Calgary Herald - Sudan: "Ample rewards outweigh security risks", "Upside offsets political risk"
Blast hits Sudan pipeline - Explosion blamed on sabotage
Chris Varcoe and Matthew McClearn, Calgary Herald, September 21
A newly built pipeline moving crude from central Sudan to the Red Sea exploded late Sunday in an act of "sabotage" that temporarily stopped oil shipments from Talisman Energy Ltd.'s project in the African country.
The Calgary-based petroleum producer described the event as a "minor incident" and said no one was hurt in the blast, which took place about 280 kilometres northeast of the capital of Khartoum.
About 100 Canadians work for Talisman in Sudan, although none were in the area at the time. Talisman chief executive Jim Buckee was also in the country but unavailable for comment.
Company spokesman David Mann said the explosion won't disrupt production or shake the company's resolve to stay in war-torn Sudan.
"The industry operates in different climates," he said. "It's part of being an international company."
The 1,500-kilometre pipeline has been operating since July as part of a $1.4-billion US project to develop the country's massive oil reserves. Talisman believes there is upwards of 900 million barrels on its concession.
Sudan's Energy Minister Hassan Mohamed Ali inspected the site Monday and said repair work on the 28-inch pipe is scheduled to be completed today.
Ali said the pipeline was "sabotaged" and the blast caused limited damage. Sudan's official news agency quoted security authorities who said they found an emblem of the so-called Ummah Liberation Army near the explosion site.
The country has been mired in a civil war since 1983 that has left an estimated 1.9 million dead. The Sudan People's Liberation Army (SPLA) controls pockets of southern Sudan and seeks autonomy for Christians and animists from the Muslim government.
The rebel group has publicly identified the pipeline as a target for attack.
For Talisman, the blast marks new tension in a development that has been criticized at home and abroad.
Some church and human rights groups claim the venture will help Sudan's government wage war against its own people.
"Talisman is operating in a conflict zone," said Lee Holland, a spokesman for the United Church of Canada. "This is what we have suggested -- Talisman was in risk of experiencing all along."
But academics were surprised the explosion happened in the northern region of Sudan, where anti-government sentiment is low.
Talisman has consistently argued Canadian participation will import Western values to Sudan and has helped build clinics and roads in the region.
Bob Ward, president of Calgary security company Pro-Con Protection Concepts, characterized the region through which the pipeline runs as an "extreme risk" area for both bombings and hostage-takings.
He said Talisman has taken extraordinary measures to protect its operations, but defending a pipeline is a "very difficult" undertaking.
The government has soldiers securing the pipeline, although none were guarding the area on Sunday.
Investment analysts weren't surprised by the turn of events, given previous threats made against Talisman and its partners, which include the state oil companies of China, Malaysia and Sudan.
"It obviously indicates they will be a target for rebels," said analyst John Clarke of Deutsche Bank Securities in Toronto.
But ample rewards in the Muglad oil basin in central Sudan far outweigh the security risks, analyst say.
Talisman acquired the development by taking over Arakis Energy Corp. last October for $277 million, giving the Canadian company a 25-per-cent stake in the project.
First oil flowed from the venture in August and it attained record production of 136,000 barrels per day on Sunday.
"The upside offsets the political risk," said analyst Matt Janisch of Nesbitt Burns.
Talisman's shares dropped fell 65 cents to $47.00 on the Toronto Stock Exchange.
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