19 - Summary
 CONCLUSIONS

20 years and over $3 billion since its discovery in the south and south-west of Sudan, oil has not yet had a demonstrably positive impact on Sudan's economy or people's lives. It helped re-ignite civil war in 1983 after a decade of relative peace, and there are plenty of reasons to believe that it will continue to do more harm than good.

Sudan joined the ranks of oil exporters in August 1999, when the first oil was shipped along its newly constructed 1,610km pipeline from the southern oil fields to the Red Sea, to a new port built for oil tankers.

Meanwhile in parts of south-central Sudan the civil war has intensified and is creating massive human suffering. The foreign companies exploiting oil there

have inevitably become involved in the war on the side of the government forces.

Yet Sudan has been transformed in the eyes of business interests from a basket-case on the verge of expulsion from the IMF to one whose future is bright with the promise of oil wealth.

The National Islamic Front government has been making allies in countries whose corporations are lining up for oil contracts. These allies will lobby their governments against any condemnation of Sudan for its extreme violations of human rights. They will attempt to block any measures that will interfere with their short-term profits.

The oil may only last 15 years. It is a finite resource, and needs to be used with maximum efficiency. Why squander it in haste? In the stampede to ship it out and discover more, its legacy is more likely to be devastation rather than any solution to Sudan's economic and social problems.

It is unrealistic for external partners in the scheme to maintain that the oil project is in any way distinct from the NIF's war effort. The drive for oil has become a central factor in the civil war.

Talisman, as lead partner in the oil consortium, has repeatedly failed to display any awareness or sense of responsibility for the political and military role it is inevitably playing.

The region's chronic instability has added significantly to the costs - financial and human - of extraction, while the act of extraction and maintaining "security" has fuelled that instability, in a vicious cycle.

VULNERABLE OIL INSTALLATIONS

The SPLA has repeatedly declared that all oil installations in South Sudan are a legitimate target for their military operations. The Sudan Alliance Force (SAF) and National Democratic Alliance (NDA) have issued similar warnings with regard to the north of the country. If the armed opposition concentrates on attacking the pumping stations at staged intervals, it will maximise its chances of actually halting the operation.

Weir Pumps appear to have built their intended quota of seven. It is not clear who will build or the five extra stations needed to complete the proposed upgrading to 250,000 b/d - although France has a similar manufacturer - or supply replacements in the event of damage .

  • The oil pipeline project not only risks longer-term disasters for Sudan's people and environment, but threatens to sustain the current regime in its prolongation of war and its rejection of democratic values and human rights.
  • Parts of Sudan already need massive aid provision in the year 2000.
  • Oil conflict will only add to that need.

With the oil revenue coming onstream, the government of Sudan's economic constraints are being eased to the extent that it will be more likely to regard continued war as affordable and will feel less pressure towards serious peace negotiations.

POWER AND THE N.I.F.

The National Islamic Front has a totalitarian outlook which is implicitly opposed to sharing power. It resists any dilution of its absolutist ideology, but is sufficiently politically astute to present itself as flexible when necessary. It has portrayed peace as within reach for as long as it has been promoting the oil project, but has always shrunk from offering the secular society and self-determination that would actually provide it.

The militarisation of the oil exploration zones and the conflict engendered by the pursuit of oil at this time are likely to worsen the social fragmentation of Sudan.

Claims by the Sudan government or its business partners that this conflict is "local internecine fighting" are disingenuous. The regime's policy is to arm southern splinter groups and their leaders as a buffer against the Sudan People's Liberation Army (SPLA), particularly in the oil zone, while playing them off against each other. It has been supplying these armed groups for years and has given their commanders military rank in the regular Armed Forces.

ENVIRONMENT

The environmental dangers of the pipeline are inadequately studied and impossible to discuss under the totalitarian regime. Talisman has declined to disclose its Environmental Impact Assessment and Emergency response plans.

