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Petronas: Partner in GNPOC, Lundin, and Block 5B Concessions

Petronas Carigali Overseas Sdn Bhd (Petronas) invested in the GNPOC project (30 percent) on December 6, 1996, and in Lundin’s Block 5A on February 6, 1997 (28.5 percent). It was the second largest owner in both projects, and in 2003 became the largest owner in Block 5A when Lundin sold its interest to Petronas.

A 60 percent subsidiary of Petronas was also awarded a management consultancy services contract for the pipeline/export terminal project serving the Heglig and Unity fields in 1998.1445 In addition, Petronas’ subsidiaries were awarded other oil-related jobs in Sudan, including the GNPOC award of the contract for the second phase of the Muglad Basin Oil Development project (oilfields Munga and Bamboo in Block 4) to OGP Technical Services Sdn Bhd, in October 2000.1446

Petronas is wholly owned by the state oil company of the government of Malaysia, Petroliam Nasional Berhad (Petronas), which is the largest company in Malaysia, headquartered in its capital Kuala Lumpur. Petronas has a record of conducting its business in and with countries with extremely bad human rights records, including China, Cambodia, Burma, and Vietnam.1447

Petronas was leading the way for other Malaysian companies to invest in Sudan. Ten Malaysian companies invested in Sudan by February 1999, up from three in 1998, and the number was expected to exceed thirty by the end of 1999. Tenaga Nasional, a large Malaysian company, completed feasibility studies for power generation. Bank Rakyat was involved in the development of 10,000 hectares of land for palm oil cultivation, and Metrobus, a public transport company, was pledged to produce 1,500 buses for Sudan and operate part of its public transport system.1448 Discussions between Sudan and Malaysia centered on expanding Malaysian investments—so far some U.S. $ 1 billion—in the oil industry as well as other investments in 2000.1449

Petronas, as a national oil company, was proud of its own development and its promise of extending a helping hand to the people of Sudan.1450 In a letter of reply to Human Rights Watch, it stressed its interest in human rights.

We wish to inform that we are as equally concerned over reports of alleged human rights violations around the areas in southern Sudan where the consortium which we are part of is carrying out petroleum activities. Within our sphere of influence we will continue to work closely with concerned parties to contribute where possible to any required improvement of the human rights situation in the Sudan.1451

The company cited its Corporate Mission Statement, a set of business principles to contribute to the well being of the people and nation wherever it operates, and its presentation to its personnel on human rights and codes of conduct. It has sent some representatives to participate in international workshops and seminars on human rights, including a round table conference on human rights and principles of conduct of company operations within the oil industry, held in November 2000 in Mulheim, Germany. It contributes to community improvement projects and offers scholarships and sponsorships to nationals of host nations including Sudan.1452

Petronas’ letter refers to issues and the statement of facts (about civilian displacement from the Sudanese oilfields where Petronas has a presence, the GNPOC block and Block 5A) raised in the Human Rights Watch letter. It says only that it “will closely work with our consortium partners in the Sudan to address these, within our own spheres of influence.”1453 It also mentions with approval Amnesty International’s recommendations about the Sudan oil industry.

Petronas continues to seek greater participation in Sudan’s oil industry. On May 3, 2001, Lundin announced that Petronas and Sudapet would be joint operators with it on Block 5B neighboring Block 5A, with interests of 41 percent and 10 percent respectively. Lundin Muglad Limited, wholly owned by Lundin and the Austrian company OMV, would each have a 24.5 percent interest in Block 5B.1454 Block 5B includes the Nyuong Nuer towns of Nyal and Ganyliel in Western Upper Nile/Unity State. These two towns saw fighting between Nuer and Dinka prior to the West Bank Covenant at Wunlit (1999), and the Peter Gatdet (Bul Nuer) SPLA troops attacked Nyal in February 2001, after which an emergency meeting of the West Bank Peace Council was held in Ganyliel.1455

Petronas has also invested in the Ethiopian west, where the Melut Basin extends from Sudan. Petronas has been described as on the Fortune 500 list of largest companies.

