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Gold/Mining/Energy : TLM.TSE Talisman Energy -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (584)	11/19/1999 4:18:00 PM
From: Tomas	Respond to of 1713

Talisman may not find good fortune from Sudan oil - Financial Times, Nov.19 The Canadian company's investment in the war-torn country may bring it more trouble than reward, reports Graham Bowley As civil war rages in Sudan, Talisman Energy, Canada's biggest oil and gas group, has suddenly been caught in an international storm of protest surrounding its CDollars 764m (œ324m) oil project in the Heglig oil fields, 700km south of Khartoum. The controversial project -a joint venture with the Chinese, Malaysian and Sudanese state oil companies - has brought bitter allegations against Talisman. Human rights groups say the Canadian company may be inadvertently supporting the Moslem Sudanese government in its violent suppression of Christian and tribal people in the south. It is alleged - and hotly contested by Talisman - that oil revenues are paying for weapons and that the army, with government tanks and helicopter gunships, has cleared local tribes from their homes so that oil wells could be developed. In a new report, the United Nations Commission for Human Rights says the oil project's strategic importance has exacerbated the conflict, led to a deterioration in human rights, and reduced the already slim chances for peace. Canadians are not used to such bad publicity. Late last month Madeleine Albright, US secretary of state, singled out Talisman for criticism and Lloyd Axworthy, Canadian foreign minister, responded by launching a high-profile investigation. Other critics have urged Talisman to disinvest from Sudan or, failing that, said shareholders should boycott the company. It is a complex state of affairs that Talisman would not have welcomed when it paid CDollars 277m for Arakis Energy, a Vancouver-based group, and its 25 per cent stake in the Greater Nile project last year. Then, Talisman was a company prospering under president Jim Buckee, with relatively conservative investments in the North Sea, Canada, Algeria, Trinidad and Indonesia. Chevron, the US oil group, had spent heavily trying to develop the Sudanese fields in the 1970s but had eventually pulled out. But the consortium - with Petronas, the Malaysian oil company, providing Islamic credentials, the Canadians supplying technical expertise and the Chinese providing manpower and political muscle - seemed set for better success. The economics also seemed to make good sense. The oil is plentiful: around 150,000 barrels a day are being pumped through a recently opened 1,600km pipeline to Port Sudan on the Red Sea, a figure that could rise to 450,000 barrels a day. Total recoverable reserves are estimated to be in the hundreds of millions of barrels. Furthermore, the oil is high quality and relatively easy to refine, making extraction costs comparatively low. This makes the project a very valuable asset. Before the latest furore broke, the investment also seemed a clever political move by the Canadian company. When Talisman went into Sudan, executives were well aware of the war that had raged since 1983. But they must also have known that they would likely be free of competition from US companies - because US groups are barred from doing business in the country under an anti-terrorism act, aimed at punishing Sudan for sheltering terrorists. Another important consideration was that Talisman could afford to go where better-known oil companies dare not invest because of the risk of bad publicity. As an upstream producer, with no downstream assets, Talisman was not vulnerable to petrol station boycotts. Doing business in dangerous and controversial areas is nothing new in the oil business, and Mr Buckee has staged a forthright defence. Dismissing the UN report as "hearsay", he says projects like Talisman's bring investment, wealth and jobs to developing nations. Talisman is building a hospital, roads and a better water supply. Whether Talisman's presence in Sudan can be maintained depends a lot on the Canadian investigation. It will also depend on Talisman's shareholders. These investors - respected names like the government of British Columbia and the Ontario teachers pension fund - may lose patience if Talisman remains in the international spotlight.