy.120

We have also used the projects budgeting figures toget a better estimate of operating costs. We have actualcost figures for 1999 through mid 2003,121 and haveextrapolated from these to estimate that the ongoingcosts are around US $44 million annuallyUS $32million for the gas production, and US $12 millionfor the pipeline transportation. Finally, we have alsoestimated the revenue that has been applied toward theprojects development costwhich has been reportedas US $1.2 billion.122


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Yadana Project gas sales to PTT, 1998-2009 (in millions of US$)

YearRevenue

from actualsales

Take-or-pay (incl.interest)

Totalrevenuefrom PTT

Operatingcosts

Applied towarddevelopment

costs

Totalcosts

Net gassales

1998 $1.693 $50.469 $52.162 $15.507 $20.694 $36.200 $15.9621999 $2.138 $285.495 $287.632 $49.435 $150.185 $199.619 $88.0132000 $171.650 $323.705 $495.355 $33.215 $192.434 $225.648 $269.7072001 $530.029 $0 $530.029 $36.500 $195.951 $232.451 $297.5782002 $493.654 $0 $493.654 $36.995 $190.632 $227.627 $266.0262003 $558.994 $0 $558.994 $43.190 $210.929 $254.118 $304.8752004 $583.519 $0 $583.519 $44.000 $180.976 $224.975 $358.5442005 $663.850 $0 $663.850 $44.000 $58.200 $102.200 $561.6502006 $889.506 $0 $889.506 $44.000 $0 $44.000 $845.5062007 $988.901 $0 $988.901 $44.000 $0 $44.000 $944.9012008 $1,325.976 $0 $1,325.976 $44.000 $0 $44.000 $1,281.9762009 $1,246.425 $0 $1,246.425 $44.000 $0 $44.000 $1,202.425

Yadana Project Revenue Distributioniii.

EarthRights International has made additional revisions to our previous estimations of the distribution of the revenue,reflecting the actual distribution for 1998 through mid-2003 and using better estimates of the distribution going

forward.

Distribution of revenue follows a somewhat complex scheme, because the partners and the regime have artificiallydivided the project into a production component, run by a joint venture, and a transportation component, run by acorporation, the Moattama Gas Transportation Company (MGTC). This division is essentially on paper only, since thepartners have the same percentage interests in both the joint venture and MGTC, and Total operates both segments.But the contracts specify that the producers in the joint venture (who actually sell the gas) pay a transportation tariffto MGTC. Based on the relative development costs of the gas field production and the pipeline construction, this tariffis 38.8% of the sales price.123The remainder goes to the partners production joint venture.124

Since 2001, the regime has taken some of its profit in kind, as gas for domestic consumption. This is valued at thesame price as the export gas, except that the transportation tariff is 86.8% of the export gas tariff,125because thedomestic gas does not travel the whole length of the pipeline. In calculating the revenue distribution, the value of thedomestic gas is added to the total revenue, such that the total revenue is more than what is paid by PTT. When thetotal revenue is distributed, the value of the domestic gas is included in the Burmese regimes portion.

Yadana Project initial revenue distribution, 1998-2009 (in millions of US$)

Project Revenue To MGTC To Joint Venture

Year

Totalexport

revenue(from PTT)

Totaldomesticgas value

Totalrevenue

Exporttariff

(38.8%)

Domestictariff

(86.8%of export

tariff)

