Sign in Subscribe
Petroleum

Human Rights Groups Pressure US Investment Funds Over Sudanese Oil Project

Strategic Insights

— 1 min read

Human rights and religious groups have launched a campaign against US investment funds over their holdings in Talisman Energy and PetroChina, citing concerns about the use of revenues from a major oil project in Sudan to fund conflict. The campaign aims to persuade funds to sell their stakes in the companies and avoid participating in PetroChina's upcoming initial public offering (IPO). Talisman Energy and PetroChina, a unit of China National Petroleum Corp., own stakes in the Greater Nile Petroleum Operating Co., which operates a 160,000-barrel-per-day oil project in Sudan. The project has been accused of funding Sudan's rulers to fight those resisting Islamic fundamentalist rule.

Key Takeaways:

  • Nearly 40 US investment funds own more than 6 million shares of Talisman Energy, representing about 5% of the company.
  • Top US investment funds, including TIAA-Cref, CalPers, the Texas Teachers Retirement Fund, and the New Jersey Division of Investment, have already sold their shares in response to the campaign.
  • The Vanguard Group, one of the largest fund groups and a top 25 institutional investor in Talisman Energy, recently sold its holdings due to market fundamentals, not pressure from human rights groups.
  • Funds like Vanguard and Fidelity stress that their primary obligation is to deliver superior returns to their shareholders, not to align with moral or human rights standards.
  • PetroChina's upcoming IPO, which will raise some $5 billion in equity, is expected to be a dud due to the political risk associated with CNPC's involvement in Sudan and the fact that shares will be readily available in the after-market.

Statistics:

  • 160,000 barrels per day: the daily production capacity of the Greater Nile Petroleum Operating Co. oil project in Sudan.
  • 40: the number of US investment funds that own more than 6 million shares of Talistan Energy.
  • 6 million: the number of shares owned by top US investment funds in Talisman Energy.
  • 5%: the proportion of Talisman Energy's shares owned by top US investment funds.
  • $5 billion: the amount of equity to be raised through PetroChina's upcoming IPO.
  • March 22: the expected date of PetroChina's IPO listing on the New York Stock Exchange.

Sources:

  • Oil Daily, February 14, page 1.
  • Morningstar, portfolio data.
  • Vanguard Group, statement to Oil Daily.
  • Orbitex Funds, statement to Oil Daily.
  • Fidelity Investments, statement to Oil Daily.
  • Securities and Exchange Commission, filing by PetroChina.

Read more