EU targets Myanmar’s lucrative energy sector in latest sanctions

The EU has imposed sanctions against almost two dozen Myanmar government and military officials as well as a state-backed oil and gas group, in the first measures targeting the country’s lucrative energy operator in the wake of last year’s coup.

The targets, unveiled by the European Council on Monday, included 22 officials and four entities, among them a mining operator and Myanmar Oil and Gas Enterprise, a crucial source of revenue for the junta.

The latest measures marked Brussels’ fourth round of sanctions since the military overthrew the elected government of Aung San Suu Kyi in February 2021. The US and UK have also imposed asset freezes and travel bans on government officials and state-owned enterprises and instituted export bans. Washington and Brussels have also pressed the UN to impose an arms embargo.

“The European Union is deeply concerned by the continuing escalation of violence in Myanmar and the evolution towards a protracted conflict with regional implications,” the council said. “Since the military coup, the situation has continuously and gravely deteriorated.”

More than 1,500 people have been killed and 12,000 arrested in the military’s crackdown against anti-coup protesters, according to the Assistance Association of Political Prisoners, a human rights group.

Energy companies have come under particular pressure to divest from Myanmar from activist campaigns seeking to cut off sources of funding for the junta. MOGE was projected to generate revenues of $1.5bn in 2021-22, according to a budget forecast from the finance ministry. The sector accounts for about 50 per cent of the government’s foreign exchange.

Apart from operating oil and natural gas resources and pipelines, MOGE also regulates Myanmar’s energy sector and collects taxes from private companies operating in the country.

Some international operators have raised concerns that withholding tax payments to MOGE could result in the cessation of power services or retaliation against local staff.

But the campaign is gaining traction, with oil groups TotalEnergies and Chevron announcing last month that they would pull out of the Yadana offshore gasfield project, while Australia’s Woodside Petroleum said it would exit its gas exploration projects in the country.

Last week, Japan’s Mitsubishi and Malaysia’s state-owned oil group Petronas said they would sell their stakes in Yetagun, another gas project.

Justice for Myanmar, a local advocacy group, praised the EU for becoming the first jurisdiction to target MOGE and called on the US and Japan to follow Brussels’ lead.

“Sanctions on MOGE are essential to deny the junta the funds it needs to finance its increasing and intensifying violent attacks against civilians,” said Yadanar Maung, a spokesperson.

Other multinationals, such as Norwegian telecoms operator Telenor and South Korean steelmaker Posco, have also been pressed to quit their local operations or dissolve joint ventures with military-backed companies.

Kirin Holdings said last week that it would withdraw from its business in Myanmar in an effort to end its two joint ventures with military-linked partner Myanma Economic Holdings Ltd.