Talisman: Canadian oilpatch finds rewards and risks abroad
The Canadian Press, November 25
REG CURREN
CALGARY (CP) - Talisman Energy Inc. is finding the ethics of working
in war-torn Sudan far more troublesome than building and operating a
massive oil project in a harsh climate and rugged landscape.
Talisman, a 25 per cent owner of the Sudanese development, along with
Chinese and Malaysian investors, has endured intensified criticism since
U.S. State Secretary Madeleine Albright attacked the Calgary-based
company's presence in Sudan a month ago.
Human-rights and church groups say Talisman's oil operations help fund
the government's war against a Christian minority in southern Sudan.
They want Ottawa to force Talisman to sell its stake.
That could send a chill through Canada's increasingly world-oriented oil
industry.
Martin Molyneux, an analyst at First Energy Capital Corp., warns against
political interference.
"We have Canadian producers in 60 oil regions in the world, and oil
tends to be in politically unstable countries," said Molyneux.
"This would not be a good message to the Canadian producing
community, if Ottawa were to do something."
Talisman's $735-million stake in the project includes a 1,610-kilometre
pipeline from the oilfields of south-central Sudan to the Red Sea. The
pipeline has allowed Sudan to begin commercial exploitation of
long-untapped oil reserves.
In a letter sent to shareholders on Wednesday, Talisman president Jim
Buckee said he hadn't seen any sign of human rights abuses in Sudan.
"I can assure you we have seen no indication of slavery in our area of
operation and all our people working on our project are wage earners,"
he said.
"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," said Buckee.
Sudan is also the scene of a 16-year-old civil war that has left nearly two
million people dead, mostly southerners who died in a war-induced
famine.
As opportunities in the Canadian oilpatch diminish, Calgary companies -
Petro-Canada, Alberta Energy Co. and Canadian Occidental among
them - are looking to expand their international plays.
Loren Falkenberg, an associate professor of business ethics at the
University of Calgary, said it's laudable that Canadian companies want to
grow internationally but they must be prepared for negative publicity.
"In the early 1970s the responsibility of business was to make a profit,"
she said. "Well, there are many people now saying the responsibility is to
make a profit, but in a socially responsible manner."
Alberta Energy has avoided major problems but in September a
contractor working for the company in Ecuador had seven employees
kidnapped, likely by anti-government guerrillas.
Social unrest has forced countries like Colombia to introduce more
lucrative investment schemes for foreign companies.
Ecopetrol, Colombia's national oil company, held investment meetings in
Calgary, London and New York this fall hoping to spark new interest in
its oilfields.
"It's no doubt that the public order situation is a consideration," observed
Ecopetrol spokesman Robert Stewart.
Petro-Canada hopes to expand its operations in Algeria, a country
racked by an uprising. The company understands the risk, said
Petro-Canada spokesman Rob Andras.
"Clearly, our first obligation to shareholders is to do business," Andras
said. "But on the other hand, if the potential involvement raises real
questions with respect to our international code of conduct or our
corporate reputation, that's something we'd have to take clear account
of."
Falkenberg wonders whether companies are as vigilant in their risk
assessment as they claim.
"I think they see 800 million barrels of recoverable oil and say, 'We're
strong enough; we'll manage our image and we won't be bothered,'
instead of saying, 'Wait a minute, where could all of the effects come
in?' "
Kevin Finn of Canadian Occidental said his company concluded it had to
adopt a different approach when operating abroad.
"One of the things we've recognized is that oil and gas companies have
not necessarily had the best track record in how they have dealt with
ethics," Finn said.
"We're extremely transparent, straight up and ethical. That's what
distinguishes us - which is a rather sad statement, but true."
CanOxy and a number of other Canadian companies developed the
International Code of Ethics for Canadian Business.
"The code has made us more accountable to ourselves and outsiders,"
said Finn. "But your actions speak louder than your words. If you don't
live by the code, you may has well not have one."
Since arriving 12 years ago in Yemen - where it now produces 208,000
barrels of oil a day - CanOxy has been working to bring running water
and electricity to desert villages.
Talisman spokesman David Mann, meanwhile, says his company has
been the victim of misinformation.
Mann pointed to Talisman's commitment to build roads, drill water wells
and establish a hospital.
"Ultimately, we believe Sudan is a highly ethical investment that will
benefit the people living in that country, and also it presents a good return
to our shareholders."
Canada has sent special envoy John Harker to Sudan to assess the
situation. Foreign Affairs Minister Lloyd Axworthy has also invited the
warring sides to Ottawa in an attempt at peace talks.
The acid test will come when Sudan's government decides how to spend
its new-found revenue, said First Energy Capital's Molyneux.
"They'll be getting $500 million a year," he said. "If they go and spend it
on tanks, that's not a great sign because that means there'll be trouble
down the road."
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