Oddly enough, sometimes one thing leads to something else and then another and so on. Today, the Chosun Ilbo ran a small but interesting article entitled China Snatches Natural Gas From Under Korea’s Nose. The Chosun writes:
The government’s mid and long-term plan to diversify energy import sources has met an unexpected obstacle since China is about to buy all (the) natural gas in wells in Burma’s offshore area (sic). The wells were explored and developed by Daewoo International and the Korea Gas Corporation with a 70 percent stake.
This means that Daewoo spent much time and money developing their gas fields — essentially investing in Burma (Myanmar) — which, in turn will sell all the gas South Korea wanted to China. It seems that on the same day a Korean delegation went to Burma, a larger Chinese delegation arrived and guess who was ignored?
A Korean delegation of 20 officials led by a Commerce, Industry and Energy director flew to Burma last month as a rumor circulated that Korea would be excluded from Burma’s sale of natural gas. While the Burmese government showed little interest in the Korean delegation, a Chinese delegation led by Chinese State Councilor Tang Jiaxuan that arrived in Burma the same day met with a series of high-ranking Burmese officials.
It is no wonder the Chinese have been described as being a “big brother” to Burma, and, considering China’s hunger for sources of energy, there is good reason for China to overlook and support Burma’s faults.
This is terrible news for South Korea and the current administration, as well as an insult, but reading further, a truly evil part of this story is revealed. It seems that Daewoo International illegally transfered military technology to Burma — the country that has one of the most appalling and repressive human-rights record in South Asia — beginning in 2001. Obviously the regime in Rangoon wanted not just the revenue from the gas fields but also the military technology that only Daewoo could give it, thus a crooked deal was made. The Seoul Central District Prosecutors Office filed charges against fourteen Daewoo International personnel, two of which are said to be in the US at this point. I think I have more than a little respect for these prosecutors.
In dealing with the evolving situation over Burmese petroleum, international oil firms have found themselves on the front lines, wrestling with issues of geopolitical significance and juggling new human-rights and environmental challenges. . . . The December 2006 indictment in South Korea of 14 Daewoo officials illustrates just how close the relationship between arms deals and natural-gas concessions can be in Burma. In 2001, Daewoo International, Doosan Infracore and Daewoo Heavy Industries allegedly signed a contract worth nearly USD 134 million to provide technology and materials to Rangoon (capitol of Burma) to help build an ammunition plant capable of producing tens of thousands of shells per year for a variety of weapons. From the Shwe Gas Project, Daewoo International is expecting to net profits of USD 86 million per year for two decades.
The hypocrisy of South Korea, which has a history of struggling against military dictatorship, itself is striking, not to mention, around the same time so many were crying crocodile tears over the accidental deaths of two unfortunate school girls in Korea, more than a few Burmese children were most likely having their welfare and future packaged and sold off in just such a cold and calculated manner. While dealing with a evil regime like Myanmar’s is crooked business and bad for the soul, this story more so illustrates the very real situation that South Korea faces in the world as it completes for energy resources. Though there is a need to deal with often corrupt and evil circumstances in the world, it is folly to even think of participation in such a “damned if you do and damned if you don’t” scenario. Korea needs more than placing last in a race to the bottom, and though it sounds naively idealistic — considering the technological demands — perhaps Korea needs to find an innovative and original solution to its energy needs instead of taking the easier and worst route of all.
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They’re making plenty of dosh from Iran.
I know from one of my Korean business contacts that Korean Chaebol receive a HUGE subsidy for investing in overseas resource projects. If a Korean company enters into a joint venture or exploration, and then loses money (highly likely it’s a very risky business) the government will reinburse them 90% of their loses. Now if a Korean citizen, invests in an exploration company and loses money, that person gets zip. One more example of the rich in KOrea ripping off the poor.
This is very enlightening. While I was more or less disappointed, I guess this “gas deal” was in the end a dirty job not worth getting ourselves involved. Now I’m glad that this was exposed and put to a stop.
Does the “70% stake” mean – the Korean company stands to gain that much of the sale of the gas regardless of which nation it is sold to? or just that the Korean company fronted 70% of the developmental costs?
R. Elgin, well said brother . . . I have nothing further to add but to thank you for that post.
maybe korea can start a war with burma in the name of democracy. then, korea can take all that it wants. you get what i mean, don’t you?
ROK should bomb those developed fields. Let the Chinese develop it again, if they want it that badly.
