Talisman Energy
Executive Summary
Talisman Energy Inc. (Talisman) is an independent Canadian oil and gas producer. Talisman is a company that has been through a great deal of criticism due to their negative experience in Sudan in previous years. They were accused of numerous things such as fueling the civil war, believing the Sudanese Government was using oil revenues to purchase weaponry, and of being complicit in human rights abuses because of fees and royalties paid to the government for the rights to explore oil and gas. Now, Talisman is faced with the decision of whether or not they should enter into Kurdistan, knowing that the same thing can happen there as it did in Sudan. The KRG is asking for $220 million in exchange for allowing Talisman to search for oil reserves. Not knowing what the KRG will use the money for, whether it’s to improve economic development or to purchase weaponry creates a dilemma for Talisman. The board of directors had first-hand experience of the damage to Talisman’s reputation. With proper due diligence and continuous re-evaluation of the situation in Kurdistan, Talisman should now find it easier to discover political risk and solve problems before they arise.
Problem Statement
Talisman Energy Inc. has encountered problems in the past when entering into politically unstable markets in other countries. Now they are faced with the decision whether to enter the oil-rich Kurdistan region of Iraq, knowing there are great risks associated with it. If they decide to enter Kurdistan, can they do it without facing the same problems as they did in Sudan?
Analysis
Talisman’s interest in pursuing oil exploration in the Kurdistan region of Iraq has been shaped by many factors. First being that Kurdistan is estimated to have 39 million barrels of oil reserves. Second, Talisman was optimistic about the opportunity for foreign oil companies to tap into Iraqi oil now that Saddam Hussein had been defeated. Finally, the Kurdistan area was viewed as
Talisman Energy Inc. (Talisman) is an independent Canadian oil and gas producer. Talisman is a company that has been through a great deal of criticism due to their negative experience in Sudan in previous years. They were accused of numerous things such as fueling the civil war, believing the Sudanese Government was using oil revenues to purchase weaponry, and of being complicit in human rights abuses because of fees and royalties paid to the government for the rights to explore oil and gas. Now, Talisman is faced with the decision of whether or not they should enter into Kurdistan, knowing that the same thing can happen there as it did in Sudan. The KRG is asking for $220 million in exchange for allowing Talisman to search for oil reserves. Not knowing what the KRG will use the money for, whether it’s to improve economic development or to purchase weaponry creates a dilemma for Talisman. The board of directors had first-hand experience of the damage to Talisman’s reputation. With proper due diligence and continuous re-evaluation of the situation in Kurdistan, Talisman should now find it easier to discover political risk and solve problems before they arise.
Problem Statement
Talisman Energy Inc. has encountered problems in the past when entering into politically unstable markets in other countries. Now they are faced with the decision whether to enter the oil-rich Kurdistan region of Iraq, knowing there are great risks associated with it. If they decide to enter Kurdistan, can they do it without facing the same problems as they did in Sudan?
Analysis
Talisman’s interest in pursuing oil exploration in the Kurdistan region of Iraq has been shaped by many factors. First being that Kurdistan is estimated to have 39 million barrels of oil reserves. Second, Talisman was optimistic about the opportunity for foreign oil companies to tap into Iraqi oil now that Saddam Hussein had been defeated. Finally, the Kurdistan area was viewed as