«Human Rights Watch Brussels London New York Washington, D.C. Copyright © 2003 by Human Rights Watch. All rights reserved. Printed in the United ...»
Lundin’s “Oil Policy on Sudan” Substitutes for a Human Rights Policy Lundin adopted a policy on Sudan, posted on its website in 2001, but the policy contained no reference to human rights. Its only reference to the war was Lundin’s belief that “economic gains, when used to improve the socio-economic and humanitarian condition of the Sudanese people, will enhance the prospects of peace in the country. [Lundin] will, within its possibilities, support initiatives that may lead to long-lasting peace in Sudan.”1365 The significant qualifier in this paragraph is “when used to improve the social and economic condition of the Sudanese people.” There is no evidence Lundin provides or that is elsewhere available that the 1364 Ibid.
1365 http://www.Lundinoil.com/eng/SudanPolicy.shtr (accessed March 7, 2001).
Sudanese government has actually tried to do this. Nor does Lundin state how or whether it would attempt to ascertain whether the economic gains from oil were actually used by the Sudanese government to improve socio-economic or humanitarian conditions.
To the contrary: in its March 2001 letter to shareholders categorically denying displacement from Block 5A, Lundin admitted that “The list of oil exporting countries that have ongoing civil strife and/or are fighting guerrilla wars is unfortunately long. It includes such countries as Algeria, Angola, Burma, Columbia, Indonesia, Nigeria, Peru, Philippines, Sudan and Turkey.”1366 None of these countries is notable for its respect for human rights. Nor did Lundin attempt to show that in any of those countries human rights conditions had improved as a result of oil development.
Talisman Buys Lundin’s Non-Sudan Assets, June 2001 In June 2001, Talisman and Lundin agreed to a corporate rearrangement whereby Talisman would buy the outstanding shares of Lundin and Lundin would spin off to a new company its Sudanese and Russian assets, to be owned by the Lundin family and others.1367 The Sudanese assets included Block 5A, Lundin’s new interest in Block 5B, and its 100 percent interest in the Halaib Block in northeast Sudan.1368 The new company, called Lundin Petroleum AB, started trading on the New Market at Stockholmsborsen. There was no mention of any trading on the NASDAQ, where Lundin Oil AB had 1366 Letter to Lundin shareholders, March 2001.
1367 Lundin Oil press release, “Lundin Oil Recommends Acceptance of Public Cash Offer from Talisman and Spins Off Key Exploration Assets into a New Swedish Oil Company,” Stockholm, June 21, 2001; Drew Hasselback, “Lundins search for the big score, wherever that leads: Not giving up on Sudan,” Financial Post (Toronto), Vancouver, June 22, 2001; Lily Nguyen, “Talisman snaps up oil firm,” Globe and Mail (Toronto), Calgary, June 22, 2001; “Talisman bids $529 million for Sweden’s Lundin Oil,” Canadian Broadcasting Corporation, Calgary, June 21, 2001.
1368 The Halaib Block was inactive because of a Sudan/Egypt border dispute. Lundin acquired this interest in 1991.
been listed and traded.1369 The corporate rearrangements meant that there would be no threat of U.S.
capital market sanctions applying to Lundin’s operations.
Carl Bildt, who was briefed by Sudan’s foreign minister, Mustafa Osman Ismael, in Stockholm in July 2001, remained on the board of Lundin Petroleum and of Lundin Oil AB after the Talisman acquisition of Lundin Oil’s non-Sudan and non-Russian assets.1370 He had in the meantime become active in the search for peace in Sudan, meeting diplomats in Europe, North America, and Africa.
After the Talisman transaction was complete, Lundin Petroleum announced that it was in the process of appraising the Thar Jath discovery with a view to completing a conceptual development study. It planned to drill at least one additional exploration and two appraisal wells during the first half of 2002.1371 In October 2001, Lundin issued new shares with preferential rights to existing shareholders of Lundin, in order to raise money to finance the development of the Thar Jath (Ryer) field on Block 5A.1372 Lundin Suspends Operations Due To “Insecurity,” January 2002-April 2003 In December 2001, a Lundin helicopter was shot and its pilot gravely wounded. He managed to land the plane and was evacuated to Khartoum and then to South Africa for treatment. 1373 According to 1369 Lundin press release, “Lundin Petroleum Shares Start Trading Today,” Stockholm, September 6, 2001.
