The US has issued economic sanctions against a multinational oil venture operating in Sudan.
The sanctions are against coventurers in the Greater Nile Oil Project (GNOP), which include Calgary's Talisman Energy Inc. and the state oil companies of Sudan, China, and Malaysia. The sanctions apply only to the activities of the joint venture and do not prevent other business dealings with the involved companies.
The sanctions state that US citizens or companies and their foreign branches are prohibited from engaging in most trade and financial transactions with GNOP or Sudapet, the Sudan state oil company. US firms that conduct business with Greater Nile Petroleum Operating Co. Ltd. or Sudapet would be subject to criminal penalties of up to $500,000/violation. Individuals could be fined up to $250,000 and imprisoned for up to 10 years. The US Treasury Department's Office of Foreign Assets Control also could impose civil penalties.
State Department Spokesman James Rubin said, "We are very concerned that investment in Sudan's oil sector strengthens the capacity of the Khartoum regime to maintain and intensify its brutal war against its own people. We have raised our concern with the government of Canada and with the governments of Talisman's partners, the national oil companies of China and Malaysia."
Talisman's reaction
The sanctions are expected to have little impact on the operations of Talisman, which said GNOP is structured so that its Sudan operations are at arm's length from the company's US activities. So-called firewalls have been established to prevent sanctions from affecting it, US shareholders, or two Talisman directors, Peter Hoenmans and Peggy Witte, who are US citizens.
Talisman official Dave Mann says the sanctions had a 1-day, short-term effect on the stock value. The shares fell more than $4 at one point following the US Treasury announcement of sanctions. The stock had made strong gains earlier, after Ottawa announced it would not apply sanctions.
Ottawa has announced a number of diplomatic initiatives affecting GNOP, and Canadian Foreign Minister Lloyd Axworthy said Talisman is expected to help in trying to end a long-running civil war in Sudan.
An earlier report by a Canadian envoy was critical of Talisman; it said oil revenues were exacerbating the civil war but stopped short of recommending sanctions (OGJ, Feb. 21, 2000, p. 22).
Axworthy said the US sanctions will not change Ottawa's position on the issue. He said Canada will make its own policy "based on Canadian values and Canadian judgment."
Meanwhile, Talisman reported strong 1999 financial results. The company logged profits of $176.8 million (Can.) in 1999, or $1.31/share, compared with a loss of $258.8 million, or $2.31/share, in 1998.