OMV (Sudan): Excited about Thar Jath Discoveries

OMV (Sudan) Exploration GmbH is a 100 percent-owned subsidiary of Austria’s OMV Aktiengesellschaft, which has many retail fuel outlets in Central Europe. The parent company OMV is traded on the Vienna, Munich, and Frankfurt stock exchanges.1456 It is one of Austria’s largest industrial companies listed on the Vienna Stock Exchange and one of the leading oil and gas groups in Central and Eastern Europe. It also conducts international exploration and production activities outside the core European region. OMV Aktiengesellschaft also owns subsidiaries doing business in Libya, Vietnam, Albania, Bulgaria, and Russia, among other countries.1457

OMV (Sudan) owned 26.125 percent of the consortium that is developing Block 5A. Following the successful exploratory well at Ryer/Thar Jath in early 2001, Gerhard Roiss, member of OMV’s Executive Board, stated: “OMV exploration has drilled in the last months an impressive row of new oil discoveries, but Thar Jath has the potential to be by far the largest one.”1458 OMV regarded its exploration success in Sudan “as a major step forward following the company’s strategy to strengthen its Exploration & Production Division in its prime growth area North Africa / Middle East.”1459

The statement most nearly regarding corporate responsibility is in OMV’s “Guiding Principles” on its website: “We are guided in our work by responsibility for people, the environment, and technical progress.”1460 There is no mention of operations conducted in a country at war or of human rights per se.

OMV answered an August 2000 letter from Human Rights on April 6, 2001. OMV took the same position as all the other oil companies that responded to Human Rights Watch:

We have reached the conclusion that, despite problems, the influx of oil revenues could improve the social and humanitarian conditions of the Sudanese. Oil exploration activities also represent immediate benefits to the local population, in terms of employment, infrastructure developments and humanitarian assistance. . . .

While human rights issues are very clearly addressed in OMV’s HSE policy and in a more general way in OMV’s corporate mission statement the operator Lundin has adopted an explicit code of conduct. Our role is to constantly monitor the situation on the ground and to turn our perception of business ethics into reality by responsible action. . . .1461

Only after the publication of the European Coalition on Oil in Sudan (ECOS)’s report, “Depopulating Sudan’s Oil Regions, January-March 2002,” on May 14, 2002, concerning OMV’s Block 5A did OMV publicly acknowledge any concern, saying in a written statement to Reuters, “On any occasion and regardless of who the aggressors may be, we regard the situation as alarming.”1462

OMV met with European human rights advocates in 2002, led by Sudan Platform Austria, and told them that it had commissioned an independent report on the human rights situation. It also said that it would not make the results public.1463 It also reiterated to the press, “For us, it is very important that human rights are respected, and this is very much in the foreground.”1464

OMV sold out of Blocks 5A and 5B a few months after Lundin left Block 5A. OMV agreed on September 2, 2003 to sell its investments to ONGC Videsh.1465 The results of its human rights investigation, if any, have not been disclosed.

TotalFinaElf: Courted by Khartoum Government

The French/Belgian company TotalFinaElf, created from the mergers of three large European-based oil companies, is one of the leading oil companies in the world. In or about 1980, its predecessor Total acquired the concession for Block 5, which encompasses the place where the El Muglad and Melut Basins join. Block 5 stretches with zigzag borders south from Malakal to Bor and east to the Ethiopian border.1466 At approximately 120,000 square kilometers, it is by far the largest oil concession in southern Sudan, and reportedly the richest.

