"POSCO Inter Continues Investment in Myanmar's 'Military Funding Source'"

[Image source=Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Since the coup in Myanmar last February, foreign companies have been withdrawing one after another, but it has been reported that POSCO is still continuing to invest in the gas field project that serves as a financial source for the military junta.

Local media Myanmar Now cited POSCO International's Q2 financial report on the 27th, stating, "POSCO International, which holds a 51% stake in the Shwe gas field project off the coast of western Rakhine State, is expected to invest $473 million (about 554.7 billion KRW) and $315 million (about 369.4 billion KRW) in phases 2 and 3 of the project, respectively."

The media explained that the Shwe gas field project is effectively controlled by the military, with the state-owned Myanmar Oil and Gas Enterprise (MOGE) holding a 15% stake, and the remainder held by POSCO International, Korea Gas Corporation, and two Indian companies.

POSCO stated in May that it was reconsidering whether to continue sharing profits with MOGE, but it has reportedly made no further comments since then. A source claimed, "POSCO International is not downsizing the project but plans to increase the number of Korean personnel in Myanmar," adding, "Additional personnel are expected to arrive over the next two months."

In response, POSCO International said, "We have reviewed MOGE sanctions from various angles in the international community, but there is no certainty that sanctions would cut off funding or deal a blow to the military if we withdraw, so sanctions have not been imposed," adding, "We will take a cautious stance if sanctions are imposed."

Regarding continuing business in Myanmar, they said, "There have been no new investments since the coup, and operations have been conducted conservatively to avoid contract violations," and "We are operating conservatively within Myanmar, including closing trading corporations and suspending grain corporations."

According to the POSCO Group, the Shwe gas field began commercial production through phase 1 development in 2013, supplying about 500 million cubic feet (ft³) of gas daily to China and Myanmar. It records an operating profit of 300 to 400 billion KRW annually and serves as a profit source for the group's gas business.

POSCO International also announced on the 22nd that its Q3 sales reached the highest quarterly level ever, entering the 9 trillion KRW range for the first time, and its consolidated operating profit was tentatively estimated at 148.5 billion KRW, a 38.7% increase compared to the same period last year. They explained that sales volume and operating profit from the Myanmar gas field both increased compared to the previous quarter.

The National Unity Government (NUG), the pro-democracy camp in Myanmar, has urged Total, Chevron, as well as POSCO, Malaysia's Petronas, and Thailand's PTTEP to suspend business with state-owned enterprises under the military to stop revenue from flowing to the military junta.