1370 “Sudan: Minister discusses oil investment with former Swedish prime minister,” Sudan TV, Omdurman, in Arabic, Khartoum, July 15, 2001, as translated in BBC Monitoring Service, July 15, 2001; Lundin Oil press release, Stockholm, July 23, 2001.
1371 Lundin Petroleum press release, “Lundin Petroleum comments on Latest Events,” September 18, 2001. This release noted that the Sudanese government had reaffirmed its commitment to combat all forms of terrorism in the aftermath of the September 11 attacks in the U.S. Lundin Petroleum announced that its operations in Sudan would continue as planned. Ibid.
1372 “Lundin Petroleum Announces A Rights Issue,” Business Wire (Vancouver), Stockholm, October 2, 2001.
1373 U.N. Security Situation Report, week 50/51/52, December 10-30, 2001, Khartoum.
confidential sources, the helicopter was shot down by members of the Paulino Matiep militia after the pilot refused to give them a ride.1374 In January 2002, the militia that had been guarding the Lundin installations in Block 5A since 2000, led by Cmdr. Peter Paar Jiek of Riek Machar’s SPDF forces, formalized in writing a standstill agreement first concluded in August 2001 with Cmdr. Peter Gatdet of the SPLA, ending the war of the “Peters.”1375 Cmdr. Peter Paar then ceased to guard the Lundin installations.
These two events, the helicopter shoot-down and the defection of the pro-government militia guarding its installations, combined to cause Lundin to suspend activities. On January 22, 2002, Lundin announced that its operations in Block 5A would be suspended “as a precautionary measure to ensure maximum security for its personnel and operation.”1376 This announcement came three days after the signing of a ceasefire to be monitored by international inspectors in the Nuba Mountains, which Lundin noted hopefully in its press release.1377 In its letter to shareholders after the Block 5A suspension, it referred to “deteriorating security conditions” in that block as the reason for suspending activities.1378 Lundin retained hope, however, that the U.S. peace effort started in late 2001 under Senator John 1374 Confidential email from journalist to Human Rights Watch, February 20, 2002; confidential email from relief worker to Human Rights Watch, February 13, 2002.
1375 “Western Upper Nile Koch Peace Covenant,” Upper Nile People to People Peace and Reconciliation Conference, January 26February 1, 2002, Koch, Western Upper Nile, South Sudan.
The agreement was signed just weeks after the unity agreement between John Garang of the SPLM/A and Riek Machar of the SPDF.
1376 Lundin press release, “Lundin Petroleum Announces a Temporary Suspension of Activities in Block 5A Sudan,” Stockholm, January 22, 2002.
1378 Ian H. Lundin, letter to Lundin Petroleum shareholders, “Report for the period ended 31 December 2001,” Geneva, February 15, 2002, p. 1, http://www.Lundin-petroleum.com/Documents/qr_4_2001_e.pdf (accessed May 28, 2002).
Danforth would permit a ceasefire which would allow Lundin to re-start its operations in the dry season, beginning in December 2002.1379 But Lundin, even as it recognized in a letter to shareholders that its engagement in Sudan had raised ethical issues, narrowly defined the issues to ignore displacement: “The question being raised is whether oil fuels the war or sets the conditions for peace by providing the country with the necessary means to lift itself out of poverty. We believe in the latter.”1380 Lundin did not offer any evidence or basis for this belief, however.
In releasing its six-month report for 2002, Lundin underlined its continuing desire to develop its Sudan assets: “We are long-term investors and remain fully committed to exploiting the resources in Sudan....
The quality of our assets in Sudan are world-class with the Thar Jath discovery estimated to contain 1 billion barrels in place and the rest of our acreage having excellent exploration potential.”1381 On July 24, 2002, days after the landmark Machakos peace protocol was signed by the Sudanese government and the rebel SPLM/A, Lundin’s chairman stated: “We hope the [Machakos peace] discussions will lead to a full and sustainable peace agreement that will allow us to resume operations.”1382 A ceasefire between the two parties was signed in October 2002. Operations in Block 5A resumed in April 2003 after a fourteen-month suspension, although no peace agreement had been reached. In June 2003, Lundin sold out its interest in Block 5A to Petronas, retaining the Block 5B concession.
