Without strong, resourceful US leadership in the Sudan peace process, military action will relentlessly continue to increase in the oil regions of southern Sudan. Talisman Energy seems intent on obscuring this basic reality, talking blithely instead about the “sale” of its increasingly burdensome Sudan asset. The company is evidently confident that it can continue to substitute rumors of buyers for a consummated sale (see attached Reuters Business Briefing). But the military realities of southern Sudan are becoming daily more pressing, and there is growing belief in the region that security in all of Western Upper Nile Province will continue to deteriorate—and that oil production and development operations will become untenable, very likely this dry season. If an intensifying of Sudan’s “oil war” is to be averted, the US must respond very soon with vigorous, fully committed leadership of a well-articulated peace process.
Eric Reeves [February 11, 2002]
Smith College e
Northampton, MA 01063
413-585-3326
reeves@smith.edu
Growing doubt about US commitment to lead in Sudan’s arduous peace process has had the effect of clarifying further the military imperative facing the people of southern Sudan, particularly those in the oil regions. Southern leaders of both the Sudan People’s Liberation Army/Movement (SPLA/M) and the Sudan People’s Defense Force (SPDF) are convinced that they must be prepared to stave off continued destruction, and to do so by all possible military means.
This dictates, both tactically and strategically, a concentration of military resources in attacking the oil regions of Western Upper Nile Province and southern Kordofan Province (Talisman’s Heglig center of operations is in southern Kordofan). Lundin Petroleum (and its partners, Petronas of Malaysia and OMV of Austria) has already been forced to suspend all operations in Block 5a, and since their decision (announced January 22, 2002) the security situation has deteriorated significantly throughout Western Upper Nile.
Much attention has appropriately been devoted by various international human rights groups to explaining how oil revenues exacerbate conflict in Sudan by providing a disincentive for the National Islamic Front regime in Khartoum to negotiate peace in good faith. At the same time, the realities of oil development create an obvious sense of military urgency in the southern military opposition.
In other words, oil production and development defines the military perceptions of both Khartoum and those opposed to its genocidal tyranny. So far, neither the mission of US special envoy John Danforth nor the State Department’s Africa Bureau gives evidence of adequately understanding this fundamental reality of Sudan’s conflict and the importance of US leadership in confronting the consequences of oil development.
Indeed, Danforth recently complained very publicly that an analysis of oil development he requested of the State Department in September has still not been provided (St Louis Post Dispatch, Feb 3, 2002). There is, of course, a massive amount of highly authoritative reporting on Sudan’s oil development already in the public domain; one must wonder about the seriousness of Danforth’s desire to be informed on this key issue. Certainly his public comments have done nothing to indicate that he has made a serious effort to understand the role of oil in sustaining Sudan’s conflict, or how the US might respond to the realities of oil development. He has, for example, refused to comment on the Sudan Peace Act—an extraordinary fact, given his mandate as special envoy to work for peace in Sudan.
The Sudan Peace Act as passed by the US House of Representatives offers an enormously powerful source of leverage for US peace efforts, if the Bush administration would only seize upon it and lobby for passage of the bill. Instead, Senate Republicans—perhaps at the behest of the White House—continue to keep the bill in legislative limbo, even as the peace process for Sudan is at its most critical juncture in years.
The House version of the Sudan Peace Act would impose US capital market sanctions on oil companies operating in Sudan, thereby forcing the exit of Talisman Energy and obliging China (via its NYSE-listed PetroChina) to see that peace is critically in its economic interest if it intends to remain in Sudan. There is no more effective economic leverage with the Khartoum regime anywhere else in the world; it is intensely dismaying that neither the Bush administration, nor the State Department, nor the Danforth mission will support this powerful tool for peace.
Certainly the US has made an important start with the appointment of a special envoy for Sudan, given what is represented in such an appointment. But despite the achievement of a tenuous cease-fire in the Nuba Mountains (in southern Kordofan, northeast of Heglig), both special envoy Danforth and his chief aide Robert Oakley seem at a loss in articulating a meaningful way of defining US leadership in the peace process. Their pushing of four so-called “confidence-building measures” has yielded only very partial success and certainly no roadmap for the future. This has had the ironic, if salutary, effect of making even clearer the need for a robust US leadership role in a fully defined peace process.
Though it now seems that Danforth and Oakley are on the brink of “retirement” from heading up the US effort, questions about the State Department’s Africa Bureau are just as exigent. It is not clear that they see the need for a fully committed US leadership role in augmenting the IGAD peace process. (IGAD is the Intergovernmental Authority for Development, a consortium of East African nations under whose auspices the now largely moribund peace process developed.)
