Thailand’s state-controlled gas firm signed up for two expensive gas deals that it later realized it didn’t want. Burma has used the revenue to finance an arms build-up.
In 1989 with the treasury bare, Burma’s ruling State Law and Order Restoration Council, or SLORC, as the junta then called itself, opened up petroleum exploration to foreign oil companies. In the short term Rangoon profited from signing bonuses paid for exploration blocks. If any of the firms struck commercially viable oil or gas, Burma would collect free rents from petroleum exports that would help maintain an unelected, unpopular administration in power.
Rangoon offered a fairly standard deal to potential operators: a 10 percent royalty to the government; no duties on imports of equipment; a three-year tax holiday from the start of commercial production, then accelerated depreciation of up to 25 percent a year.
In those days there was no boycott movement against firms doing business with Burma. Oil companies—big and small—jumped in. The firms with onshore exploration leases were to be disappointed. They found no oil in commercially viable quantities. Most pulled out by 2002. Offshore it was a different story.
Total Package
The Badamyer and Yadana gas fields off the coast south of Rangoon Division were discovered in 1974 and 1982, respectively. But Burma had sufficient gas production for its needs and in any case could not afford the cost of a production platform.
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