The Shwe Natural Gas Pipeline in Burma: Human Rights Violations Increase as Project Moves Forward

By EarthRights Interntional • March 10, 2010

EarthRights International (ERI) has confirmed that serious human rights abuses have increased in connection to the multi-billion dollar Shwe natural gas pipeline project in military-ruled Burma, including recent reports of land confiscation on Maday Island. Compensation for local villagers on the island was reportedly promised by the Burmese authorities and the Asia World Company (whose Managing Director is on the United States sanctions blacklist), a Burmese conglomerate providing services related to the construction of the Shwe project. To date, no compensation has been provided to local people.

More human rights abuses in western Burma and along the pipeline’s route to China are likely in the near future; the Burmese junta recently issued a letter to hundreds of villagers in western Burma ordering them to vacate their land to make room for the energy project.

The companies involved and their home governments continue to be undeterred. In February, South Korea’s Hyundai Heavy Industries, the world’s largest shipbuilder, signed a deal with Daewoo International to build the offshore and onshore Shwe gas production facilities in Arakan State and the Bay of Bengal, to be completed by March 2013. Also in February, the Indian government permitted its state-owned oil and gas companies ONGC Videsh and GAIL, both partner to the Shwe consortium, to proceed with their stake in the cross-country gas pipeline to China – operated by China National Petroleum Corporation. The Indian government also authorized the companies to invest a reported US$1 billion to further develop the offshore gas fields operated by Daewoo. These decisions were formalized by India’s Cabinet Committee on Economic Affairs, headed by Prime Minister Dr. Manmohan Singh. The project’s human rights impacts were reportedly not discussed.

The Shwe gas project will generate approximately US$29 billion dollars for the Burmese authorities over 30 years, according to the Shwe Gas Movement, a civil society network from Burma advocating for the companies to postpone the project. Production is scheduled to begin in 2013.

In late 2008, ERI, the Shwe Gas Movement, and nine co-complainants filed a 48-page OECD complaint with the Korean government under the OECD’s Specific Instance procedure, alleging that Daewoo International and KOGAS were in violation of several of the OECD Guidelines for Multinational Enterprises through their investment in the Shwe project. India and China are not OECD countries.

The complaint alleged that the Korean companies failed to practice due diligence to prevent negative human rights and environmental impacts of the Shwe Project, and that the companies were currently and potentially in violation of at least six of the Guidelines, including a failure to respect human rights and a failure to disclose vital information about the project.

The ERI/SGM complaint was summarily rejected by the National Contact Point (NCP) in Korea in what was regarded by complainants as a deeply flawed decision. The Korean NCP is located in the Ministry of Knowledge Economy, which is tasked with promoting overseas energy investments, and also provided a sizable multi-million dollar loan to Daewoo to proceed with the Shwe project in Burma, raising critical questions of structural conflicts of interest.

As an OECD-member country, South Korean companies are bound to follow the OECD Guidelines, which are the world’s only comprehensive, multilaterally endorsed rules negotiated by nation-states to govern corporate behavior. In this case, the companies not only failed to uphold the Guidelines, but they were not held to account by the Government of Korea for their blatant violations, violations which continue to date.

Korea’s misinterpretations of the OECD Guidelines and its failure to promote them in this case were documented in a 24-page follow-up report by ERI and SGM, entitled A Governance Gap (June 2009), which was submitted to the OECD headquarters in Paris on June 15, 2009 as human rights abuses continued in Burma.

Today, increasing numbers of local people are being affected by the Shwe project. They continue to withstand adverse impacts with no redress or ready access to justice.

South Korea’s Daewoo International and Korea Gas Corporation, and India’s ONGC Videsh and GAIL represent the consortium operating the offshore component of the Shwe project, while China National Petroleum Corporation will be the operator of the trans-national pipeline transporting the gas overland to China. The Daewoo-led consortium will hold a 49 percent stake in the cross-country pipeline, as well.