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Viewing cable 06RANGOON668, SOCIAL PROJECTS BENEFIT PIPELINE VILLAGES

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Reference ID Created Released Classification Origin
06RANGOON668 2006-05-19 09:57 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Rangoon
VZCZCXRO0574
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGO #0668/01 1390957
ZNR UUUUU ZZH
O 190957Z MAY 06
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4561
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0862
RUEHBY/AMEMBASSY CANBERRA 9637
RUEHKA/AMEMBASSY DHAKA 4148
RUEHLO/AMEMBASSY LONDON 1604
RUEHNE/AMEMBASSY NEW DELHI 3329
RUEHUL/AMEMBASSY SEOUL 6732
RUEHTC/AMEMBASSY THE HAGUE 0514
RUEHKO/AMEMBASSY TOKYO 4347
RUEHCI/AMCONSUL CALCUTTA 0737
RUEHCN/AMCONSUL CHENGDU 0738
RUDKIA/AMCONSUL CHIANG MAI 0386
RUEATRS/DEPT OF TREASURY WASHDC
RUEHGV/USMISSION GENEVA 2669
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUCNDT/USMISSION USUN NEW YORK 0313
RUEHBS/USEU BRUSSELS
UNCLAS SECTION 01 OF 03 RANGOON 000668 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS; PACOM FOR FPA; TREASURY FOR OASIA:AJEWELL 
 
E.O. 12958: N/A 
TAGS: ECON ENRG SOCI PGOV BM
SUBJECT: SOCIAL PROJECTS BENEFIT PIPELINE VILLAGES 
 
RANGOON 00000668  001.2 OF 003 
 
 
1. (SBU) Summary: The controversial pipeline running from the 
Yadana gas field in the Andaman Sea to Thailand is expected 
to produce over $800 million in revenue this year for its 
joint venture partners TOTAL, UNOCAL, PTTEP (the Thai 
government petroleum company), and the Myanmar Oil and Gas 
Enterprise (MOGE).  While the GOB offers little to the 
residents of the region, TOTAL and UNOCAL have tried to be 
"socially responsible" by reforesting almost the entire 
pipeline route and implementing successful agricultural, 
educational, and health care projects among local villages. 
The joint venture investors plan to offer $1.4 million to the 
local Wildlife Conservation Society to develop a major 
wildlife preserve in the area.  End Summary. 
 
A Profitable Pipeline 
--------------------- 
 
2. (SBU) On April 25, DCM and Econoff visited onshore 
pipeline facilities in Tanintharyi Division, southern Burma, 
that service the offshore Yadana gas field.  The visit was at 
the invitation of UNOCAL representative David Peters (Note: 
Although merged with Chevron Texaco, UNOCAL retains its 
original name in Burma to avoid the trouble of a complicated 
and costly re-registration process.  End note).  The joint 
investors in the Yadana natural gas field, located 225 miles 
offshore, are TOTAL (31.24%), UNOCAL (28.26%), PTTEP (25.5%) 
and MOGE (15%).  While revenues from the pipeline tariff are 
divided strictly according to percentage of ownership, 
production revenues are divided according to a cost sharing 
agreement that is based on a number of variables.  This year, 
Peters estimates that the Burmese regime will earn about 60% 
of gross revenues, or over $480 million from the consortium's 
approximately $810 million total revenues. 
 
3. (SBU) TOTAL, as the consortium's operating partner, 
manages the pipeline from its Pipeline Control Center, 
located 5 miles from the coast, with 350 people employed on 
shore and 382 on the offshore Yadana platform.  Seven GOB 
officials are also assigned to the on-shore facility, 
primarily to facilitate coordination with MOGE and to 
supervise local social programs.  The pipeline currently 
delivers approx. 620 million cubic feet daily (MCFD) of 
natural gas to the Thai border, and 35-50 MCFD to a domestic 
cement plant and a small gas turbine generation plant in 
neighboring Mon State.  PTTEP has a 30-year "take or pay" 
contract, valid until 2028.  The GOB is upgrading its own 
narrow (18 cm.) pipeline, which feeds the old cement plant in 
Bago Division, into a larger 32 cm. pipe that would bring gas 
as far as Rangoon.  Burma does not currently take its full 
entitlement of 20% of production.  Peters told us that the 
GOB would most likely route any expanded domestic supply to 
new industrial projects, rather than using it to address the 
urgent needs of Burma's troubled electricity sector. 
 
4.  (U) The Burmese military, once an ominous presence in the 
pipeline region, now maintains a low local profile.  Locals 
admitted that "bandits" remained a problem on the road north 
to Moulmein, but said that roads south to Dawei were now 
relatively secure.  Most military camps along the pipeline 
route were abandoned, with the only obvious troop presence on 
the Thai border and at a few camps near the pipeline 
right-of-way. 
 