There is a reasonable possibility, given the project's history, that technical safeguards have been minimised and that the risk of fires, explosions and pollution from oil spills both deliberate and accidental - even into the River Nile and Red Sea - has not been addressed realistically. Extraction areas will face the same fate as the Niger delta: chronic poverty amid chronic pollution, contamination of soil and water.

The people of Western Upper Nile and South Kordofan are already suffering more direct military oppression than the Ijaw or Ogoni people of Nigeria. They may have ecological disaster added to famine and war.

 

Emergency responses to spillage are likely to take days rather than hours. Clean-up operations in remote areas are expected to be token or non-existent for the most part. Sabotage attempts may further endanger populations near the pipeline.

REFINERIES

Local refineries such as El Obeid are believed to be producing aviation fuel for bombing raids on southern villages and low-grade petrol primarily for armed forces and security personnel vehicles.

The oil will be used inefficiently by poor quality refineries. A secondhand refinery which has been imported (from the US) and rebuilt in Khartoum no longer conforms to environmental regulations in its country of origin. Pollution and wasteful processing can also be expected from the refinery in El Obeid.

AID SUBSIDISING OIL

Operation Lifeline Sudan is already the biggest relief operation in the history of the UN. Fighting over oil will increase the need for aid input from the international community. Unless the oil issue is resolved, a perverse situation will prevail where humanitarian aid is needed simply to deal with the fallout of fighting around the oilfields. Aid would, in effect, be acting as a subsidy to the oil companies.

The destabilising effects of the civil war and the aggressive may spill over into the neighbouring countries in the already fragile Horn of Africa.

TRADE AND MILITARISATION

There is a lack of coherence in UK government policy towards Sudan. While some British government departments and ministries were pushing for peace and providing humanitarian assistance in 1998, its trade ministry was enthusing about the supply of equipment essential to the oil pipeline which - it could be argued - is contributing to the war. The equipment is certainly considered a strategic military target.

PIPELINE MILITIA

The Sudan government has attempted to recruit sufficient young men into militia to protect the pipeline along its entire length (an impossible task). The recruitment is often no more than press-ganging, and under-age children have often been swept up into the militia.

Since European oil companies can provide money in the form of "investment" which the NIF government then spends on weapons, the current EU arms embargo on Sudan is effectively being broken.

ECONOMY

The government is now paying off its debt arrears to the International Monetary Fund. Because the decision by the IMF to upgrade Sudan's borrower status from ‘non-compliance’ to ‘compliance’ has been made on strictly fiscal criteria, it has overlooked the broader consequences of the way the Sudan government is conducting its economy, including the human impact of the investment in oil in the middle of a civil war.

PEACE

Closer examination must be given to the possible outcomes of two areas of possible fence-mending. The NDA's Sadiq al-Mahdi and NIF leader Hassan al-Turabi have been holding meetings in 1999 which have not always pleased others in Sadiq's Umma party, let alone the rest of the NDA. This rapprochement, echoed in Egyptian and Libyan peace initiatives aimed at the northern Sudanese opposition, is highly unlikely to bring the rest of the NDA into reconciliation with the NIF. Nor will it end the war.

Members of Southern groups - notably UDSF / SSDF - which have been fighting on the government side since 1996 - have been mending fences with the SPLA. This has been affected by the grass-roots Nuer-Dinka and Nuer-Nuer peace initiatives of the church. Nonetheless, the situation remains in flux.

HUMAN RIGHTS

The SPLA has been guilty of human rights abuses which have turned several communities against it. These are not, however, comparable with the National Islamic Front's deliberate use of torture in government as a means of control, nor with the scale of official abuses committed against minorities by the NIF in the pursuit of its social engineering policies.

Nonetheless, the SPLA has continued holding fellow rebels prisoner in prolonged arbitrary detention, confiscating food (including emergency relief food) from civilians, looting crops, summary executions and disappearances. It, too, has recruited thousands of under-age boys.

