Myanmar's Ethnic Conflict Flares In Shadow Of Asian Oil Investment

Simon Montlake, Forbes Staff

Rakhine State, Myanmar

In a setback for reformers, ethnic violence has spread in western Myanmar (Burma), killing scores of civilians and displacing over 32,000 people. Following the latest fighting between Rakhine and Rohingya groups, satellite imagesreleased by Human Rights Watch appear to show the wholesale destruction last week of a coastal community of Rohingya. Boatloads of evacuees have since arrived in camps opened after previous deadly clashes elsewhere in June. Muslim Rohingya face widespread discrimination in a majority Buddhist country that doesn’t recognise them as citizens. Even Rohingya that have lived for generations in Myanmar are accused of being illegal migrants from neighbouring Bangladesh. The U.N. estimates the Rohingya population in Myanmar at 800,000 people. This excludes tens of thousands displaced to Bangladesh and others who have sought refugee protection in Southeast Asia. The head of the Association of Southeast 

Asian Nations, a grouping that includes Myanmar, has warned that the Rohingya crisis could destabilise the region.

While the renewed fighting is troubling for a fragile, multi-ethnic country that has just begun to open up after decades of isolation, the unrest spells particular risk for Asian energy firms. The burnt-out Rohingya community seen in the satellite photo was located in Kyaukpyu in the Bay of Bengal. This is an operational hub for multi-billion dollar investments by Daewoo International, which has offshore gas concessions, and China National Petroleum Co., which is constructing two cross-country pipelines to southwest China. The first, a gas pipeline, may begin operating as early asApril 2013 with 400m cubic feet a day supplied to China’s power sector. The second pipeline is designed to carry crude oil cargoes that dock in Kyaukpyu. CNPC has begun building a transshipment port and the twin pipelines, while Daewoo handles the gas production. Australian producer Woodside recently agreed to partner with Daewoo in further exploration in the Bay of Bengal. As Western sanctions against Myanmar are dismantled, more oil giants are likely to join the rush to tap these offshore resources.

An international campaign group, the Shwe Gas Movement, has been putting pressure on Myanmar and its investors to compensate those displaced by pipeline, gas terminal and port. Much of the attention has been on the pipeline’s diagonal path across Myanmar and the role of the military in securing it. But there are also concerns about the impact on Kyaukpyu and other coastal areas. Thismap shows the project sites. It’s not clear exactly where the attacks on the Rohingya took place; HRW identifies the torched community as being on the eastern shore, near to the industrial zones where CPNC and Daewoo are invested. But the violence spread through several built-up areas in and around the town. An industry consultant in Myanmar told me that while the Chinese port was on the outskirts of Kyaukpyu, Daewoo is running its gas pipeline through a base in the town. This could become a more risky proposition if ethnic violence continues. It also raises security and human-rights concerns for other investors sizing up Myanmar’s oil and gas sector.

Ref;forbes