Lundin Community Development Program
1379 Ian H. Levin, letter to Lundin Petroleum shareholders, “Report for the first three months, 1 January-31 March 2002,” p. 1, http://www.Lundin-petroleum.com/Documents/qr_1_2002_e.pdf (accessed May 28, 2002).
1380 “Report for the period ended 31 December 2001,” February 15, 2002, p. 1.
1381 Lundin press release with letter to shareholders, C. Ashley Heppenstall, “Lundin: Report for the six months ended 30 June 2002,” http://www.lundin-petroleum.com/Documents/pr_corp_08-08-02_e.html (accessed November 4, 2002).
1382 Lundin statement, “Sudan Peace Process,” dated July 24, 2002, http://www.lundin-petroleum.com/Documents/pr_sudan_24-07e.html (accessed November 4, 2002).
The Lundin consortium began a community development and humanitarian assistance program (CDHAP) in 2001.1383 One of its objectives was to provide a better quality of life “for the current and future inhabitants” of Block 5A (emphasis added).
One activity was to supply fresh water, because there was no good supply in the area. Lundin was trucking in water to water cisterns placed along its all-weather road, where it also drilled six water wells.
Lundin repaired ten water wells in Ler, a garrison town. A Sudanese medical doctor retained by Lundin did a needs assessment onthe feasibility of providing permanent medical services in the area. Lundin decided to rebuild the existing hospital in Ler, presumably the brick building constructed by the British that MSF-Holland used for a decade (1988-98) until it was repeatedly looted in the fighting.1384 Lundin’s CDHAP booklet notably contains aerial photographs of a temporary (dry season) Nuer settlement and a Nuer village. It also contains a photograph of the bridge linking Rubkona to Bentiu over the Bahr El Ghazal (Nam) River, and a bus at Jarayan well.
When interviewed by human rights investigators, however, those displaced from Block 5A in 2002 were not aware of any of Lundin’s “social investment” activities. The investigators noted, “Although one of the oil business's contributions made by the Lundin Petroleum-led consortium for the development of the region was the building of a bridge over the Bahr el Ghazal [Nam] River, the bridge’s only tangible impact on the well-being of the local communities has been to enable Baggara horsemen and mechanized Government forces to access the area, and to kill, rape and chase away the people.”1385 Block 5A was the focus of increasingly heavy government military operations from 1998 to date. In these operations government forces have relied on the oil company road and the bridge for access to the areas 1383 Lundin Petroleum AB, “Community Development and Humanitarian Assistance Program (CDHAP) Sudan, 2001-2004,” October 2001.
1384 MSF, Violence, Health and Access to Aid, pp. 28-29.
1385 “Depopulating Sudan’s Oil Regions,” p. 4.
that they have targeted, generating increasing numbers of wounded and killed, as well as tens of thousands of displaced persons. The Sudanese government forces continued to fight to militarize and control the Lundin oil areas even after signing a ceasefire agreement in October 2002, notably in January and February 2003 during a dry season offensive in Block 5A documented by the Civilian Protection Monitoring Team (CPMT).1386 While Lundin’s development projects may have assisted some people in the area of its operations, they cannot compensate for the abuses that those people have suffered because of the fighting connected to oil development.
1386 Herbert J. Lloyd, Civilian Protection Monitoring Team (CPMT), “CPMT Final Report: Military Events in Western Upper Nile 31 December 2002 to 30 January 2003,” February 6, 2003; Charles H. Baumann, CPMT, “Report of Investigation: Violence Against Civilians Along the Bentieu-Leer-Adok-Road,” Khartoum, August 19, 2003, http://www.cpmtsudan.org/finalreports/violence.zip (accessed September 24, 2003).
CHINA’S INVOLVEMENT IN SUDAN: ARMS AND OILChina’s need for oil reserves for its growing domestic economy has caused its government to pursue investments in many countries of marginal stability and democracy, but its greatest oil success abroad has been in Sudan.
Although the China National Petroleum Company (CNPC) had escaped the public relations hammering that Talisman was receiving, it was drawn into the controversy through the efforts of Sudan activists to bar the use of U.S. financial markets to raise money for anyone doing oil business in Sudan in late 1999.