 RECOMMENDATIONS
  • All extraction of oil in contested areas should cease until a peaceful resolution of the conflict is reached.
  • Equity of distribution of oil revenue must be recognised as essential for an end to the conflict.

There should be a halt in the rush of outside investors seeking to profit from Sudan's oil while it is so clearly an integral factor in the civil war.

Governments concerned with peace in Sudan should prohibit or discourage investment in Sudan (including prohibiting company subsidiaries) until a peace agreement has been signed by all major parties and is moving in recognisable stages towards implementation.

Talisman, as lead partner in the oil pipeline consortium, should end its blinkered approach to the social and local economic dimensions of the project.

There is a growing international call for shareholders and governments to put pressure on Talisman and Sudan's other oil partners. The naming (and implicit shaming) of Talisman investors - who include local authorities and pension funds - should extend to other stakeholders in the Sudanese oil project. The coupled fate of the pipeline project partners and the National Islamic Front should be recognised and made explicit. Any evaluation of the project must highlight the risk to investors of political fallout as well as moral opprobrium.

Independent specialist observers should be given full access, facilities and time to:

  • Clarify the environmental dangers, from possible oil/gas spillage from the pipeline and refineries, from the pollution associated with extraction - and from using inadequately refined petroleum products in local applications such as transport. Examine ways of improving safeguards to meet internationally accepted levels.

Talisman should put into the hands of independent experts its documents and correspondence on environmental aspects - such as the impact assessment report, emergency response and clean-up plans. Some of these documents were prepared under the previous Arakis management and should be reassessed in the light of Arakis' demonstrated mendacity over financing.

  • Carry out adequately detailed assessments of the project's impact on local people.
  • Investigate security arrangements for the oilfields and the pipeline - and their human rights / conflict implications - more thoroughly.

Assurances from the Sudan government must be viewed with scepticism in the light of its unwillingness to acknowledge genuine dangers, its own weaknesses, and its role in deploying militias. Neither the use of private security forces nor of government militias can be relied on to ensure the safety of field workers when the project is surrounded by a variety of hostile armed groups entangled in long-drawn-out low-level conflict. Indeed, they may worsen the problem.

  • The UN Human Rights Rapporteur and other human rights observers should be given proper access and facilities to investigate reports of oil-related human rights abuses and to go into the oil fields for as long as is necessary to establish a full account of events.

The area is a patchwork of zones under government and pro-government militia control, and of zones held by the SPLA and Nuer dissidents. Access must be to all the areas, not only to the citadels of the oil installations under government control and tight security, but also to those outlying villages and populations which are reportedly coming under attack from government forces.

Questions concerning environmental safeguards and human rights abuse should addressed to all the participants in oil project, including the Chinese and Malaysian companies.

 

The UK and other IGAD Partners should:

  • put pressure on the warring parties to put genuine cease-fires in place, inclusive of militia activity, and monitored in all regions.
  • push the IGAD peace process to address the role of oil in the war, including issues of land rights, equity of income, and access to resources and their benefits.

The World Trade Organisation (WTO) should be called upon to address the question of Talisman's involvement in Sudan: this would be an indicator of the WTO's handling of human rights and conflict issues in trade.

 SUDANESE PROTESTS FROM NORTH & SOUTH

A petition calling for a halt to the export of oil has been circulated by the Sudan Human Rights Organisation (Washington DC) and signed in mid-1999 by:

  • Democratic Forces Front - (DFF) - (Khartoum, Sudan)
  • Sudanese Human Rights Group - (SHRG) (Khartoum)
  • National Alliance for the Restoration of Democracy (Khartoum, Sudan)
  • The Group Against Torture in Sudan - (GATS) - USA.
  • Sudan Human Rights Organization (SHRO) Cairo,

Canada, Washington DC and Germany

  • Sudan National Alliance (SNA/SAF)-Poland.
  • Sudan National Democratic Alliance, USA.
  • Sudanese Australian Human Rights Association.
  • Association of Sudanese Women Abroad

The Nairobi-based New Sudan Council of Churches has also written on several occasions to Canadian and British governments to call for action on the oil project. It is urging that the oil revenue accruing to the Sudan government be put instead into escrow accounts, to be held by an international fund until a peace settlement is reached.

