Petronas interested in Texaco's Myanmar stake

Petronas interested in Texaco's Myanmar stake

KUALA LUMPUR (Reuter): Malaysian national oil firm Petronas is studying the purchase of Texaco Inc's 42.9 percent stake in Myanmar's Yetagun gas field, president and chief executive Hassan Marican said yesterday.

Texaco is the largest shareholder and operator of the field, which has estimated gas reserves of one trillion cubic feet and lies 125 miles off Myanmar's western coast in the Indian Ocean. It is being commercially evaluated.

Marican said Texaco had appointed an investment banker to look for buyers of the U.S. oil giant's stake.

"We have been approached by the investment banker. Yes, we are looking and studying the opportunity," he told reporters on the sidelines of an industry conference in Kuala Lumpur.

Texaco has said it might sell the stake.

Earlier this year, the United States imposed sanctions to protest what it called political repression by the ruling military junta, banning fresh investment in Myanmar by U.S. companies.

U.S. firms have been under pressure to withdraw from Myanmar by human rights activists. High profile names which have pulled out of Myanmar include U.S. soft drinks giant PepsiCo Inc. But oil companies have also faced particular pressure because they tend to be the biggest investors in Myanmar.

Unocal Corp has a 47.5 percent stake in the US$1.2 billion Yadana field, which plans to pipe gas to Myanmar and Thailand.

Texaco's Yetagun field is due to come on stream in 1999 and the consortium has already signed a 30-year deal to sell 200 million cubic feet per day of gas to Thailand.

At Texaco's annual shareholder meeting in May, the company said it might sell the Yetagun stake, citing financial rather than human rights concerns.

Later the same month, the U.S. Treasury's Office of Foreign Assets Control (OFAC) said existing contracts entered into by U.S. companies in Myanmar could proceed.

There are around 20 U.S.-based companies with direct investment or employees in Myanmar. The largest are Unocal, Texaco and Atlantic Richfield Co, the Washington-based Investor Responsibility Research Center said in May.

Oil companies have generally argued that unilateral sanctions have not worked in the past and the best way to promote change is through investment.

The U.S. efforts to raise human rights to the top of the Asian agenda received a severe blow earlier this month when the Association of South East Nations (ASEAN) decided to accept Myanmar, Cambodia and Laos as full members.

They are scheduled to join Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam as members of the grouping at a summit in Kuala Lumpur next month.