Talisman Energy Inc. the Decision to Enter Iraq Essay

Words: 1528
Pages: 7

Executive summary:

Before entering Iraq, Talisman must do their due diligence in order to maximize profits and minimize risks. Due diligence would require a thorough review of both surface and subsurface risks to successfully extracting oil from Iraq and bringing it to market. It is important that they clearly indicate what needs to be done. Given Talisman’s background in Sudan: 1) Being accused of indirectly giving weapons to the Sudanese government by the NGOs which created lots of media attention and bad press. 2) Talisman used their influence and adopted steps to stop human rights abuse in Sudan, leading them to become the largest independent oil and gas firm on the basis of revenue. 3) NGOs and Sudanese people formed a lawsuit
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* Although risky, Canadian owned Western Oil Sands entered into production agreements with the KRG but was later purchased by U.S. based Marathon Oil who then resold to another Canadian firm, Western Zagros, due to U.S. political pressures. * Talisman then paid US$220 million to KRG for permission to join Western Zagros oil exploration and production activities in Kurdistan. * Despite concerns that Bagdad may challenge the KRG’s autonomy assertions, the lack of sharing agreements with the central government and pipeline accessibility, investing in the KRG was more optimistic and manageable than investing in southern Iraq.

Discussion of Alternatives:

1. Negotiate a balanced agreement with the Kurdistan government:

To avoid problems like the ones experienced in the Sudan case, it is necessary that a clear understanding be reached between Talisman and the KRG to ensure that both parties’ expectations of the business arrangement can be met. Learning from the Sudan experience, it was important for Talisman that a significant portion of the monies retained by the Kurdistan government through tariffs be invested in the community. To achieve this, tariffs and taxes normally paid to the government, would be offset by direct investments in community projects by Talisman. This way, Talisman is assured that the money is invested towards the right causes. With this approach, stakeholders such as NGOs, the people of Kurdistan,