 INVESTORS' CONCERNS

 City of New York Pension Funds
1 Centre Street, New York, NY 10007-2341

To: Mr. James W. Buckee, President and Chief Executive Officer, Talisman Energy, Inc., 2400, 855Q2 Street, SW
Calgary, Alberta T2P 4J9, Canada

September 27, 1999

Dear Mr. Buckee,

I am the investment adviser and/or trustee of the New York City pension funds (the "Funds"), with combined assets totaling approximately $90 billion, including an aggregate 186,000 shares of Talisman Energy Inc., Common Stock.

I am deeply troubled by the allegations made against our company in a report titled Western Capital Aids Genocidal War in Sudan, Spurs Human Rights Violations (American Anti-Slavery Group's Special Report: Talisman Divestment Campaign, July 20, 1999)…

The report … describes a recent June raid by the Sudanese Army in which twelve hundred troops backed by tanks and planes decimated villages right near Talisman's Unity Oil Field. The international community is appalled and outraged by the report's horrific accounts..

Talisman Energy has defended its role in Sudan, asserting that it employs many Sudanese and has helped build roads, water wells, and a hospital. Even if the above positive actions are true, they do not and cannot compensate for the grief otherwise caused by our activities.

Our company's position painfully brings to mind the intransigence of companies that operated in South Africa under apartheid, incurring substantial damage to their public image and the eventual loss of capital as protestors demonstrated in front of their facilities and investors divested their stock, worldwide.

I believe a company that is doing business in a country under a repressive regime must not provide financing or other resources for the perpetuation of wrongdoing or atrocities. As long-term investors, we believe a company that is cavalier about its moral and social responsibility presents an unacceptable investment risk. The expanding divestment campaign against Talisman Energy for alleged complicity in the horrors in Sudan is just one indication of that risk.

As the investment adviser to the funds, it is my fiduciary duty to advise the Funds' Trustees of potential risks to our investments. Therefore, I request that you respond to these allegations and inform me of our company's plans concerning future business in Sudan. In this regard, I would appreciate a meeting with you, at your earliest convenience.

Sincerely,

Alan G. Hevesi, Comptroller of the City of New York

American Anti-Slavery Group Urges Fidelity and Vanguard to Dump Talisman Stock
July 23, 1999

Millions of Americans are inadvertently profiting from an oil venture that is contributing to enslavement and mass murder of blacks in Africa. Widely held mutual funds - such as Fidelity's True North and Vanguard's U.S. Growth Portfolio - include Talisman, a Canadian company developing oil in Sudan.

The major teacher's pension fund, TIAA-CREF, also holds Talisman, and is asking them to divest. "American educators who teach the evils of slavery will be shocked they are unknowingly profiting from a modern day trade in humans," AASG's Charles Jacobs said. The states of Wisconsin and New Jersey also hold Talisman in their pension funds. New Jersey Congressmen Chris Smith and Donald Payne told Jacobs … they were surprised and upset over that. Payne, former head of the Congressional Black Caucus, just returned from Sudan […]

Jacobs has written to Fidelity and Vanguard officials and is hopeful they will divest. "They won't want to have made their investors accessories to murder and slavery. This is 1999. I believe American capital has conscience. "
(American Anti-Slavery Group)

 Canadian Churches' Shareholder Proposal to Talisman

Eleven churches and religious orders from Canada and the United States have submitted a shareholder proposal to Talisman Energy. The proposal asks the Board of Directors of Talisman to assure shareholders that the company will not materially aid the Sudanese government in its civil war in that country, nor in its repeated violations of internationally accepted standards of human rights.

