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The Yadana GSA set a rough template for later gas agreements.

 

The small British oil firm Premier purchased the exploration lease for blocks M-13 and M-14 in 1990 east and south of Tavoy, Tenasserim Division. In 1992 it bought the adjacent M-12 lease, then announced the discovery of the Yetagun field in M-13.

 

Premier was too small to take on a project like Yetagun by itself. It farmed in American oil giant Texaco (now ChevronTexaco) as the biggest shareholder and operator. Nippon Oil and PTTEP bought stakes. In October 1996 a GSA was signed with PTT with commercial production due to start in July 2000 at 200MMcf/d. MOGE exercised its option for a 15 percent stake on credit. Then things in the gas world started to get messy.

 

Boycott Movement Kicks In

 

The Yadana consortium hired the Burma Army to clear a path for the overland portion of its gas pipeline to Thailand through Tenasserim Division and provide security for the crews. The Burma Army operated as per normal—burning down villages, press-ganging labor, torturing and occasionally killing local inhabitants. The Yadana consortium became so alarmed at the army’s conduct that it purchased bulldozers in the hope that the men-in-drab would stop using slave labor. Pretty soon, the pipeline fiasco hit the press.

 

...so that Thailand could buy overpriced gas from here ...

In order to avoid a growing consumer boycott movement in the US, in 1996 Unocal sold most of its American downstream operations including its retail gasoline stations. Texaco simply sold its 35.42 percent stake in Yetagun—it didn’t need the trouble. The two firms’ contrasting business decisions can be explained by their relative sizes.

 

Yadana was going to have a significant impact on Unocal’s bottom-line. A comparatively small player in the oil business, it currently has a market capitalization of only $11 billion. ChevronTexaco, on the other hand, is one of the world’s largest companies with a market cap of $115 billion.