Total carried out seismic surveys in Sudan in the early 1980s and found that Block 5 (then Block B) had a “huge potential” for oil production. The company suspended operations in Sudan for security reasons in 1985,1467 a year after Chevron halted southern operations, but it maintained its ownership of the concession rights. Total executives made yearly trips to Sudan and met with the government so as to not lose the concession. The civil war made it impossible to develop Block 5, and qualified as a “force majeure” exception to the time limits set forth in the agreement, in the opinion of Total, and the Sudanese government either agreed or acquiesced.1468

What accounts for the extraordinarily long “force majeure” time period—not extended to the U.S. company Chevron at the same time—is no doubt Sudan’s desire to keep at least one huge multinational involved in Sudan. According to the Indian Ocean Newsletter, Sudanese Minister of Petroleum Awad al Jaz set off on a European tour in September 1999. He met what were then TotalFina officials in Paris, asking them to resume work on their permit in southern Sudan and offering further prospecting rights. He claimed that safety was improving. TotalFina officials reportedly decided to send a mission, accompanied by Sudanese officials, to check out the safety situation in Bor,1469 but it is not clear that the journey was ever made.

Following the oil minister’s pleas, TotalFina’s Director for East Africa Exploration announced in October 1999 that the company was planning to return to Sudan after a fourteen-year absence, focusing initially on further explorations in its existing concession of 120,000 square kilometers, Block 5. He said, “We plan to extend our presence in Sudan as the security seems to be improving.”1470 This statement, however, was made just a few weeks after the (September 1999) first sabotage of the GNPOC pipeline and the mutiny of several thousand of Gen. Paulino Paulino Matiep’s Bul Nuer militia troops, led by Cmdr. Peter Gatdet, who joined the SPLM/A. Block 5 is well inside various rebel lines—including those of the SPLM/A; Dr. John Garang, commander-in-chief of the SPLA, was born in Bor County, whose rural areas remain under SPLA control.

Meanwhile, Sudan’s oil minister said that TotalFina had bid for another concession, and that Sudan was eager to offer TotalFina the possibility of acquiring another tract.1471 On October 27, 1999, the French ambassador to Khartoum Michel Raimbaud reportedly told a Sudanese official that more French companies would invest in Sudan, particularly in the field of energy. The French ambassador made his comments the day after the Canadian government said it might impose sanctions on Sudan.1472

As of the writing of this report, TotalFinaElf has not taken any visible steps to expand its activity or interest in Sudan. Its concession is far from the pipeline and from the front line of the oil war. But the possibility that this giant would step in to the largest block in the south was always in the air, behind the government’s push to clear the way for the smaller companies on the smaller blocks.

Royal Dutch/Shell

The Shell Transport and Trading Company, the U.K. holding company of the Royal Dutch/Shell Group of companies, acquired the first oil exported from Sudan in 1999, to be refined in its Singapore refinery. Royal Dutch/Shell was trying to get an integrated, continuous, and long-term contract to purchase Sudanese crude oil, the government said.1473

Royal Dutch/Shell produced aviation fuel in Sudan. In May 2000, the Sudanese ministry of energy and mining declared that Sudan had begun producing aviation fuel.1474 Shell would have less of the Sudanese aviation fuel market and could expect its profits to drop.

Royal Dutch/Shell met with European campaigners urging it to withdraw from Sudan in early 2001. At its annual meeting, it was subjected to criticism for doing business in Sudan. It undertook to prevent the sale of its aviation fuel to the Sudan military. This decision not to sell aviation fuel to the Sudanese government was made easier by local competition from a Sudanese government enterprise.

1445 Petronas press release, “Prime Minister Opens Petronas Office and Launches Petronas Operations in Sudan,” Khartoum, May 15, 1998.

1446 Petronas press release, “Petronas’ Subsidiary Awarded Oil Development Job in Sudan,” October 18, 2000, (accessed November 21, 2000).

1447 “Nation: Petronas To Ignore U.S. Sanctions: Dompok,” Business Time (Kuala Lumpur, Malaysia), March 8, 2000.

1448 “Sudanese Govt Invites Investment by Malaysian Cos,” Asia Pulse via COMTEX, Kuala Lumpur, January 13, 1999.

