Talisman Energy Case Analysis

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Talisman Energy Inc. is considering entering Kurdistan after the Iraq War, following a failed oil venture in Sudan caused by mishandling of public relations. In Sudan, Talisman was portrayed as a conspirator with the Sudanese government, fueling regional conflict and supporting human rights abuses. The media frenzy and activist pressure that ensued frightened away important investors, leading Talisman to withdraw. Similarly, Kurdistan faces a precarious and ever-changing political situation as a result of war, with the regional government striving for legitimacy and seeking foreign investment.

Despite the potential for profit and the availability of resources, the field lacks competition, leaving Talisman vulnerable to being targeted once again. The company faces numerous logistical and ethical challenges. Given their recent failure, it is advisable for Talisman to avoid entering such a risky market again, as it is still fresh in people’s minds, including their investors. Despite conducting thorough research and making visible corporate efforts, the media portrayed Talisman as indirectly supporting human rights abuses in Sudan through their operations. Unable to minimize the negative impact, Talisman had no choice but to withdraw from the region, losing both profits and presence.

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Talisman should carefully consider the potential effects on their reputation and stock value from political pressure and public opinion before deciding to enter Iraq. The problems Talisman faced with public relations in Sudan, which ultimately resulted in their withdrawal, can be attributed to two main factors. Firstly, Talisman’s position and composition in the region made it a prime target for activists. Secondly, their handling of the situation before and after facing backlash expedited their downfall.

Talisman had a direct connection with the Sudanese government through their purchase of a 25% share of GNPOC. This enabled them to share profits with both the Sudanese government and other international companies associated with the company. However, instead of being distributed to local communities, most of these funds were received by the government itself. This created issues as the government utilized these revenues to fuel additional conflicts within the country, which greatly upset activists. Similarly, in Iraq, due to the disputed legitimacy of the KRG, the political situation remains unstable and constantly changing.

Foreign investment in Kurdistan carries significant risk due to the region’s violent history and its status as a minority group in a war-torn area. In the 1970s, Chevron was among the international companies operating there before Talisman. However, when US sanctions restricted American firms’ operations, Talisman capitalized on reduced competition and utilized this chance to maximize profits. As a result, they attracted attention by lacking any refuge from global scrutiny.

In other markets, Talisman may be able to use the activities of other firms as both justification and a distraction from negative media attention. However, in Sudan, they were the only operator under close scrutiny. Similarly, in Iraq, US companies were discouraged from operating there, and although there is another Canadian firm present, Talisman would face the same potential media frenzy they experienced in Sudan due to their history of stigma.

The company was fully aware of the risks of operating in an unstable region. CEO Jim Buckee and the management staff acknowledged the potential for profit was greater than the risk, and they expected initial resistance but remained confident they could overcome it. Following the initial negative press and pressure, Talisman implemented various policies and measures in an effort to show their compliance with the demand to combat human rights violations.

Despite their efforts to gain power and influence in Sudan by acquiring a 25% stake in Talisman, it ultimately failed for two reasons. Firstly, Talisman was already in a minority position and lacked true control over the Sudanese. Secondly, their attempts to improve the situation were insufficient and came too late, resulting in widespread condemnation from international community, activists, and media outlets.

In Iraq, there is considerable profit potential due to the presence of 39 billion barrels of oil. However, the inability to export this oil along with escalating conflicts in the region significantly heighten the associated risks.

Talisman, a publicly traded Western firm, was primarily accountable to its investors. These investors played a dual role in the success of the company’s venture in Sudan – providing strength while also posing as a significant weakness. Despite experiencing a quadruple increase in revenues, Talisman faced a steep decline in stock price during this unfortunate episode. This decline can be attributed to the profound influence public opinion holds over a company’s stock value, regardless of its true value. Being publicly traded in both Canada and the United States made Talisman susceptible from two different perspectives.

Through the work of NGOs and media, a massive divestment campaign targeted Talisman as a surrogate for the Sudanese government. If the government did not yield to the pressure, Talisman’s lifeblood would be taken away. The campaign succeeded, and Talisman’s investors threatened to withdraw their support unless they complied. If Talisman had been privately or state-owned, these issues would have had a much smaller effect. To salvage both reputation and stock price, two possible solutions would have been improved pre-planning and a more assertive response to media criticism.

Talisman could have prevented some of the lawsuits from Sudanese church groups and activists if they had considered the region’s volatile nature and prepared for their operations on the ground. They could have achieved this by implementing outreach programs to engage with local communities, monitoring human rights violations in advance, and including activists as consultants and corporate advisors with more prominence.

By involving these groups and giving them the opportunity to participate in the process, you can effectively suppress resistance before it arises, adhering to the principle of “keeping one’s friends close, and one’s enemies closer”. Although this may have made Talisman vulnerable to potential media scrutiny in an expose-style manner or provoked activists if they felt their opinions were not respected, it is highly probable that their concerns and anger would be appeased, leaving no one to highlight supposed misconduct.

Talisman has another option to consider in response to the increasing wave of media-driven outrage and external pressure. Instead of shifting blame onto other companies in the region, whose demographics differ from Talisman’s and thus remain unaffected by similar pressures, Talisman should have initially chosen a powerful positive media campaign.

To mitigate negative press, Talisman could have taken the initiative to meet and listen to the concerns of NGOs and activists. Moreover, they could have gathered these complaints to create a media package that would address and rectify the issues raised. Another approach could have been investing a considerable amount of their profits (which had quadrupled at the time) to flood the media with positive visuals, thereby overpowering the criticism from the international community.

If Talisman floods the press with positive PR, investors will react less negatively to pressure and the public will consider both sides of the story. However, if this campaign fails, Talisman’s reputation and credibility will be damaged further, as it will be seen as a cover-up attempt that vilifies them in the eyes of the world.

Considering the absence of readiness for non-traditional risks and the subsequent mishandling of the PR crisis, my suggestion is that Talisman should not have entered Sudan. However, the knowledge gained from the Sudan experience, which includes assessing potential issues, planning for all types of risks (not just traditional ones), effectively responding to backlash, and maintaining a favorable media position, should be applied to a potential undertaking in Iraq. It is crucial to avoid repeating the same mistake made in Sudan due to the extremely high risk involved.

Factors such as exporting oil logistical problems, an unstable political climate, a lack of similar demographic firms, and the haunting memory of Sudanese failure all contribute to the possibility of a disaster. A second failure would harm major investors who are already cautious of repeating past mistakes, potentially leading to the company’s downfall. It is not wise for Talisman to venture into Iraq. However, if Talisman decides to proceed with exploring Kurdistan, they must prioritize thorough research and be prepared for the worst.

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Talisman Energy Case Analysis. (2016, Oct 26). Retrieved from


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