Unocal in Burma

Unocal in Burma

Union Oil Company of California, or Unocal, was founded in 1890 to develop oil fields in California. By the 1990s, however, most oil fields in the United States were nearing depletion so the company began investing in energy projects outside the U.S.

One project that attracted the company was the "Yadana Field," a natural gas field that belonged to Burma and that lay off its coast beneath the Andaman Sea. Estimates indicated the Field had over 5 trillion cubic feet of natural gas, enough to continue in production for 30 years.
In 1992 Burma had signed a contract with Total S.A, a French company that gave Total the right to develop the field and build a pipeline to transport the gas to Thailand, whose government wanted to buy the gas. Total invited other companies to buy into the project as partners. The government of Burma stood to net an estimated $200 - $400 million a year for the life of the project. While Total and its partner companies would actually construct the project, Burma contracted to "assist by providing security protection and rights of way and easements as may be requested by" the companies.

Burma is a poor developing Southeast Asian country with a population of 42 million. Economically, Burma's per capita gross domestic product is approximately $200-$300, while inflation is above 20 percent. Burma suffers a high infant mortality rate (87 deaths per 1000 live births) and a low life expectancy (53 years for males and 56 for females). The natural gas project would provide significant benefits to the impoverished nation.

Unocal was attracted to Burma for several reasons. First, labor was cheap and relatively educated. Second, Burma was rich in natural gas resources. Third, Burma was an entry point into other international markets, particularly in and around Southeast Asia. Finally the political environment was extremely stable.

The only real problem the company saw with the project was that the government of Burma is a military...

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