1449 Petromin press release, “Sudan to attract Malaysia’s oil and gas investments,” May 16, 2000, (accessed November 21, 2000).

1450 Mohd Fisol Jaafar, “Petronas contributing towards well-being of Sudan,” Bernama, Khartoum, July 13, 2000.

1451 Mohd Azhar Bin Osman Khairuddin, Senior General Manager, Legal & Corporate Affairs, Petroliam Nasional Berhad, Kuala Lampur, letter to Human Rights Watch, December 14, 2000.

1452 Ibid.

1453 Ibid.

1454 Lundin press release, “Lundin Oil: Petronas, OMV, Sudapet and Lundin Oil are Granted Block 5B Onshore Sudan,” May 3, 2001. The secretary general of Sudan’s mining and energy ministry Hassan Mohamad Ali announced that Petronas was awarded at least a 40 percent stake in Block 5B. “Malaysian oil firm given stake in Sudan project: report,” AFP, Kuala Lumpur, July 13, 2000.

1455 West Bank Peace Council, Ganyliel, Western Upper Nile, 5th April to 7th April, 2001, resolutions.

1456 OMV Aktiengesellschaft has revenues of US $ 4.593 trillion yearly, and is based in Vienna. It was the state-owned petroleum company until a process of privatization began in 1987. Now the state entity, Österreichische Industrieholding AG (ÖIAG), owns 35 percent and its next-largest shareholder is the International Petroleum Investing Co. (IPIC), based in Abu Dhabi, with 19.56 percent. See (English, Investor Relations, Stockholder Services, Stockholder Structure and Privatization, accessed July 11, 2001).

1457 Ibid.

1458 OMV press release, (accessed March 18, 2001), OMV did not list an office address in Sudan in correspondence with Human Rights Watch or on its website.

1459 Ibid.

1460 OMV’s Guiding Principles, (accessed November 4, 2002).

1461 Email, OMV Aktiengesellschaft, Bettina Gneisz, Kommunikation, to Human Rights Watch, April 6, 2001.

1462 Louis Charbonneau, “OMV alarmed by claims of govt-led violence in Sudan,” Reuters, Vienna, May 15, 2002.

1463 Email, Philipp-Stephan Schneider, Sudan Plattform Austria, to Human Rights Watch, Vienna, October 9, 2002; see Sudan Plattform Austria, (accessed November 5, 2002).

1464 Louis Charbonneau, “OMV studying human rights situation in Sudan,” Reuters, Vienna, July 11, 2002.

1465 OMV announcement, (accessed September 10, 2003).

1466 Total had been active in the fledgling Sudanese petroleum sector for several years. It signed one oil prospecting agreement (for the Red Sea area) in 1979 and another in 1980. “Sudan: French Oil Agreement,” SUNA, in English, November 5, 1980, BBC, November 18, 1980; “Oil Prospecting Agreement with Total,”, November 7, 1979, BBC, November 20, 1979.

1467 “Total Fina Plans to Resume Oil, Gas Exploration In Sudan,” Dow Jones Newswires, London, October 1, 1999.

1468 Anonymous corporate source, June 2001.

1469 “Sudan: Energy Minister Working Hard,” Indian Ocean Newsletter (Paris), September 11, 1999. This followed a July 1999 trip abroad by John Dor, then deputy minister of energy and mining, who tried but failed to convince Western oil majors to take up new petroleum exploration permits in Sudan. Ibid.

1470 “Total Fina Plans to Resume Oil, Gas Exploration In Sudan,” October 1, 1999.

1471 Ibid.

1472 “French investment in Sudan to increase: ambassador,” AFP, Khartoum, October 27, 1999.

1473 “Shell Seeks More Contracts to Purchase Oil,” Omdurman Republic of Sudan Radio Network, Omdurman, in Arabic, September 4, 1999, as translated in FBIS, Washington, D.C., September 7, 1999.

1474 Ibid.

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November 2003