Continuing in Myanmar no longer ‘viable option’ for Woodside
Following an exit by majors TotalEnergies and Chevron, Australia’s Woodside has also decided to follow suit and abandon its Myanmar operations following a military coup in the country in February 2021.
After reducing its presence in Myanmar last year, Woodside has now also decided to abandon its operations there despite previously stating its belief that the military coup in Myanmar was just “a transitionary issue” and would not affect its offshore drilling plans.
Woodside has operated in Myanmar since 2013, conducting multiple exploration and drilling campaigns. It holds a 40 per cent participating interest in the A-6 Joint Venture as joint operator and participating interests in exploration permits AD-1 and AD-8.
In 2021, Woodside completed the relinquishment of exploration permits covering offshore Blocks AD-2, AD-5 and A-4 and is in the process of withdrawing from Blocks AD-6, AD-7 and A-7. The company will now start arrangements to formally exit Blocks AD-1 and AD-8, the A-6 Joint Venture and the A-6 production sharing contract (PSC) held with the Myanma Oil and Gas Enterprise (MOGE).
The non-cash expense associated with the decision to withdraw from Blocks A-6 and AD-1 is expected to impact 2021 net profit after tax (NPAT) by approximately $138 million. This is in addition to the $71 million exploration and evaluation expense for Block AD-7 disclosed in Woodside’s fourth-quarter report earlier in January 2022. These costs will be excluded from the underlying NPAT for the purposes of calculating the dividend.
Woodside CEO, Meg O’Neill, said while Woodside had hoped to develop the A-6 gas resources with its joint venture participants and deliver much-needed energy to the Myanmar people, there was no longer a viable option for Woodside to continue its activities.
“Woodside has been a responsible foreign investor in Myanmar since 2013 with our conduct guided by the UN Guiding Principles on Business and Human Rights and other relevant international standards. Given the ongoing situation in Myanmar we can no longer contemplate Woodside’s participation in the development of the A-6 gas resources, nor other future activities in-country,” she said.
Last week, TotalEnergies announced its decision to withdraw from its operations in Myanmar without any financial compensation amid a worsening situation following last year’s military coup.
TotalEnergies has been a partner (31.24 per cent) and operator of the Yadana gas field (Blocks M5 and M6) in Myanmar since 1992, alongside its partners Unocal-Chevron (28.26 per cent), PTTEP (25.5 per cent), a subsidiary of the Thai national energy company PTT, and the Burmese state-owned company MOGE (15 per cent).
Following the announcement about TotalEnergies’ exit, reports emerged that Chevron, its joint venture partner in the Yadana field, also followed suit and decided to withdraw from Myanmar. Offshore Energy has reached out to Chevron, seeking confirmation of these reports.
A spokesperson for Chevron confirmed the exit and said: “In light of circumstances in Myanmar, we have reviewed our interest in the Yadana natural gas project to enable a planned and orderly transition that will lead to an exit from the country.
“We have been in discussions with the operator to understand their position. As a non-operator with a minority interest in the project, our immediate priority remains the safety and well-being of employees, safe operations and the supply of much-needed energy for the people of Myanmar and Thailand.”
Meanwhile, Thailand’s PTTEP said it was considering potential directions of the Yadana project. In a statement last Monday, PTTEP confirmed it had been notified by TotalEnergies of its exit and stated in the notification letter to PTTEP that the company would fully support the transition to the new operator of the project. According to Reuters, PTTEP is the likely candidate to take over the operatorship of the project.
This article has been updated to include a statement from Chevron.