TotalMGTC

income

Fromexport

gas

Fromdomestic

gasTotal

1998 $52.162 $0 $52.161 $20.238 $0 $20.238 $31.923 $0 $31.923

1999 $287.632 $0 $287.632 $111.606 $0 $111.606 $176.026 $0 $176.0262000 $495.355 $0 $495.355 $192.201 $0 $192.201 $303.154 $0 $303.1542001 $530.029 $4.130 $534.159 $205.656 $0 $205.656 $324.372 $4.130 $328.5022002 $493.654 $18.644 $512.298 $191.543 $2.240 $193.783 $302.110 $16.404 $318.5142003 $558.994 $35.220 $594.214 $216.889 $7.867 $224.757 $342.104 $27.353 $369.4572004 $583.519 $44.937 $628.456 $226.405 $11.122 $237.527 $357.113 $33.815 $390.9292005 $663.850 $111.454 $775.304 $257.573 $34.068 $291.642 $ 406.276 $77.385 $483.6622006 $889.506 $145.397 $1,034.903 $345.128 $44.443 $389.572 $544.377 $100.953 $645.3312007 $988.901 $154.273 $1,143.174 $383.693 $47.156 $430.850 $605.207 $107.116 $712.3242008 $1,325.976 $206.858 $1,532.835 $514.478 $63.230 $577.709 $811.497 $143.627 $955.1252009 $1,246.425 $194.448 $1,440.873 $483.612 $59.437 $543.050 $762.812 $135.010 $897.822

MGTCs income then goes to pay MGTCs operating costs, its taxes, and its shareholders, which are the same fourjoing venture partners. In our calculations we have estimated that the income from MGTC is first used to pay back

pipeline development costs; because the pipeline cost was approximately US $465.6 million, and the contracts allowdepreciation at 12.5% annually, we estimate that MGTC paid US $58.2 million of the development costs each year(with shortfalls in the early years carried over to the next year), with the full initial costs paid off in the year 2005. We


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have used actual operating costs figures from 1998-2003, and thereafter estimated costs of US $11 million annually.MGTC is subject to a 30% income tax after a 3-year tax holiday that ended in August 2001, and pays taxes on itsincome after operating costs and amortized development costs.

MGTC revenue distribution, 1998-2009 (in millions of US$)

YearTotalMGTC

income

Costs

Taxes(aftercosts)

Estimated shareholder distribution

Operatingcosts

Appliedtowarddevelop-

mentcosts

Totalcosts

TOTAL(31.2375%)

Chevron(26.2825%)

PTTEP(25 5%)

MOGE(15%)

Totalafter-

taxincome

1998 $20.238 $4.166 $16.072 $20.238 $0 $0 $0 $0 $0 $01999 $111.606 $17.360 $94.246 $111.606 $0 $0 $0 $0 $0 $02000 $192.201 $9.790 $64.281 $74.071 $0 $36.900 $33.386 $30.123 $17.719 $118.1292001 $205.656 $10.000 $58.200 $68.200 $17.182 $37.570 $33.992 $30.670 $18.041 $120.2742002 $193.783 $10.170 $58.200 $68.370 $37.623 $27.423 $24.811 $22.386 $13.168 $87.7892003 $224.757 $11.190 $58.200 $69.390 $46.595 $33.977 $30.741 $27.736 $16.315 $108.7712004 $237.527 $12.000 $58.200 $70.200 $50.411 $36.521 $33.043 $29.813 $17.537 $116.9162005 $291.642 $12.000 $58.200 $70.200 $66.638 $48.356 $43.751 $39.474 $23.220 $154.8032006 $389.572 $12.000 $0 $12.000 $96.005 $87.954 $79.577 $71.799 $42.235 $281.5662007 $430.850 $12.000 $0 $12.000 $108.383 $96.982 $87.745 $79.169 $46.570 $310.4662008 $577.709 $12.000 $0 $12.000 $152.422 $129.100 $116.805 $105.388 $61.993 $413.286

2009 $543.050 $12.000 $0 $12.000 $142.029 $121.520 $109.946 $99.200 $58.353 $389.020

The joint ventures income is split between production costs, the Burmese regime, and the joint venture partners(which also includes MOGE at 15%). Costs, including paying down accrued development costs, can take up to halfthis amount; we estimate that the initial development costs were paid off by the year 2004. A 10% royalty is alsopaid to the regime on the total amount. The remainder, the producers profit, is then split between MOGE and thepartners according to a formula that varies with the price of gas, but generally gives MOGE around 60%. What is leftis then divided among the partners according to their percentage interest, again including MOGE at 15%. During theearly years of the project, some funds were also allocated to pay back MOGEs estimated costs for exploring the fieldprior to signing the original contracts. Finally, although the corporations pay their own taxes, we have included the taxfigures here to show that this money also flows back to the Burmese regime; the corporations are subject to the sametax treatment as MGTC, with their share of the producers profit subject to 30% tax after the 3-year tax holiday.

