Oil patch pariah

Problems that can arise when Western oil companies invest in developing countries suffering under political instability are described using Calgary-based Talisman Energy Inc.'s recent experiences in the Sudan as example. In 1998 Talisman acquired a 25 per cent interest in an oil project by cash-poor Arakis Energy Corporation, thus acquiring a foothold in the Middle East , and more importantly, access to one of the world's largest oil reserves at a bargain-basement price. A UN report accusing the Sudanese government of gross human rights violations , the chagrin expressed by the US Secretary of State that a Canadian company would do business with a country that the US officially regards as 'a state sponsor of terrorism', a warning by the Canadian Minister of Foreign Affairs of economic sanctions unless Talisman demonstrates active promotion of human rights in the Sudan, led the Ontario Teachers Federation to threaten to withdraw its $ 184-million stake in Talisman if reports of human rights abuses in the country can be corroborated. A fact finding mission has been dispatched by the Minister of Foreign Affairs to establish by next month who is killing whom in the Sudan and whether oil revenue from Talisman is being used to fund a campaign of terror and killing that have claimed the lives of some two million Sudanese citizens in the past 16 years. As a result of the turmoil caused by these actions Talisman lost nearly $ 700 million in value in the last week of October, and several institutional investors are actively considering selling their shares in Talisman. The company has hired a top public relations firm to defend itself against the 'coordinated attack' by human rights groups, Sudanese refugees, and Christian fundamentalists whose aim is said to be to shut down oil production in the Sudan. Talisman management is confident that given the company's reputation and its large asset base, it can weather the storm that its Sudanese assets have generated, however, there is little evidence to date that the furor is dying down. If the fact finding mission confirms the UN report, it is likely that Talisman will will be forced to sell its Sudanese holdings