Destabilisation Forces Woodside out of Myanmar

Woodside has followed France’s TotalEnergies and Chevron of the US in quitting Myanmar following last year’s military coup and the deteriorating human rights situation there.

With the military coup having already led to gas operations in Myanmar being put on hold in February 2021, Woodside said on Thursday it would start to formally exit its remaining petroleum exploration permits and contracts held with the military-controlled Myanma Oil and Gas Enterprise.

The non-cash expense associated with the decision to withdraw from the company’s two main exploration areas – Blocks A-6 and AD-1 – is expected to impact 2021 net profit after tax (NPAT) by approximately $US138 million., Woodside said.

That will be reported next month.

This is in addition to the $US71 million exploration and evaluation expense for Block AD-7 disclosed in Woodside’s Fourth Quarter Report on 20 January 2022. These costs will be excluded from underlying NPAT for the purposes of calculating the final dividend.

Woodside said it has operated in Myanmar since 2013, conducting multiple exploration and drilling campaigns. It holds a 40% participating interest in the A-6 Joint Venture as joint operator and participating interests in exploration permits AD-1 and AD-8.

Woodside had previously announced that it was placing all Myanmar business decisions under review following the State of Emergency declared in February 2021 and the deteriorating human rights situation in the country.

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.

Woodside will now commence 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) (which now controlled by the military and through it, the ruling junta.

In Thursday’s statement 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.

Woodside shares rose 2.4% to $24.73 as world oil prices briefly breached the $US90 a barrel for the first time since October, 2014.

 

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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