Now, the interesting question. Do they even have a plane to bomb it with, to fly there and come back unharmed– NO.
If it was US development, China won’t be fucking with it.
Fuck China. I hope they have a giant Civil War. Just like old times, just like 60% of Chinese history. One giant civil war.
Some readers may be aware that Unocal and Total-Fina-Elf were involved in a joint oil/gas project in Burma, in partnership with the Burmese military. The military had a labor shortage, so they rounded up entire villages and forced them to build roads under conditions you can only imagine. If you want to see the gory details, well, read.
Several Burmese plaintiffs swore out affidavits in Thai refugee camps, and a suit was filed in U.S. District Court under the Alien Tort Statute of 1789. After years of costly litigation, Unocal lost, and lost big. While the appeal was pending before the Ninth Circuit Court of Appeals, the parties settled for an undisclosed amount, rumored to be $30 million. I’m sure their legal fees cost them at least that much.
I would like to see someone do the same to Daewoo’s U.S. affiliates, or for that matter, for someone to escape from Kaesong and do the same thing to the companies that operate there.
Unfortunately, this is one of those laws, like the Foreign Corrupt Practices Act, that only reaches U.S. corporations, meaning we’re put at a competitive disadvantage by the good intentions of our founding fathers.
Congress should amend the Alien Tort Statute to confer jurisdiction over grave offenses like terrorism, slavery, and genocide violate “the law of nations,” and confer that jurisdiction over any U.S. subsidiary of a foreign corporation. I also think there’s virtually no chance that will happen.
This really shows just how powerless the Roh administration is in the region. As for hypocrisy, I’d say cozying up to Pyongyang far outweighs what Daewoo was up to in Myanmar though. Giving money and military technology to a repressive regime in SE Asia is bad enough, but doing the same to a military regime that’s got missiles pointed directly at you only a few kilometers away is insane.
“This is terrible news for South Korea and the current administration, as well as an insult, but reading further, a truly evil part of this story is revealed. It seems that Daewoo International illegally transfered military technology to Burma — the country that has one of the most appalling and repressive human-rights record in South Asia — beginning in 2001. ”
Interestingly enough, the JoongAng’s editors have chosen to publish the article alongside the picture of an anti-FTA rally. Hopefully, it was an attempt to highlight to the hypocrisy that you’ve mentioned, but I doubt it.
Daewoo International is a trading company without particular specialty, not a hard-hitting energy-focused MNC.
Their 2005 annual report discloses their investments according to the Equity Method, which in Korea means any company that the parent controls more than 20% of. It shows:
Myanmar Korea Timber Corp (45% owned, worth $2mil)
Myanmar Daewoo Int’l (55% owned, worth %120mil)
Myanmar Daewoo Ltd. (100% owned, worth $5mil)
Myanmar Daewoo Construction (55% owned, worthless)
These amounts of money are far too small to represent significant stakes in offshore energy.
At the back, with the list of overseas offices, there is an addresses for something called Daewoo E&P Myanmar, in the oil & gas business.
And this cryptic statement, from the introductory pages:
“In the field of overseas energy resources and
development, the total 5 appraisal wells were drilled on the “Shwe” gas field in the Block A-1, offshore Myanmar. The reserve certificate for
“Shwe” gas field was obtained from a third party consulting firm.”
Taken altogether, my preliminary assumptions would be: (1)Daewoo Int’l owns less than 20% of the gas wells, and it might not even own any shares directly. (2) Daewoo Int’l probably intended to trade the extracted gas as a commodity, in Korea or internationally, and would have made optimistic financial projections around these trades. That is, Daewoo International would be an intended customer of Daewoo E&P Myanmar. (3)Daewoo probably had no more than letters of intent regarding (2), and it doesn’t own a majority of the gas, so it can’t force the issue. (4) Myanmar probably retained majority ownership of the gas development project, and the Chinese showed up with ready cash to make a deal for the total output. Myanmar went for it. Daewoo International will still make its cut of the profits, deriving from its less-than-20%-ownership of Daewoo E&P, but it is disappointed by its loss of expected profits from being the primary distributor of the entire gas output.
That expectation was probably unrealistic anyway.
All assumptions, as I said, but I think there’s probably a lesson here in making sure you’ve got secure contracts and not just ‘understandings’ based on conversations with local dictators. Uh..that is to say nothing of the ethics of even doing business in that country to begin with.
I guess that South Korean regional “balancer” role still needs a little fine tuning.
