Maybe it comes with the territory of drilling for oil in
war-torn east African desert states or in South America’s
widely scrutinized rainforests, but if an oil company ever needed
a talisman to ward off the evil spirits of controversy and negative
press, it is Talisman Energy. With its Sudan experience a fading
memory downloaded to Chinese oil and gas interests, Talisman
may yet again be facing a public wrangle, this time in Peru.
At its 2010 annual general meeting in May, John Manzoni,
Talisman’s president and chief executive officer, launched
into a spirited presentation to shareholders. He explained its
lower first-quarter earnings of $228 million, compared to $455
million in the first quarter of 2009, as mostly the result of the
company’s transition to becoming a major unconventional
shale gas player in Canada and the United States. With that
nearly complete, the company is on track for growth in 2011.
Just as Manzoni sat down to open the floor to questions, a
young man in his late 20s or early 30s stood up and somewhat
tentatively took the microphone. He introduced himself as a
representative of Amazon Watch and brought with him three
Peruvian natives in colourful headdresses complete with facial
markings.
The bulk of that Q&A session was then taken up by presentations, first in indigenous dialects, then translated into Spanish,
then into English by the Amazon Watch representative. The
message was pretty straightforward: Talisman is operating
on native lands in Peru without consent; Talisman is polluting
their lands on which they depend for their livelihood and medicine; the natives want Talisman to respect their rights, stop its
operations, and leave its neck of the woods.
The right
mix
with its major asset reshuffling almost
complete, Talisman looks to 2011 for
growth
by R.P. Stastny
“We’ve learned some very hard lessons in Sudan,” Manzoni
said later in a news conference. “So we’re treading very carefully
in Peru. It’s a complex situation in terms of who represents who.”
The elder natives flown to Calgary by Amazon Watch claim
that although Talisman has an agreement to operate in the
region, that agreement was signed with locals who didn’t represent the interests of the community at large but rather a smaller,
more opportunistic subgroup.
“So it’s complicated,” Manzoni said. “We do a lot of consulta-
tion. The government of Peru is completely aligned with what
we’re doing, but, at the same time, we have to play that care-
ful balance.”
Work in Peru is still in the early exploration phase, Manzoni
added. Talisman will have to assess the risks and rewards of
that hydrocarbon resource as they unfold and make a decision.
SOUTHEAST ASIA
On the other side of the globe in Southeast Asia, where more
industrialized developing economies are grateful for all the
energy they can get their hands on, life is a lot simpler for
Talisman. It produces about 120,000 barrels of oil equivalent
a day in this region and actually set a new production record
last year, delivering 18 per cent growth over the previous year.
Talisman is working to mirror this success in Indonesia,
Malaysia, Vietnam, Australia, and Papua New Guinea. It made
a series of acquisitions in Papua New Guinea, which creates a
new opportunity for some low-cost gas aggregation and helps
underpin longer-term growth in the region.
Southeast Asia accounts for about a quarter of the company’s
worldwide production. At year-end 2009, Talisman operated only
about 34 per cent of its Southeast Asia production.
In 2010, Talisman plans to increase capital spending in
Southeast Asia to approximately $1.1 billion, with $780 million
directed to development spending.
“We can see about 10 per cent growth on average for the
next four or five years,” Manzoni said. “The costs are low. Cash
returns are very high. We have great relationships in the region
