Political risk is something that oil companies always face overseas, but Talisman Energy Inc. is tasting it at home.
Talisman, of Calgary, is one of Canada's largest independents. Last year, it took over Arakis Energy Corp., which had a 25% interest in a $2.3 billion Sudan oil project.
Sudan is one of several nations that the US has accused of promoting terrorism (OGJ, Apr. 7, 1997, p. 31).
In August, Talisman and its international partners (the state oil companies of China, Malaysia, and Sudan) completed a 932-mile pipeline from their Heglig and Unity oil fields to Port Sudan on the Red Sea and began moving 120,000 b/d of oil (OGJ, July 12, 1999, p. 34).
Critics fear the Islamic government in Khartoum will use its new oil export revenues to quash a 16-year-old uprising by Christian tribes in southern Sudan rather than seek a peaceful solution.
And the Canadian government is one of those critics.
Canada's actions
At the urging of Canada's Interchurch Coalition on Africa, Canadian Foreign Minister Lloyd Axworthy has threatened to impose sanctions on Talisman unless it tries harder to persuade the Sudanese government to end the fighting.
He said Canada might ban trade "if it becomes evident that oil extraction is exacerbating the conflict in Sudan or resulting in violations of human rights or humanitarian law."
Axworthy invited Sudanese leaders to peace talks in Canada. And he said Canada would send a team to investigate human rights abuses and the role oil companies are playing in the conflict.
There have been reports of fighting near the oil fields and the forced relocation of nearby villages. The pipeline was shut down briefly after a bombing Sept. 19 near Atbara (OGJ, Sept. 27, 1999, p. 43).
US Sec. of State Madeleine Albright also has been critical of Talisman.
She recently said, "We're going to have to talk to some of our allies about ways to put pressure on Khartoum...I'm definitely going to discuss this with the Canadians.''
Last week, the US Commission on International Religious Freedom urged the Clinton administration to ban companies operating in Sudan from trading on US stock exchanges. The Treasury Department is investigating whether that could be done under US sanctions imposed against Sudan on Nov. 3, 1997.
Talisman responds
Talisman Pres. and CEO Jim Buckee said his company already has discussed some of the issues with the Sudanese government, and the oil company also believes all Sudanese will benefit from the oil development.
He said, "There has been a lot of misinformation" about the civil war, partly because of Canada's limited diplomatic links with Sudan.
Buckee noted, "Canada has a reputation as an honest broker and peacekeeper throughout the world," and said Talisman "will respond seriously and constructively" to the government's concerns.
"However, I should point out that Talisman is a business and does not have the role of a sovereign government. We encourage the evolution of diplomatic relations between Ottawa and Khartoum to the point where a positive and constructive dialogue can be held," Buckee said.
