The Dirty Dozen #11: Oil & Natural Gas Corp. Ltd.

Oil & Natural Gas Corp., India’s largest oil exploration and production company, has business ties to both Sudan and formerly to Saddam Hussein’s Iraq.  Its ties to these countries have stemmed from two unique business strategies: in Iraq, the company’s ties were, at least in part, due to a broader effort by the Indian government to open business ties with Baghdad; and in Sudan, the company has purchased the assets of Western companies that have fled the country due to moral objections to the odious policies of the Sudanese government.1

In Iraq, Oil and Natural Gas Corp. signed a number of contracts prior to the war, including exploration and development deals in the south as well as in other fields.  The company announced in 2001 that it would spend $5 million exploring these blocks for oil.  Operations on these contracts, however, never began due to UN economic sanctions.  As with Total’s deals with Saddam Hussein, such interests may have influenced the company’s government in its decision to oppose the U.S.-led liberation of Iraq.2

Oil & Natural Gas Corp. has acquired the Sudan assets of two Western oil companies after they divested their operations in that country.  Specifically, Oil & Natural Gas Corp. purchased Austrian OMV’s stake in two oil blocks and Canadian Talisman Energy’s stake in the Greater Nile Petroleum Operating Project.  Interestingly, Talisman’s decision to liquidate its Sudan interests followed intense pressure on its share value due to international outrage over the company’s role in providing revenues to the Khartoum government, revenues the latter actually acknowledged helped underwrite its brutal prosecution of a genocidal civil war.3

Oil and Natural Gas Corp.’s activities place it on the "Dirty Dozen" list for the following reasons:

• GeopoliticalMotives: According to published reports, the company has been accused of using U.S. sanctions as a bargaining tool in negotiations.  For example, in the case of the company’s ties to Saddam Hussein’s Iraq, some have speculated that company’s efforts dovetailed with the Indian governments efforts to expand its economic ties to that country.  Do American investors really want to hold the stock of a company that uses our country’s war on terrorism as a means of identifying business prospects?
• Moral and Political Cover:  When leading global companies such as Oil & Natural Gas Corp. partner with terrorist-sponsoring states, it sends a clear message to these governments: Sponsoring terrorism is not a concern as long as there are corporate profits to be made.  This message undermines U.S. sanctions and international diplomatic efforts.  This is particularly egregious in a case such as Sudan’s, whose human rights violations are proven to be enough to drive out even energy companies like Talisman that were willing to overlook Khartoum’s sponsorship of terrorism.  It is appalling that Oil & Natural Gas Corp. appears to view such withdrawals as nothing more than business opportunities. 

1. InfoProd, 7/8/02.

2. Dow Jones, 11/30/00; Financial Express, 4/18/03; and Weekly Petroleum Argus, 7/15/02.

3. Company Website, 10/2003; Oil & Gas Journal, 9/22/03; Middle East Economic Digest, 8/9/02; and Financial Times, 9/16/03