canoe.com
November 25, 1999
No signs of slavery: Talisman
Talisman moves to keep investors onside, pledges
support for probe into Sudan
Money's Oil and Gas News
By CLAUDIA CATTANEO
The Financial Post
CALGARY - Talisman Energy Inc. yesterday downplayed to
shareholders the importance of Sudan to its operations, while
attempting to shore up their confidence by pledging support for
investigations into slavery and human rights abuses in the war-torn
African country.
Sudan will represent less than 10% of expected production volume
next year, the Calgary-based oil and gas company, Canada's largest,
said in a letter mailed to shareholders yesterday. The company
expects to produce nearly 400,000 barrels of oil equivalent daily from
Canada, Indonesia, the North Sea and Sudan.
But Talisman's shares have plunged nearly 20% since Sept. 10 as a
high-profile campaign by the U.S. government, the United Nations
and human rights organizations gathers steam. They allege revenue
from the Greater Nile Oil Project, in which Talisman is a 25% partner,
will help Sudan's government bankroll a civil war against the
rebel-held south.
Canada has appointed a special envoy, John Harker, to investigate
allegations that the country condones slavery and human rights
abuses and that oil development is exacerbating the conflict. His
report is expected by yearend.
"I can assure you we have seen no indication of slavery in our area
of operation and all of the people working on our project are wage
earners," Jim Buckee, Talisman's president and chief executive, wrote.
It was the second time in less than six months Mr. Buckee sent a letter
to shareholders to defend the firm's $800-million investment.
"I would like to make it clear that Talisman is vehemently opposed to
forced relocation for oil development and I personally believe such
practices are abhorrent."
The company says it supports several initiatives to improve the
country's infrastructure and help alleviate poverty in one of the
world's poorest countries.
They include providing jobs to more than 2,000 Sudanese of all
ethnic backgrounds, funding medical treatments, building a 60-bed
hospital and a medical dispensary, installing roads and water wells,
and providing funding for an orphanage in Khartoum, the country's
capital.
"Sudan has been in turmoil for many years, however, I believe that
continued investment and international involvement will provide a
catalyst to economic and social development. This will ultimately
improve the standard of living in a country that has endured more
than its share of civil war, famine and poverty," Mr. Buckee wrote.
Eric Reeves, an American college professor who has been leading a
divestment campaign, discounted the impact of Mr. Buckee's letter. He
said pressure from critics has been effective.
"Talisman is going to be forced out of Sudan," he said.
"There is no question in my mind that it's just a matter of weeks.
There is no way that Talisman can withstand the pressure," Mr.
Reeves said.
Jesse Sage, associate director of the Boston-based American
Anti-Slavery Group, accused Mr. Buckee of trying to "whitewash"
conditions in Sudan, where the government in Khartoum has been
accused of genocide among southern rebels.
"He's grasping for straws, for any way that he can present the
situation that somehow Talisman is actually making the situation
better in Sudan when all the evidence suggests that it is actually
making it far worse," he said.
But analysts say the company will back out from the lucrative
investment only if the Canadian government decides to impose
sanctions. Talisman believes sanctions are unlikely.
"In the past, full economic sanctions by Canada have only occurred
with the endorsement of an international organization to which
Canada belongs and not as a unilateral Canadian action," Mr. Buckee
wrote.
Many funds have been unswayed by the divestment campaign,
especially after numerous investment analysts issued glowing reports
following a Talisman-organized tour of Sudan's oilfields.
Lee Fullerton, spokeswoman for Ontario Teachers' Pension Plan
Board, said the fund intends to keep its 4.5 million shares of Talisman.
She said forcing companies to abandon investments in Sudan was not
the best way of bringing peace to long-running and brutal civil war.
"Divesting is just not the answer nor an option for us," she said.
"We don't have the legal authority to restrict investments on ethical
or moral grounds."
The company also said yesterday it will not formally challenge
findings of a mid-October United Nations report alleging many
villages on the eastern edge of Heglig, where one Talisman oilfield is
located, were attacked and burned to the ground by the Sudanese
army, causing the displacement of 1,000 to 2,000 civilians.
While Talisman believes the information is inaccurate and
incomplete, "there will not be a formal response ... [because] it
escalates a situation that we frankly would like to see de-escalated,"
said Mr. Mann. |