The consequences of a US failure at this critical juncture will be discernible in the inevitable intensifying of conflict in the oil regions. If Assistant Secretary of State for Africa Walter Kansteiner does not seize the initiative at a moment in which the Danforth mission seems to have accomplished all it can, then whatever momentum derived from the original appointment of a special envoy for Sudan will have been lost.
The US must lead, and lead decisively, if the peace process is not to fall victim of European opportunism, Egyptian obstructionism, and Khartoum’s uncanny ability to exploit any diplomatic wiggle-room that allows the regime to escape further from their 1997 commitment to the Declaration of Principles that anchors the IGAD process. Key within the Declaration of Principles (DOP) is the right of self-determination for the south. US leadership must not only be decisive, but unwaveringly committed to this bedrock principle. Without such US leadership, it is highly unlikely that the necessary diplomatic resources for furthering the peace process can be found regionally or in the compromised commitments of the EU and Canada.
The southern opposition is, of course, acutely attuned to all these developments, and makes its military calculations accordingly. Sensing that Assistant Secretary Kansteiner and his Africa Bureau may be wary of the potential risk of failure, they worry that the US will not commit the necessary diplomatic, political, and economic resources that will be required for effective US leadership. They worry that the US has been far too accommodating of the recently announced decision by the European Union to resume development aid to Khartoum, clearly for reasons of economic self-interest; they worry that the US will not confront Egypt over its intransigence on the question of southern self-determination; and they worry that despite the tough talk by President Bush and Secretary of State Colin Powell about Khartoum’s barbarous actions against its own people, geopolitical calculations will allow Sudan to slip out of policy focus.
Thus it should come as no surprise that authoritative regional sources are now speaking of a dry-season offensive by the united southern military opposition that will halt oil operations within the next few months. (The potent military implications of a solidifying reunification between the SPLA and SPDF have yet to register fully enough with news reporters.) Government of Sudan military forces have already suffered a series of severe setbacks in Western Upper Nile, not all of which have been reported, even in wire service news from the region. The military tide has clearly begun to swing against Khartoum and their partners in the oil regions. The forced withdrawal by Lundin Petroleum is only the first sign of what is to come
Talisman Energy has long shown a penchant for deception and prevarication about its operations in southern Sudan, including the August attack on its Heglig headquarters. But the military realities they now confront cannot be dismissed or obfuscated. No one pays more for the absence of peace than the innocent civilians of the oil regions of southern Sudan; no people on earth are more deserving of a just peace. But unless peace is attained, the time will come soon when Talisman and its callous partners see for themselves the terrible face of war.
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SA: PLATT’S – TALISMAN BUCKS TREND OF CAPEX CUTS, EYES SUDAN SALE
Publication: PLATT
Source: RBB – Reuters Business Briefings
Feb 08 02:45
Vail, Colorado (Platts)-8Feb2002/420 pm EST/2120 GMT Calgary-based Talisman Energy CEO James Buckee Friday said Canadian upstream capital spending this year is being slashed 40% to 60% by many companies, particularly the Canadian arms of US producers. “We are seeing dramatic cuts,” Buckee told a CS First Boston investor meeting in Vail, Colorado. The spending squeeze has slowed drilling, and in some cases there is “no money to even tie in wells” already drilled. Buckee said he viewed the situation as shortsighted. Talisman is one of the few E&P companies actually stepping up capex this year, to $2-bil from $1.9-bil in
2001. That is despite an expected slide in Talisman’s cash flow to under
$2.1-bil from $2.5-bil last year. Production is forecast to be 450,000-480,000 boe/d, up from 419,000 boe/d in 2001.
Vail, Colorado (Platts)-8Feb2002/420 pm EST/2120 GMT Buckee said Talisman would expect to reap between $500-mil and $1-bil this year if a buyer emerges for its 25% stake in Sudan’s Heglig concession, currently producing about 220,000 b/d, and its 900-mile pipeline to the Red Sea. The controversial project has drawn Talisman into a vortex of human rights criticism over Sudan’s ongoing war against southern rebels. Talisman’s own operations have not been targeted, Buckee said, but some oil operations south of Heglig have seen fighting. Other Heglig partners are an affiliate of China National Petroleum Corp, Malaysia’s Petronas and Sudan state Sudapet. “We like the project and the people, but all
our assets are for sale, at the right price,” Buckee said. “A number of people are interested and we’re talking to them at the moment.”
PLATT’S COMMODITY NEWS 8/2/2002