There’s a commonly held perception — one that I even hear in the business community here — that Australia already has a ban on investing in Burma. There is nothing of the sort.

After the Burmese government opened fire on protesters in September 2007, then-foreign minister Alexander Downer, resisted calls to introduce economic sanctions, saying the Australian government preferred the option of dialogue.

“I think economic sanctions as such would have absolutely no impact, except perhaps on the living standards of a number of ordinary Burmese, although we have virtually no, or minuscule, trade with Burma,” Downer said at the time.

The sanctions that have been introduced are targeted at senior government or military figures, their families and those people deemed to have benefited from government policies, a group often referred to as “regime cronies”.

The targeted sanctions policy has been widely praised for its flexibility, most recently by Human Rights Watch’s David Mathieson.

The rationale is that this sends a message to the Burmese government without hurting the “mums and dads” by shutting down garment factories and so on. There is also an assumption that less damage is done to Burma-Australia relations, giving diplomats more of an influence in Naypyidaw.

And, as Downer pointed out, there is little trade with Burma, although it has been rising in recent years. According to Department of Foreign Affairs and Trade figures, bilateral trade grew to about $80 million in 2008-2009.

But things are about to get a little more uncomfortable. The most high-profile Australian company in Burma is Twinza Oil, which in 2006 signed a production sharing contract with Burma’s state oil company for the Yetagun East Block, a shallow water concession off the southern Burmese coast.

In its financial report for the 2008-2009 financial year filed with ASIC and released on October 13, the company’s directors announced their intention to hold an initial public offering before the end of the present financial year.

The IPO was subject to shareholder approval at last month’s AGM but given most of the shares are held by one person, West Australian miner William Clough, getting approval shouldn’t have presented a problem.

When the IPO will happen is unclear; it could be next week, it could be in six months. But it will almost certainly go ahead, as the company has so far been unable to “farm out” its concession, which basically entails finding a partner to share the risk and then the profits if the project goes to the development phase.

As a result, two companies associated with Clough have provided a loan of up to $20 million to cover operations up until November 2010. Under Twinza’s PSC with the Burmese government, it is due to spend $11.6 million on exploration in 2009-10, while an additional $3.2 million will be spent on two onshore blocks the company has in Thailand.

It should be pointed out that, as yet, no oil has been found; they haven’t even drilled a single well. They might not find any economic reserves at all and the whole Twinza issue will disappear.

However, members of the company seem fairly confident they will go to production. In late 2007 the Twinza Oil’s country manager in Burma reportedly told Dow Jones Newswires the block has estimated crude oil reserves of about 100 million barrels.

“If things go well, we’ll be able to start production in 2010, which would require an investment of several hundred million dollars,” he said.

I’m sure Twinza Oil’s backers are acutely aware of the scrutiny they will face if the project goes into the development phase.

They only need to look at the furore surrounding the Yadana gas project, which was developed by French company Total in a consortium with Unocal (now Chevron), Thailand’s PTTEP and the state-owned Myanma Oil and Gas Enterprise. Over the past decade there have been claims villagers have been displaced, forced labour has been used and the more recent allegation that the ruling generals have stashed billions of dollars of the profits from Yadana in Singapore banks.

Using crude methodology, the Burma Campaign Australia earlier this year used the 100 million barrels figure to estimate the Burmese government would make $US2.5 billion from Twinza Oil’s project.

“By itself, this contract with an Australian company promises the Burmese junta enough money to run roughly one quarter of its military — the world’s 12th-largest — for a decade,” ACTU boss and boycott campaigner Sharan Burrow wrote in New Matilda.

Just last week, Debbie Stothard, the co-ordinator of the Alternative ASEAN Network on Burma, called for the Australian government to subject “current projects with Australian interests in Burma to greater scrutiny”.

In the past I have been quite critical of the Burma Campaign Australia’s “Don’t Deal with Burma” drive and think it’s often misdirected. The argument is stronger when applied to the extractive industries but if Twinza cancelled its planned investment tomorrow a Chinese, Indian, Thai, South Korean, Russian or British (Virgin Islands) company would simply take their place and operate with far more impunity.

Nevertheless, these are emotive arguments that could find wide public support.

So far, Twinza hasn’t tried very hard to defend itself — for example, its website consists of a home page with no links — but in October, Clough told a Burma newspaper the project would create “hundreds of jobs for locals” and defended the Australian government’s stance on investment in the country.

“I believe Australia is more constructive in its approach to the Myanmar situation than other Western governments,” he said. “With the elections next year and an opportunity for change — even at a step-by-step pace — hopefully we will see a more constructive attitude from the West and, in turn, Myanmar becoming more outward looking and open towards the West.”

But the company also acknowledged the “complexities” of investing in Burma in its financial report.

“Disclosure of information regarding likely developments in the operations of the company in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the company. Accordingly, this information has not been disclosed in this report.”