Sudan: Lundin Oil: Letter to shareholders
March 28
Dear fellow shareholder,
To operate in Sudan can be both challenging and rewarding. When we began our activities there, the country was somewhat isolated economically and politically. Presently, the country and the activities of oil companies there is the focus of much international attention. Lundin Oil welcomes this attention and wishes to clarify its role there.
In conjunction with the announcement of a significant discovery made on block 5A in the southern Sudan in March 2001 a report was published by Christian Aid, alleging that people have been displaced from Lundin Oils area of operations particularly relating to a road that was financed by Lundin Oil and partners.
We wish to state categorically that we have not witnessed any such acts nor would we tolerate such acts to take place for our presumed benefit. To accept such acts would be contrary not only to our commitment to respect and uphold human rights (stipulated in our Code of Conduct) but also to our firm belief that commercial success can only be achieved with the cooperation of the local population. Followingly, it also goes against the company’s practice in Sudan.
We have taken these claims very seriously however, and have thoroughly discussed them with our people on the ground, government representatives as well as other people operating in the area. Our staff working locally has refuted in no uncertain terms these allegations and representatives of various NGOs and UN related organizations have indicated to us that the local population has more to gain than to loose from our continued presence there. Leaving the country would be tantamount denying local people a chance to improve their socio-economic development.
THE ALL WEATHER ROAD LINKING RUBKONA TO THAR JATH
Lundin Oil built a bridge, which allows crossing of the river between; Block 5A and Rubkona, and an All Weather Road (AWR), which gives us easier access to our Block. The road covers a distance of 80 km between the company’s base camp at Rubkona and the drilling site at Thar Jath and continues to Jarayan (see attached map).
In addition to facilitating our operations, this road also increases the mobility of the local population and provides them better access to amenities available in Bentiu and Rubkona such as schools, clinics, and markets.
The selection of the routing of the road was the subject of serious reflection. We were concerned about a possible detrimental impact on existing population settlements, and therefore chose to build the road in such a way as not to interfere with those settlements.
We have lately extended the road from Thar Jath to Jarayan and, at the request of the local representatives, are extending it all the way down to Lehr. This is being done not for operational purposes, but for the people there, as it will enhance their mobility. It will also enable us to upgrade the existing school and clinic and give everyone access to a remote area where no aid has been given so far.
OUR APPROACH IN BLOCK 5A (CDHAP)
Even before beginning operations in our area, we met with representatives of the local population (state commissioners, governors, tribal leaders, etc.) to enlist their support for our activities and find out what were their needs and concerns. We later met with representatives of NGOs working in the area, to hear from them about the main problems facing the people in the area and the way we, as a company, could address them. As a result of the consultation process, we elaborated a community and humanitarian assistance program (CDHAP), which is in the process of being implemented. The purpose of the program is:
- To promote better health, hygiene, education and quality of life for the current and future inhabitants of the concession area of Block 5a, Unity State.
- To contribute to the economic and social development of the area.
- To promote friendly relations between the consortium and the people in the area.
In addition to infrastructure developments, we have also contributed to the areas access to fresh water by sending three water trucks to fill water tanks (13’000 liters) on a daily basis to villages situated near the AWR and are in the process of drilling six shallow water wells which will secure permanent supply of freshwater. We are employing locals, not only for the purpose of our operations, but also to assist us in ascertaining the needs of the local population and further refine our program.
OPERATING IN A GLOBAL CONTEXT
As the world's appetite for oil keeps growing, oil companies have to search for this precious form of energy where it may be found. Oil is indifferent to borders or human conflicts caused by those borders. It is present in various regions of the world following a geological process of generation, migration and accumulation into geological traps that can take millions of years. As this resource is growing scarce, companies have to go into ever more remote areas of the planet, including areas that suffer from conflict and lack of development.
The list of oil exporting countries that have ongoing civil strife and/or are fighting guerilla wars is unfortunately long. It includes such countries as Algeria, Angola, Burma, Columbia, Indonesia, Nigeria, Peru, Philippines, Sudan and Turkey. Multinational companies are active in all these countries. Oil majors with production in one or more of these countries include Agip, BP Amoco, Exxon Mobil, Shell, and TotalElfFina. Oil exploration and production in such areas will take place; whether through multinationals or independent companies as long as there will be consumer demand for oil.
The key issue therefore is not whether oil companies should be present in such countries, but what they can do to ensure their presence has a beneficial impact on the area.
CONCLUSION
As we stated at the outset of this letter, working in Sudan can be both challenging and rewarding. On the political front, there seems to be consensus in the European Union, gaining ground in North America, that more can be achieved through constructive engagement than through isolation. The efforts on this level are geared towards promoting the chances of peace, by emphasizing the need to respect and uphold human rights, to promote the rule of law and the democratization of institutions, etc. The ultimate concern and goal of the international community is to try to set the conditions for a just and lasting peace. On the economic front, the country’s future development is dependent on the activity of oil companies. Through our oil operations, we commit to contribute to the economic development of the area for the benefit of all the people of Sudan and thereby support the peace agenda of the international community.
Adolf H. Lundin
Chairman of the Board
LUNDIN OIL AB
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