It Takes A Village 
------------------ 
 
5. (SBU) The undersea Yadana pipeline comes onshore near 
Kanbauk village, 35 miles north of Dawei township, and runs 
40 km to the Thai border.  The region is sparsely populated, 
with 40,000 inhabitants, mostly ethnic Burmans and Mon, along 
 
RANGOON 00000668  002.2 OF 003 
 
 
with 2,200 Karen in the highlands areas closest to the Thai 
border.  The consortium spends $1.3 million per year in 
ongoing expenses to support the social needs of 25 villages 
located near the pipeline Right-of-Way.  TOTAL pays the 
employees of all social work projects directly, then bills 
the other three partners for a share of expenses.  Newly 
replanted native vegetation covers the low hills on either 
side of the pipeline.  From 1997 to 2003, a 
consortium-sponsored nursery project distributed 50,000 teak, 
ironwood, acacia, and other saplings annually to rebuild the 
area's forests. 
 
6. (SBU) While the reforestation project helped make the 
pipeline's path less visible, local residents wanted more 
immediate returns from their planting efforts, so the 
consortium's nursery switched to cash crops, distributing 
175,000 seedlings in the past year.  The most popular are 
cashew and rubber trees, since the former products can be 
easily stored, and villagers can tap rubber throughout the 
year.  The nursery also provides saplings for tropical fruit 
trees, cocoa, and betel nuts, but those products have proven 
hard to transport to distant markets. 
 
7.  (SBU) Many villagers, who previously worked on the 
pipeline or in the region's shrinking tin mining industry, 
are now successful farmers, according to the joint venture 
nursery's director.  The consortium supports a loan program 
that offers up to K1.5 million (about $1000) at 1% interest 
per month to set up new plantations.  No borrower has 
defaulted since the loan program began.  The consortium has 
also upgraded minor roads to improve access to 
transportation, and villagers now sell produce to passengers 
on buses plying the Dawei-Rangoon trail. 
 
8. (U) The consortium also supports local efforts to raise 
pigs, poultry, and cattle.  The consortium runs breeding 
centers and distributes livestock free of charge to local 
villagers, who then commit to give back one or two offspring 
from future litters.  Veterinarians visit the farmers 
regularly and offer training sessions.  Other social programs 
in the pipeline area include schools, educational training, 
and a land compensation program. 
 
Health and Habitats 
------------------- 
 
9. (SBU) Emboffs also visited the 40-bed Kanbauk Hospital, 
where the joint venture provided funds for renovations, 
equipment, supplies and training.  While the hospital was 
very modest by international standards (the main operating 
room was clean, but contained only a single light and a bed), 
it was far better equipped than most in Burma.  A new ward is 
under construction, and the storeroom was well stocked with 
medical supplies.  The hospital's two doctors treat 15,000 
outpatients and 1,200 inpatients per year.  20% of the clinic 
patients come from beyond the immediate region, seeking 
better care.  The joint venture also pays ten midwives who 
regularly travel between the district's 25 villages. 
 
10. (SBU) According to the hospital director, public health 
in the pipeline region has improved significantly.  Infant 
mortality has fallen from over half the national average in 
1997 to one fifth the national average in 2003.  Malaria 
mortality declined from 9 deaths per 1000 cases to fewer than 
1 per 1000 in the same time period.  The number of deaths 
from water- and food-born diseases fell from 4.4 per 1000 
cases in 1997 to 0.2 in 2004.  The clinic prominently 
displayed recent public awareness campaign posters on Avian 
Influenza, HIV/AIDS, and Dengue Fever. 
 
 
RANGOON 00000668  003.2 OF 003 
 
 
11. (U) The consortium plans to provide $1.4 million to 
develop a major new wildlife conservation area in cooperation 
with the Ministry of Forests and the local Wildlife 
Conservation Society.  The park runs along the Thai-Burma 
border from south of Kyaunghwa in Mon State almost to Dawei. 
Twenty forestry officials now patrol the sparsely populated 
area and have reported sightings of wild elephants and 
evidence of a small population of tigers.  The Thai 
government recently signed an MOU with the GOB to extend the 
park's protection across the border. 
 
Comment:  A Narrow Pipeline 
--------------------------- 
 
11. (SBU) Comment: The controversy abroad over TOTAL's and 
UNOCAL's involvement in the Yadana pipeline project has never 
died, and a new Czech documentary will give further notoriety 
to allegations that the companies were complicit in the GOB's 
use of forced labor during pipeline construction.  TOTAL and 
UNOCAL deny culpability, and prefer to focus attention on 
their social programs, which offer free seedlings, livestock, 
medicines, educational support and health care to 40,000 
local residents.  These residents in 25 villages have 
definitely benefited.  But the vast majority of Burmese 
living elsewhere have not seen any benefits from the almost 
$500 million flowing into regime coffers each year from 
Yadana.  End comment. 
VILLAROSA