Chevron Corp. of San Ramon is drawing harsh criticism for its
business ties to Burma, the Asian nation conducting a brutal
military crackdown.
The company owns part of a natural gas project in Burma, where
soldiers crushed pro-democracy protests last week and killed at
least 10 people.
U.S. sanctions prevent most U.S. companies from working in Burma,
but Chevron's investment there existed before the sanctions were
imposed and continues under a grandfather clause. As a result, the
company is one of the few large Western companies left in the
country.
Now Chevron faces pressure to pull out.
Human rights activists are calling on the company to either leave
Burma or persuade the country's military rulers to stop killing
demonstrators. Bloggers are encouraging people to flood Chevron's
phone and fax lines in protest. Some are calling for a boycott.
"There's no question that the money from the pipeline project
helps prop up the military government," said Marco Simons, U.S.
legal director for EarthRights International. "If Chevron can stop
people from getting killed by using its influence, we'd certainly
like to see that. In the long run, we don't think anyone should be
doing business with this government."
But Chevron doesn't intend to leave.
"Chevron is maintaining its interest in the ... project," said
spokesman Alex Yelland.
The company has been trying to build up its portfolio of oil and
natural gas projects in Asia, where energy demand is growing fast.
Chevron also has a history of working under difficult political
circumstances. In some cases, that history involved countries with
questionable human rights records or nations that ran afoul of the
U.S. government. In other cases, the company's own actions have been
called into question.
Chevron has been the focus of repeated protests in Nigeria, for
example, where soldiers paid by the company have been accused of
shooting villagers and burning homes. And the company continues to
work in Venezuela, despite constant sniping between Venezuelan
President Hugo Chavez and the Bush administration.
Chevron has denied any part in any human rights abuses. Its
executives argue that staying in troubled countries - even pariahs
such as Burma - does more good than harm by employing locals and
funding health and education programs.
"I'm convinced that hundreds of thousands of people in Burma have
benefited," said Chevron Vice Chairman Peter Robertson, who pointed
to the community doctors and teachers his company has paid for.
"They benefit from us being there."
There's also the question of whether pulling out would work.
Chevron owns a minority stake in the Yadana natural gas field and
pipeline, a little more than 28 percent. Both China and India have
been eager to do business with Burma, hoping to secure some of the
fuel supplies that their surging economies need. If Chevron left,
one country or another would try to take its place, Robertson said.
"It's pretty clear that this is a very attractive asset, and
other people would be interested," he said.
Frank Verrastro, head of the energy program at the Center for
Strategic & International Studies think tank, said Burmese law also
would force Chevron to fork over much of the company's capital gains
on the project if it sold its stake. That could amount to hundreds
of millions of dollars, depending on the sale price. The project
cost roughly $1 billion to build in the mid-1990s and is doubtless
worth far more today.
"That goes straight to the Burmese government," Verrastro said.
"The biggest conundrum right now is how to deal with bad actors who
have a resource that the world needs. And we haven't come to grips
with that in any way, shape or form."
Chevron's involvement in Burma - called Myanmar by the military
junta that rules it - already has a complicated and controversial
history.
It started with Unocal Corp., one of Chevron's historic rivals.
Unocal invested in the Yadana project in the 1990s along with three
other companies: France's Total, Myanmar Oil and Gas Enterprise and
the Petroleum Authority of Thailand. When Washington decided to
impose sanctions on Burma's military junta in 1997, Unocal was
allowed to stay under a grandfather clause.
Chevron acquired the stake when it bought Unocal in 2005. By
then, however, the Yadana project had become a public relations
disaster for Unocal. Burmese exiles sued the company in a U.S.
court, saying the pipeline's construction had involved forced labor
and other human rights abuses committed by the military. Unocal
denied the accusations but settled the case out of court for an
undisclosed sum.
Burma isn't the only place where Chevron has faced questions
about human rights.
The company's operations in Nigeria have triggered frequent
protests by poor Nigerians who say they see little of the money
flowing from the nation's rich oil fields. Some have sued Chevron,
saying that soldiers paid by the company have killed protesters and
villagers.
And in Ecuador, Chevron is fighting a long-running lawsuit
concerning oil-field pollution that residents say has contributed to
a wave of illnesses in part of the Amazon jungle. The suit alleges
that Texaco, which operated an oil-field in Ecuador years before
Chevron bought the company, left pools of petroleum and hazardous
chemicals scattered around the field, eventually covering them with
thin layers of soil rather than removing them.
In both countries, Chevron has denied the allegations, both
inside and outside court.
In Burma, Chevron acts mainly as an investor. The company does
not operate the Yadana field. That role falls to Total, which has
the biggest stake in the project, at 31 percent.
Despite its strategic location for Chevron, Yadana has its
limits. The U.S. sanctions prevent Chevron from expanding its
investment, even as the company pours money into exploring for oil
and natural gas off neighboring Thailand. And the existing
operations are small compared to many of the company's projects
worldwide.
Even so, Yadana represents a key source of cash for Burma's
government.
Human Rights Watch, one of the groups trying to pressure Chevron,
says natural gas sales are the government's single largest source of
income, although economic data from Burma are unreliable. Gas sales
to Thailand brought the government $2.16 billion in 2006, according
to Human Rights Watch. Most of the Yadana project's gas flows to
Thailand.
"President Bush should order Chevron to cease operations in Burma
immediately," said Nyunt Than, president of the Burmese American
Democratic Alliance. "That would cut hundreds of millions of dollars
from this military. It would create great pressure on them to come
to the table."
A White House spokesman referred questions about Chevron's
presence in Burma to the National Security Council, which did not
respond to a query.
Chevron pays for social programs in communities along the Yadana
pipeline's route, funding teachers, libraries and doctors. The
company reports significant declines in local deaths from malaria
and tuberculosis since the programs began.
But exerting political pressure on Burma's government is another
question entirely. Chevron has typically resisted calls for that
kind of involvement.
Chief Executive Officer David O'Reilly defended that position in
a Chronicle interview last year.
"You have to be apolitical and try to remember what you're doing.
What we do well is we invest in oil and gas exploration, refining
and whatnot," he said. "We were in Angola during years and years of
civil war and years when there were clearly people in the United
States who felt that Angola was an inappropriate place to invest.
And yet Angola's civil war is over. We've had a very positive
influence there. We've created a lot of jobs."
E-mail David R. Baker at
dbaker@sfchronicle.com.
