Home / Companies / ONGC’s Sudan deals come under attack

Hyderabad: International activists are turning the heat on India’s Oil and Natural Gas Corp. Ltd (ONGC) over its operations in the civil war-ravaged African nation Sudan following similar campaigns against Chinese and Malaysian oil firms.

Amnesty International, Genocide Intervention Network (GIN) and Investors Against Genocide have launched targeted campaigns after GIN’s Sudan Divestment Task Force report identified ONGC as among the top four “highest offenders" indirectly contributing to the ongoing conflict in Sudan. While estimates vary, the conflict, which started in 2003, is believed to have killed nearly 300,000 people and displaced at least two million Sudanese from their homes. ONGC has invested nearly $1 billion (Rs4,288 crore) in Sudanese oilfields and is one of the top three players in the oil sector in that country. Activists claim that ONGC is stonewalling efforts by both activists as well as investors to engage the company on its operations in Sudan.

“We have regularly written to and called ONGC but, have not yet been able to secure a meeting or phone call to discuss their operations in Sudan. To our knowledge, investors have not yet been able to effectively engage with ONGC either," said GIN International coordinator Scott Wisor.

Asked about the human rights issues involved in the company’s Sudan operations, ONGC spokesperson M. Selva Pandian said the company acknowledged the “ethical question" involved and the “big dilemma" that it poses.

“However, we are a 74% state-owned company and a purely commercial entity. It is not really in our hands, we follow the directions given by the Indian government," the spokesperson added. Joining ONGC on the shortlist in the report, released on 31 May, are China National Petroleum Corp., Malaysia’s Petroliam Nasional Berhad (Petronas) and China Petroleum and Chemical Corp. (Sinopec).

As per International Trade Center (ITC) data, Sudan’s oil export, which constitutes nearly 90% of total exports, stood at $4.8 billion in 2006 and are expected to touch $7 billion in 2007. Amnesty claims that close to 70% of this oil revenue is used by the Sudanese government for military expenditure. The campaign by the human rights activists is channelled through mutual fund houses and institutional investors who will have a better chance of influencing companies they have invested in.

“Ultimately, the goal is to get big oil companies, like Petronas or ONGC, to engage the Sudanese government to end the violence in Sudan," wrote Amy O’Meara, Amnesty International USA human rights and business director, in an email response to Mint’s questions. “We are talking to major investors in the US who have holdings in ONGC as well as the other major oil companies operating in Sudan, in the hopes that they will raise these concerns with the company."

Violent conflict started in Sudan in February 2003. A month later, ONGC started operating in Sudan through the wholly owned subsidiary ONGC Videsh Ltd (OVL) by acquiring a 25% stake in Greater Nile Petroleum Operating Co. from Canada’s Talisman Inc. for $720 million, as per the data available on the company website. Expanding its operations in May 2004, OVL acquired a 24.125% stake in Block 5A and a 23.5% stake in Block 5B operated by the White Nile Petroleum Operating Co. Ltd from Austria’s OMV Aktiengesellschaft for $134 million.

According to shareholding data available with the Bombay Stock Exchange, as on 31 March, foreign institutional investors, or FIIs, held nearly 8% stake in ONGC. At current market price, the entire FII holding is valued at around $560 million. American Funds is the single largest FII investor in ONGC, holding 46,016,142 shares or a 2.14% stake.

Campaigners have made headway with some large fund houses such as American Funds (handles $900 billion globally), Fidelity International Ltd ($279 billion), Berkshire Hathaway and T Rowe Price ($376 billion). Berkshire, Fidelity and T Rowe Price have reduced their holdings in Chinese oil companies linked to Sudan since the Sudan Divestment Campaign started two years ago.

“We are not trying to get anybody to sell their stake in ONGC, and we are not demanding that they stop operating in Sudan. Rather, we want the company to understand the impact that oil revenues are having in Sudan, how they are being used by the Sudanese government to fund military campaigns in Darfur," O’Meara said. In an effort to maintain sustained pressure on ONGC at its home front, Amnesty International and GIN are looking to partner with Indian organizations who can lead the campaign in India. Wisor who travelled to India last month as part of this effort, says that there is a severe lack of awareness in India about ONGC’s operations in Sudan and the firm’s potential to make a difference in the civil war-ravaged African nation.

Indeed, even R.K. Pachauri —a member of the ONGC board of directors and chairman of the Intergovernmental Panel on Climate Change, which won the 2007 Nobel Peace Prize—told Mint in a telephone interview that he was not aware of the issue. He declined additional comment on the issue saying that any comment he made would be “uninformed". “We are shocked to learn how ONGC is indirectly linked to the gross human rights violations going on in Sudan," admitted director of Delhi-based Human Rights Law Network, Colin Gonsalves.

Human Rights Law Network is one of the organizations with which GIN is exploring the possibility of a partnership.

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