TotalEnergies, which on 21 January announced a rapid withdrawal from Myanmar because the situation in the country no longer allowed the French company to make a “sufficiently positive contribution”, said its exit will be “responsible.”
Thailand’s PTT Exploration & Production (PTTEP) confirmed earlier this week that it will take over operatorship of the strategic Yadana gas field offshore Myanmar and gas transportation company MGTC in July, as TotalEnergies (LSE:TTE) walks away in a transaction with no commercial value.
TotalEnergies said yesterday that it “has initiated a due diligence process to ensure a responsible withdrawal for its stakeholders in Myanmar, particularly its employees and the local communities that have been supported by TotalEnergies for many years through its role as an operator in the MGTC gas pipeline area.”
The French company added that “PTTEP confirmed its willingness to take over as operator of Yadana and MGTC and, in line with this decision, to increase its direct stake in Yadana by taking over TotalEnergies’ equity share.”
“Chevron has also decided to take over TotalEnergies’ equity share, thereby increasing its stake in Myanmar. As a reminder, in light of the exceptional situation, TotalEnergies has chosen to withdraw from Myanmar without seeking any financial compensation for its assets,” said the French company.
TotalEnergies’ 31.24% share of Yadana will be allocated proportionately, as per contract rules, to the remaining joint venture partners. Following the French company’s withdrawal, PTTEP (BKK:PTTEP) will hold 37.0842% interest, up from 25.5%, while Chevron will hold 41.1016% interest, up from 28.26%, PTTEP said earlier this week. Any mention of state-owned MOGE was conspicuously absent, but presumably its share of Yadana will rise to 21.8142%, up from 15% currently. MOGE is a key source of revenue for the junta and was placed under sanctions by the EU last month.
Chevron (NYSE:CVX) is also seeking to exit Yadana, but in contrast to TotalEnergies, it wants to do so via a commercial transaction that would not see MOGE take a greater share of the project.
PTTEP is the logical acquirer as there will not be many suitors willing to take on the reputational risk associated with Myanmar. But as Energy Voice reported on Monday consultancy Rystad Energy estimates Chevron’s current share of Yadana is worth around $200 million to $250 million. However, it seems unlikely that the Thai company will be willing to pay so much given it is the only realistic buyer.
Meanwhile, PTTEP has expressed its willingness to take on all staff currently employed by the TotalEnergies affiliate in Myanmar. TotalEnergies said it is working closely with PTTEP to ensure that the transition occurs in a fair and orderly manner. “With respect to our employees who have been ensuring the safety and efficiency of operations in Myanmar since January 21, TotalEnergies will help all those who wish to transfer to the new operator and will ensure that they continue to be employed under the same conditions,” added TotalEnergies.
“At the same time, TotalEnergies will work with PTTEP to ensure that the existing socio-economic development program led by TotalEnergies to support local communities living near the MGTC pipeline will continue after its withdrawal. To this end, TotalEnergies will allocate the resources necessary to a dedicated fund in order to contribute financially to the actions to be carried out by the future operator,” said the French firm.
“TotalEnergies’ withdrawal from Yadana and MGTC will be effective at the latest at the expiry of the 6-month contractual period, i.e. July 20, 2022, giving the Company and PTTEP enough time to ensure the safe and orderly transfer of the operatorship while ensuring a fair transition for our key stakeholders, our employees and local communities where we operate,” said TotalEnergies.
The atmosphere in Myanmar has been extremely volatile since the military seized power from the National League for Democracy (NLD) government on 1 February 2021.
TotalEnergies and Chevron said late January that they would pull out of Myanmar to protest the junta’s continued violence against civilians since the military coup.