Production joint venture revenue distribution, 1998-2009 (in millions of US$)

Total jointventureincome

CostsRoyalty(10%)

(toMOGE)

Paymentof

MOGEspastcosts

MOGEshare

ofprofit

Tax onpartnersshare of

profit

Partnerstotal after-tax share

Operatingcosts

Appliedtoward

develop-ment costs

Totalcosts

1998 $31.923 $11.340 $4.621 $15.961 $3.192 $7.485 $5.108 $0 $.1761999 $176.026 $32.075 $55.938 $88.013 $17.602 $21.908 $28.828 $0 $19.674

2000 $303.154 $23.425 $128.152 $151.577 $30.315 $.687 $66.173 $0 $54.401

2001 $328.502 $26.500 $137.751 $164.251 $32.850 $0 $83.112 $5.002 $43.2862002 $318.514 $26.825 $132.432 $159.257 $31.851 $0 $70.621 $14.480 $42.305

2003 $369.457 $32.000 $152.728 $184.728 $36.945 $0 $90.333 $14.649 $42.8002004 $390.929 $32.000 $122.775 $154.775 $39.092 $0 $118.236 $20.100 $58.7242005 $483.662 $32.000 $0 $32.000 $48.366 $0 $241.978 $41.136 $120.1822006 $645.331 $32.000 $0 $32.000 $64.533 $0 $329.279 $55.977 $163.5422007 $712.324 $32.000 $0 $32.000 $71.232 $0 $365.455 $62.127 $181.5092008 $955.125 $32.000 $0 $32.000 $95.512 $0 $496.568 $84.416 $246.6292009 $897.822 $32.000 $0 $32.000 $89.782 $0 $465.624 $79.156 $231.260


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Distribution of partners share of profit, after taxes, 1998-2009 (in millions of US$)

YearTOTAL

(31.2375%)Chevron

(26.2825%)PTTEP

(25.5%)MOGE (15%)(pays no tax)

Total after-taxshare

1998 $.054 $.049 $.044 $.026 $.1761999 $6.145 $5.560 $5.016 $2.951 $19.6742000 $16.993 $15.375 $13.872 $8.160 $54.4012001 $13.245 $11.984 $10.812 $7.243 $43.2862002 $12.416 $11.234 $10.136 $8.517 $42.305

2003 $12.562 $11.365 $10.254 $8.617 $42.8002004 $17.235 $15.594 $14.070 $11.823 $58.7242005 $35.274 $31.914 $28.795 $24.197 $120.1822006 $48.000 $43.429 $39.184 $32.927 $163.5422007 $53.274 $48.200 $43.489 $36.545 $181.5092008 $72.387 $65.493 $59.091 $49.656 $246.6292009 $67.876 $61.411 $55.409 $46.562 $231.260

The total net income for the Burmese regime includes a number of different pieces: the tax income from MGTC,MOGEs 15% stake in MGTC, the 10% royalty, payments for past costs, MOGEs split of the profit with the producers,the tax on the corporate partners shares of the profit, and MOGEs 15% share of the profit as a producer. The totalnet income for the corporate partners is simply the sum of their distributions from MGTC and their after-tax profitfrom the joint venture.

Total project revenue distribution by partner, 1998-2009 (in millions of US$)

YearTotalcosts

Corporate partners share MOGE/regime share Totalrevenue

(incl.domestic

gas)

TOTAL netafter-taxincome

Chevron netafter-taxincome

PTTEP netafter-taxincome

In cashIn kind

(domesticgas)

Total

1998 $36.200 $.054 $.049 $.044 $15.812 $0 $15.812 $52.1611999 $199.619 $6.145 $5.560 $5.016 $71.291 $0 $71.291 $287.6322000 $225.648 $53.894 $48.761 $43.995 $123.056 $0 $123.056 $495.3552001 $232.451 $50.816 $45.976 $41.482 $159.302 $4.130 $163.432 $534.1592002 $227.627 $39.840 $36.045 $32.522 $157.618 $18.644 $176.263 $512.2982003 $254.118 $46.539 $42.107 $37.991 $178.237 $35.220 $213.457 $594.2142004 $224.975 $53.757 $48.637 $43.883 $212.264 $44.937 $257.202 $628.4562005 $102.200 $83.631 $75.666 $68.270 $334.083 $111.454 $445.537 $775.304