Talisman refused to circulate the Canadian churches' 1999 shareholder proposal, so it was not seen by most shareholders, and was not voted upon at the company's AGM.

Together the filers hold in excess of 100,000 shares.
Socially screened investment funds in North America are now estimated at more than $1 trillion. Many of these investors avoid companies whose human rights records fail to meet internationally recognized standards. The shareholders believe that without credible evidence that Talisman is not materially aiding the continuing civil war or the gross and systematic human rights abuses of the Sudanese government in Khartoum, the long-term financial health of the company could be adversely affected.

TALISMAN ENERGY INC. SHAREHOLDER PROPOSAL

WHEREAS Talisman Energy Inc. owns 25% of the Greater Nile Petroleum Operating Company, a consortium engaged in oil and pipeline developments in Sudan;
Talisman's participation in the Greater Nile project raises concerns among investors that have already reduced and could further reduce liquidity and shareholder value;
Talisman's other business relationships may be hurt by its association with the Government of Sudan's violence against innocent civilians;
The Sudan People's Liberation Army and the Sudan Alliance Forces have declared that the consortium's facilities in Sudan are a target in the civil war, posing a security risk to both employees and company assets;
The Government of Sudan in Khartoum is a partner through its state petroleum company, Sudapet;
The Khartoum regime is engaged in a civil war in and around the region where oil and pipeline developments are being undertaken;
The United Nations Commission on Human Rights, in both 1997 and 1998, passed resolutions censuring the Sudanese Government for human rights violations, including indiscriminate aerial bombardment in southern Sudan, extrajudicial killings, forced disappearances, persecution of women, and denial of international humanitarian access to populations at risk of starvation;
Any revenue and oil supplied to the Government of Sudan will increase the regime's capacity to engage in conduct repeatedly condemned by respected international bodies such as Amnesty International and Human Rights Watch;
Facilities of Arakis Energy Inc. in Sudan, now wholly-owned by Talisman, were reported in the news media as providing direct assistance to the Sudanese military;
In letters to shareholders the Company has committed itself to being a positive influence in Sudan;

THEREFORE BE IT RESOLVED that the shareholders ask the Board of Directors to:

  1. assure shareholders that the company's operations in Sudan will not materially aid the capacity of the Sudanese government to engage in the civil war in that country, nor violate internationally accepted standards of human rights,
  2. issue an independently verified report on the company's compliance with this commitment,
  3. provide to shareholders within 180 days a summary of this report, and
  4. provide a copy of the full report to shareholders on request.

SUPPORTING STATEMENT: Doing business in Sudan exposes investors to significant risks. Our Company has formed a business partnership with the Khartoum regime, which is engaged in the gross and systematic violation of fundamental human rights. The other members of the partnership are the state petroleum companies of China and Malaysia, countries whose governments are also internationally condemned for their human rights records. Our business partner, the Khartoum regime, has also manipulated and stalled the peace process initiated by neighbouring governments through the Inter-Governmental Authority on Development and supported by the Canadian government. Talisman's undertaking to be a positive influence in Sudan is significantly hampered by the fixed nature of its assets.

In particular, because our Company's financial success rests on oil wells and a pipeline under construction amidst a civil war, it depends on the Sudanese military to protect its investment. Security arrangements for oil development reportedly involve forced removal of people living where development is occurring. Reports received by church shareholders from partner organizations in the region vary significantly from Talisman's descriptions….

2 February 1999

Peter Chapman, Coordinator Canadian Friends Service Committee 60 Lowther Avenue Toronto, ON M5R 1C7 tel 416.920.5213 fax 416.920.5214 cfsc@web.net

Taskforce on the Churches and Corporate Responsibility 129 St. Clair Avenue West, Toronto, Ontario M4V 1N5 Canada 416-923-1758 Fax 416-927-7554

20 - Comparisons: Chad & Colombia