Analysts upbeat about Talisman's Sudan role - National Post, Nov.17
But war with rebels dominates talks on site
Claudia Cattaneo, with files from Carol Howes in Calgary Financial Post
HEGLIG, Sudan - On a nomadic route in Sudan's barren interior, a
group of leading oil and gas analysts from Canada and the United
States has come to take a first-hand look at Talisman Energy Inc.'s
controversial oil project.
Impressed by what they have seen, the analysts say it is an unfair
representation to condemn, as reports in the West have done, the
Calgary-based company as an accomplice to a government that is
fighting a brutal civil war.
"We're here, in the middle of the Sudan, and suddenly there's this
incredibly high-tech project. This is a real benefit to this area," said
Shawn Reynolds, Wall Street-based vice-president of equity
research at Lehman Brothers Inc.
"I came here with an extremely cautious perspective," he adds. "I
don't see here any basis for extensive sanctioning. I don't see how
you can come here and be upset at what Talisman is doing."
During the four-day visit, the analysts saw no evidence of conflict.
But the war, along with the issue of how revenue will be used by the
Sudanese government, dominated discussions with politicians,
academics, European ambassadors and Talisman employees.
The United Nations, church and human rights organizations allege
that the newly flowing petro-dollars are funding the government's
military spending and that civilians are being displaced to make way
for oil development.
One such critic was unmoved by the analysts' tour. "This has been
carefully choreographed," said Jesse Sage of the American
Anti-Slavery Group in Boston.
He said humanitarian groups, the U.S. Congress and Madeleine
Albright, the U.S. Secretary of State, could not all be wrong in their
opposition of Talisman.
"This is ridiculous. There have been massive reports at this point, by
the United Nations, by Congress," he said. "This Canadian
company has become a Western apologist for the Sudanese
government."
New York City's comptroller has warned the city's pension fund
that Talisman might not be a morally appropriate investment.
Yesterday, a spokesman for the comptroller declined to comment.
But at Heglig, the site of one of Talisman's major oilfields and
processing facilities, there is no evidence of population
displacement. Military presence is low key. Children are playing and
going to school near the oil wells.
Western and Sudanese workers say thousands of nomads are
coming here to look for work, for medical assistance at a
Talisman-funded hospital, or for education at a school funded by the
project.
Some of the analysts on the tour are already upgrading their outlook
for the company's stock, which was battered in recent weeks in
selling related to Sudan's perceived political risk.
Yesterday in Toronto, Talisman's stock dropped 25½ to $40.
Robert Plexman, an analyst with CIBC World Markets Inc. in
Toronto, was one of the first off the mark to file a glowing dispatch
from Sudan. Based on what he has seen and heard, he rates
Talisman's stock a "strong buy" with a target of $69 in 12 months.
"The war has been raging for years, but things are headed in the
right direction. Talisman is here on the ground floor," he says. "The
oil is flowing and all comments we get suggest revenue will be used
for good purposes."
The analysts were told that the Sudanese have established a
committee to allocate revenue from oil. Abdul Rahim Hamdi, the
committee's chairman, said military spending will eat up about 15%
to 18% of the national budget. He said there is no plan to increase
that as a result of money coming from oil.
"Every silly person here knows it: This money will have to go for
human infrastructure, roads, bridges, water, energy," Hassan
Abdalla El Turabi, speaker of the country's national assembly,
pledged at a meeting with the analysts yesterday.
Sudan's civil war began in the early 1980s. The largely Muslim
north, which runs the government, is fighting rebels in the largely
Christian south. Up to two million people are estimated to have died
in the war.
"There is less risk than has been presented, based on what I have
seen," said Paul McGarvey, an analyst with Newcrest Capital. "The
key thing is that there will not be an increase in defence spending"
by the government.
"If you have to bottom-line it," added Doug Gowland, an analyst
with National Bank Financial, "the company is doing a lot of good in
the country. However, a lot of work needs to be done in the south."
This week's tour is Talisman's first effort to showcase its activities.
William Watson can be reached by e-mail at bwatson@irpp.org
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