2006 $44.000 $135.955 $123.006 $110.983 $475.560 $145.397 $620.958 $1,034.9032007 $44.000 $150.256 $135.946 $122.658 $536.041 $154.273 $690.314 $1,143.1742008 $44.000 $201.487 $182.298 $164.479 $733.711 $206.858 $940.569 $1,532.8352009 $44.000 $189.396 $171.358 $154.609 $687.060 $194.448 $881.508 $1,440.873ALL $1,678.838 $1,011.770 $915.409 $825.932 $3,684.035 $915.361 $4,599.399 $9,031.364PCT 18.59% 11.20% 10.14% 9.15% 40.79% 10.14% 50.93% 100.00%

Annual total project revenue distribution by partner, 1998-2009 (in millions of US$)


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Thus, of the total revenue generated by the project, including the value of the domestic gas taken, the Burmese regimehas taken over 50%or more than 62% of the net revenue, once costs are deducted.

Cummulative total project revenue distribution by partner, 1998-2009


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ConclusionTotal, Chevron, and PTTEP have been complicit inforced labor, killings, and other abuses committed bythe Burmese Army providing security in the area oftheir natural gas pipeline in Burma. The companies

are vulnerable to liability in their home states for theseabuses and can be sued by affected villagers.

Given the positive development outcomes associatedwith revenue transparency in the extractive industries,a diverse and powerful international coalition requestedthat the Total, Chevron and PTTEP practice revenuetransparency in Burma and publish details of all oftheir payments to the Burmese authorities over thelast 18 years. Total and Chevron explicitly rejected therequest, citing curiously inconsistent reasons that aredetailed in this report.

In the absence of the companies revenue transparency,EarthRights International has conducted its own originaland detailed calculations based on newly-considereddocuments obtained through the Doe v. Unocallawsuitin the US. From 1998-2009, EarthRights Internationalestimates in this report that the Yadana gas pipelinehas generated over US $9 billion, over half of whichwent directly to the Burmese military regime or 62percent of net revenue, after costs. The Yadana Projectcompanies have thus financially upheld a violent and

authoritarian regime accused of crimes against humanityand war crimes, and a regime exposed as the worldsnewest nuclear threat. Rather than use the countrysgas revenues to benefit the people of Burma and securea stable economic future for the entire country, theBurmese military regime is instead engaged in anexpensive military program in partnership with NorthKorea, reportedly in violation of UN sanctions againstPyongyang, and the generals are developing a programto equip the country with nuclear weapons of mass

destruction, violating their international and regionalcommitments to nuclear non-proliferation.126

Total, Chevron, and PTTEP already made theprofound mistake of doing business with the Burmesemilitary regime, long before the country was a nuclearthreat, and against the better judgment of a number oftheir competitors and critics in the 1990s, when theirproject in Burma began.

However, it is not too late for the companies to changecourse and do the right thing.

EarthRights International hereby requests a seriesof meetings with the companies, dismissing Totalsprevious denials to engage with EarthRights

International. Reports have emerged that Total hasbeen convening meetings in Rangoon (Yangon) withother multinational oil companies operating in Burmato discuss a variety of issues, including social andenvironmental impacts of their projects. To EarthRightsInternationals knowledge, local people and objective

civil society groups have not been present at thesemeetings. While there is nothing inherently wrongwith meetings between oil companies excluding civilsociety, if the company is seriously intent on stemmingthe adverse social impacts of oil and gas projects inBurma, these meetings should be complementedby additional meetings that include genuine civilsociety groups who are relatively unhampered by themilitary regimes repression. For security purposes,the meetings could be held in Bangkok, Thailand;organizations that should be present would include

but not be limited to EarthRights International, theHuman Rights Foundation of Monland, the ShweGas Movement, and other relevant internationalorganizations.

