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24

US Oil Company Faces $billion Lawsuit

The situation in Myanmar, ex Burma, has come on focus again as the heads of the Californian and New York pension systems have asked the US oil company Unocal to withdraw from a pipeline project in Myanmar.

The situation in Myanmar, ex Burma, has come on focus again as the heads of the Californian and New York pension systems have asked the US oil company Unocal to withdraw from a pipeline project in Myanmar. The pensions systems are large shareholders, with around 3.3 million shares, and are afraid that the company?s stock market capitalization will continue to suffer due to bad publicity and a pending lawsuit.

Unocal is one four parties that are involved in the development of the Yadana natural gas field, offshore Myanmar. The field is expected to hold more than 5 trillion cubic feet of natural gas reserves, which makes it to a world class energy resource. Additionally to the exploration of the offshore field, the project includes the construction of a $1.2 billion pipeline, which transports the gas across Myanmar to Thailand. The venture was completed in 1998. Gas production started in the first quarter in 2000 and amounted to a daily output of 525 million cubic feet. Unocal likes to stress the $10 million socio-economic development programme which was included in the pipeline project. It brought qualified medical care to this severely underserved region, built or renovated hospitals, health center and new schools, constructed or improved local roads and water systems, introduced electrical power in several villages, and launched a variety of self-sustaining enterprises. This was additional to the creation of 2?000 jobs and the above average wages.

However, environmental groups filed two lawsuits against Unocal and accused the company for having allowed Burmese troopers to guard the pipeline and to commit rape, murder and enslave the local population. First Burmese refuges filed a lawsuit in a US federal court in 1996. But the judge decided that Unocal beard no liability and dismissed the case. But it was reinstated in 2002 under US state law in a Superior Court. Unocal pleaded that the case should be dismissed and removed to Myanmar where the alleged abuses took place. Another possibility would be a court on Bermuda, where Unocal?s involved subsidiary is registered. However, this request was rejected by the Los Angeles court. The trial is due to start on 22 September 2003.

The pending Unocal case could not only have consequences for the involved companies, it is expected that the case might cost up to $1 billion. But the lawsuit could become a precedent for the whole business community. It would make multinationals legally accountable for their investment practices, including the adoption of acceptable labor and environmental standards and everybody would have the opportunity to sue perpetrators in the United States of America under the Alien Torf Act. Until now, under this law, only sovereign states could be sued for incurred damage. This paradigm change could be a major blow for international business. However, the whole developments will unlikely find support from the international responsible body, the United Nations Human Rights Commission. Although a hot debate between Northern countries and the Third World contingent, headed by Asian and African nations, can be expected. Stiff opposition will also come from the US government. Vice President Dick Cheney is a forceful opponent of any interference of law bodies in international business. As a head of Halliburton, an oil service provider, he was even involved building the Unocal pipeline in Myanmar.

So far, Unocal itself does is not considering withdrawing from the project. Under the pressure of shareholders it did however agree to make a new analysis of benefits and threats of the venture. The company pointed out that the project would be beneficial for its shareholders and that it would provide important gas supplies to Thailand which is a key ally of the US in the region.

Author: Andreas Wild

Source : Neftegaz.Ru