Aside from the moral issues involved, sometimes you get burned doing business with corrupt police states. (A certain country north of the 38th comes to mind…) Anyway, too bad!
“Fuck China. I hope they have a giant Civil War. Just like old times, just like 60% of Chinese history. One giant civil war.”
That’ll teach the Chinese to mess with Korea, wjk!
Quite so.
I forgot to mention, that “70% stake” referred to in the article: I discount it. I have often wondered where Korea’s newspaper reporters get their numbers. I’ve stopped wondering whether they actually check their numbers.
If you truly OWN 70% of a business, then you control it.
Korean money and Technology? Money yes, the Technology part is debatable. When it comes to resource development, such as natural gas and oil, I’ve met lots of specialists bought into Korea, especially to do such work. Have you ever met a Korea educated Geologist?
Apart from corrupt regimes, there are alternative resource sources, such as Australia and Canada, however doing business in these countries is contrary to the Korean business style of deals done in Room Salons, and big bribes being paid. Korean companies are very successful in those countries where high levels of corruption are the norm, as they know how to operate. This is not to disparage the practice. Actually it’s the Anglo Saxon practice of imposing it’s values on business people when dealing with countries (THE MAJORITY) where corruption is rampant, that is dumb!
This isn’t the only time Daewoo was chummy with totalitarian states. When Kim Woo Joong was chairman of the group, he maintained a close relationship with Gaddafi.
There is also an interesting story my father told me regarding Daewoo and Libya. I don’t know if the story is true or not, but anyways during the 80s, the tanks and armored vehicles of the Libyan armored corps were in really bad shape. Gaddafi asked W.J. Kim for assistance and he obliged by gathering up Daewoo employees who have served as mechanics in ROKA armored division and sending them to Libya. According to my father, Gaddafi was very pleased with the results.
Tough break. You’d think if you deal with murderous slime, supply them with military technology and set up their ability to suck the earth dry, it would give you a bit of a bargaining advantage. Mayanmar’s government is giving murderous slime a bad name.
I don’t understand what the Myanmar administration would gain from stabbing Korea/Daewoo in the back like that. It’s not like any amount China offered to pay couldn’t be matched by Korea/Daewoo; and with Korea/Daewoo you get modern military equipment, not Russian-with-Chinese-Characteristics military equipment. What piece of the puzzle am I missing?
PP,
Raw, naked power, baby.
When will Koreans learn that at least when we (Americans) fuck them we give them a courtesy of a “reach-around”? This is the shape of Korea’s future: being fucked, fucked, and re-fucked by China. Yankee Go Home, indeed. Peninsular ingrates!
PS: Anybody spot the movie reference in my first vulgar sentence?
Sure: “Full Metal Jacket” — we’re not Hollywood-classic-illiterate around here…
It’s not related to the above story but it does involve oil and gas.
President Roh is on a visit to the Middle East in order to discuss cooperation in the fields of energy(read : secure oil supplies) and IT(read : please buy more of our mobile phones and electronics) with the emirs of Kuwait, Saudi Arabia, and Qatar.
China will buy the gas…I may be missing something, but doesn’t this mean that Daewoo will get 70% of the profits (given the reporters numbers are accurate)?
The Indians are also moaning into their chai about losing out on the Burma gas deal to the Chinese. At least the South Koreans can take comfort from the fact that they were not screwed alone.
I honestly wonder if the editors at the JoongAng Ilbo really understood what was going on. I don’t know if they ever caught on. The Chosun Ilbo almost said the words but decided to skew events so as to make it a tale of Korea wronged by China and Burma, which is true but certainly not the whole story. I can’t even imagine what the Seoul prosecutors could say about all of this but I would bet it would be even worse than what I’ve read.
I do know that Daewoo International, along with a subsidiary of Doosan, essentially paid for and gave this gas to China and, in consideration of such, they have betrayed Korean interests and aided the most likely potential enemy that Korea has (not counting its own leadership). The responsible parties should go to jail for a long time for this, IMHO.
“But it’s alright now, in fact it’s a gas…”
Jeffery Hodges
* * *
Rolling Stones fan are ya?
“Jumping Jack Flash, singing yes, yes, yes!”
Yeah, I know, misheard lyrics and all that…
Jeffery Hodges
* * *
For those that have not kept up with Burma (Myanmar), a reminder of that Daewoo and Doosan-supported hell and Burma’s new military capital.
hey, wait a minute.
my uncle worked for daewoo in the 80s and went to libya for a while…
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