Myanmar's military has received hundreds of millions of dollars from gas sales through a financial scheme linked to a pipeline exploited by French energy giant Total, a French newspaper reported on Tuesday.

Total has come under pressure from pro-democracy activists to "stop financing the junta" since a military coup in February which has been followed by a brutal crackdown on dissent.

Total and the military-controlled Myanmar Oil and Gas Enterprise hold stakes in Moattama Gas Transportation Company (MGTC), which owns the pipeline linking the Yadana gas field and Thailand.

MGTC, which was created in 1994 and incorporated in Bermuda, has set exorbitant prices for the transport of gas, according to Le Monde newspaper, which cited company accounts and audits.

The scheme reduced the amount of royalties received by the state since transporting gas is taxed at a lower rate, Le Monde said.

This allowed the military to directly receive money from gas transport via its oil and gas company, with turnover of $523 million in 2019 against just $11 million in charges.

Le Monde said this allowed a "tax optimisation" for MGTC shareholders at the expense of the Burmese state.

Total said it does not know the "exact reasons" for incorporating MGTC in Bermuda three decades ago, adding that the company "no longer incorporates any new subsidiaries in tax havens".

The French energy giant said the creation of separate companies to exploit the pipeline and transport the gas was not unusual, adding that similar arrangements exist in the North Sea and other countries.

"The are no extraordinary profits" in the Myanmar pipeline, Total said.

"They are shared between the transport and production of gas. It is a classic scheme and it was endorsed by the Myanmar authorities at the time," it said, adding that it continued under successive governments until today.

Total chief executive Patrick Pouyanne said last month the company was suspending drilling operations in Myanmar but would continue exploiting gas at Yadana because it is used to produce electricity for millions in Yangon and western Thailand.

He also said Total would donate the equivalent of the taxes it will owe the Myanmar government to organisations working on human rights in the country.

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TOTAL

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