Regarding revenue transparency, Total, Chevron, andPTTEP should embrace their own assertions aboutthe virtues and value of transparency and follow theunambiguous will of the international community:the companies should practice complete revenuetransparency in Burma and publish their last two

decades of payments to the Burmese military regime.Given that the companies are already in dialogue withnumerous other oil companies operating in Burma, itwould appear that they are well-positioned to advocatefor revenue transparency in Burma. The companiesshould demonstrate their efforts at promoting revenuetransparency in Burma. Positive results will benefitnot only Burma, but also the companies own bottomline.

While there are no easy answers when it comes to the

complex social, political, and economic problems thatbeset Burma, these and other concerted steps detailedin the recommendations below can and should betaken by Total, Chevron, and PTTEP. EarthRightsInternational also calls on the international community,investors and shareholders, and the ruling junta toheed the reasonable recommendations included in thisreport.


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Recommendations

To Total, Chevron, and PTTEP:

Publish disaggregated data about all payments madeto the Burmese authorities since 1992, or earlier,per the Global Call for Revenue Transparencysigned by over 160 nongovernmental organizations,labor unions, investment firms, scholars, andworld policy leaders.

Demonstrate benchmarked efforts to promoterevenue transparency in Burma; demonstrateencouragement to other oil companies in Burmato follow suit and practice disaggregated revenuetransparency in Burma.

Chevron should stop lobbying against, andinstead support, the Energy Security ThroughTransparency Act pending before the US Congress,a bill that promotes revenue transparency throughthe mandatory disclosure of resource-relatedpayments to governments for all oil, gas, andmining firms registered with the US Securities andExchange Commission.

Conduct ongoing Environmental Impact Assessments in the pipeline area and make theassessments public, per international best practice.These assessments should be conducted byindependent-third parties.

Facilitate local complaints of forced labor to theInternational Labour Organization.

Demonstrate a clear and measurable system forstemming adverse human rights impacts, includingtaking steps to enable accessible and objective

assessments of the human rights situation in thepipeline corridor by EarthRights Internationaland other select groups capable of such sensitivework.

Acknowledge a wider and more accurate sphere-of-responsibility in the pipeline corridor, including allvillages affected by the Yadana pipeline project.

Invite relevant civil society organizations to themeetings that Total has been convening in Rangoon(Yangon) between representatives of oil companiesoperating in Burma. Appropriate inviteeswould include but not be limited to EarthRightsInternational, the Human Rights Foundation of

Monland, the Shwe Gas Movement, and otherrelevant international organizations. For securitypurposes, it is requested that Total convene themeetings in Bangkok, Thailand.

Meet with EarthRights Internationals management,as previously requested, to discuss the local and

national impacts of the companies operations inBurma.

To the International Community:

Apply targeted multilateral pressure on Burmaspetroleum sector (oil and gas), including actionsdesigned to restrict the State Peace and Development

Councils access to capital markets with regard tothe natural gas revenue generated from the Yadanaand Yetagun Gas Projects, and future revenuegenerated from the Shwe Gas Project.This shouldinclude targeted multilateral actions designed torestrict international transactions by individualsand institutions associated with the petroleumsector in Burma.

Maintain and strengthen targeted restrictions onnew investment in Burmas petroleum (oil and

gas), mining, timber, and hydropower sectorsuntil a range of preconditions are firmly in place,including:

Full disclosure of all payments made to theState Peace and Development Council.

Reliable guarantees that large-scaledevelopment projects can proceed inBurma without an unreasonably high riskof adverse human rights impacts by theBurma Army providing security for the

projects.

Reliable guarantees that local communitiescan participate freely in developmentdecisions, including Free Prior andInformed Consent before projectscommence.

Home-state access to justice for foreign victims ofcorporate-related human rights abuses.

Enact and strengthen legal and other regulatory

mechanisms that promote transparency,normative frameworks and harmonization acrosssystems. The goals of such mechanisms must be


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to promote stability for corporations operatinginternationally, allow for corporate liability andaccountability for complicity in abuses abroad,and enable access to justice for survivors of abusesabroad. Civil society organizations and citizens ofthese countries should advocate for legislation to

create such mechanisms.

To

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Energy Insecurity