Talisman Energy at a Crossroads

Policy vs. Practice in the Amazon

Canadian oil company Talisman Energy has generated significant buzz in the Corporate Social Responsibility community with the recent release of their Global Community Relations Policy which incorporates the "broad principles" of Free, Prior and Informed Consent (FPIC). This is an important step forward in an industry increasingly subject to legal, reputational and operational risks as companies move into increasingly remote areas of the world in the search of oil. However, Talisman continues to face protest and opposition to their operations from the Achuar people in Peru despite the company's assertion that they are operating with community support. Why this gap between policy and reality on the ground?

In 2008 when three Achuar leaders travelled to Talisman's Annual General Shareholder Meeting in Calgary, Canada, CEO John Manzoni made an important commitment: "Talisman will not work in Peru in areas in which it does not have an agreement with the community." The company continues to maintain that it has the support of the communities directly affected by their operations. However, the majority of Achuar living in Block 64 continue to protest that Talisman has no right to be there. Understanding this gap between the Achuar's opposition and Talisman's perception that they have a license to operate requires an understanding of the history, geography, and traditional decision-making structures of the Achuar. It gets to the heart of the challenges that companies need to address when implementing an FPIC policy.

There are two groups of Achuar in Peru separated by the mighty Pastaza river. To the east Achuar in the Corrientes river basin have suffered devastating environmental and health impacts from more than 40 years of oil drilling. The Achuar to the west in the Pastaza and Morona river basins watched these developments and decided the risk of oil drilling to their way of life was too great. They were particularly concerned about a large, remote wetlands area in the heart of their territory – a crucial hunting and fishing ground and the source of much of the fresh water that flows through their territory. That is precisely the area where Talisman has been exploring for oil.

Conflict and division

The Achuar of the Pastaza and Morona have been opposed to oil drilling since the creation of Oil Block 64 in their ancestral territory in 1995. By the time Talisman bought a 25% interest in the block in 2004 the lead operator Occidental Petroleum (Oxy) had managed to convince a handful of communities in the north-west corner of the block to allow initial seismic testing. Oxy offered money to leaders who could convince their communities to join them, set up new Achuar organizations, and divided the Achuar people.

When Talisman became the lead operator in Block 64 in 2007 they renegotiated community agreements and continued seismic exploration and drilling. But what Talisman saw as an effort to broaden their engagement and community support was seen by the Achuar as a continuation of Oxy's efforts to divide and provoke conflict between the Achuar. To Talisman it may have seemed perfectly reasonable that individuals, families and communities should be free to choose whether they wanted Talisman to be there, but to the Achuar elders and traditional chiefs this went against their values of collective decision-making and undermined the unity of the Achuar people.

In May 2009 a large group of Achuar walked several days to one of Talisman's drilling platforms to express their opposition to ongoing operations, but they were received by an armed group of Achuar allied to Talisman. The tense stand-off could well have ended in shots being fired if it hadn't been for the intervention of the Achuar elders. The Achuar see oil companies as being at the heart of these conflicts between families, but in this case the Achuar accuse Talisman of transporting people with guns to the drilling site, fueling the flames and almost provoking a massacre.

The Achuar's perception that Talisman is the cause of conflict and division is in part due to the unscrupulous tactics of their predecessor Oxy, but no doubt it has been re-enforced by Talisman's actions at the drilling platform in 2009. The Achuar see Talisman's continued attempts to negotiate further agreements with communities as corrupting and divisive. This disaffection and conflict presents an ongoing risk to Talisman's operations on the ground.

Prior consent and collective decision-making

At each stage of operations in Block 64 Talisman Energy has negotiated agreements with neighboring communities. But the Achuar object to the very existence of the block and the ongoing threat of oil drilling. They were never consulted when the Peruvian government created the oil block in 1995 and auctioned it to oil companies. They know that if Talisman finds oil, after hundreds of millions of dollars of investment in exploration, it will undoubtedly lead to development and decades of production with roads, pipelines and wells that will affect everybody living there.

The primary responsibility for consultation prior to the creation of an oil block lies with the Peruvian government, but for the Achuar Talisman's presence on the ground makes it an accomplice in an abuse of their right to participate in decisions about their future. Now the government and Talisman are locked in a contract with financial obligations that create a massive economical and political obstacle to either side respecting the Achuar's right to self-determination and questioning the creation of the block itself.

At times Talisman has portrayed the situation with the Achuar as a a dispute over territory and borders, but the Achuar's relationship with their territory is very different to the ownership of property in the western world. There are no clear boundaries and land does not belong to any one family, individual or community. The Achuar say that oil drilling would affect everybody and any decision should be made collectively – not by a single community but with all the elders and traditional leaders of the Achuar people together as a whole.

Collective and consensus-based decision-making present a challenge to an oil company. It is far easier to negotiate with a community at a time or a small group of leaders who represent and can make decisions on others' behalf. But major decisions are made in large assemblies of hundreds of Achuar from every community who debate for days from dawn to dusk until consensus is reached. The Achuar have consistently decried Talisman's failure to respect these decisions.

From an individualistic north-American perspective, it makes sense the any community or individual should be free to allow oil drilling in their land. Indeed, the idea of putting your own interests before those of your neighbor is appealing to several young Achuar leaders. But to the Achuar elders and traditional chiefs this undermines their collective rights and their traditional decision-making structures and threatens the fabric of their society.

Who is affected?

Talisman says that they are operating with the support of the communities directly affected by their operations, but who decides who is directly affected? Talisman has not visited the the majority of communities within Block 64 to fully understand how exploration will affect their territory and hunting grounds. Despite this the company asserts that the communities opposed to their operations are not affected, and they do not need their support.

Much of Achuar territory in the remote headwaters of the Amazon has not yet been legally titled and appears on maps as a vacant area. Talisman has entered areas many miles from any community and been surprised when they are confronted by angry groups of Achuar. The Achuar see this as a continued lack of respect and it increases animosity towards the company.

Identifying whose territory and rights are affected by oil operations in the Amazon is a challenge due to the lack of maps and formal land titles, but failing to do so runs a very real risk of provoking conflict when a work team turns up in someone's back garden.

Next steps

This year Talisman plans to expand exploration further into Achuar territory and is already thinking about production, despite the Achuar's opposition. The Achuar are becoming increasingly frustrated that their message is not being heard and that the company continues to ignore them. Failing to address this issue exposes the company to significant operational and reputational risk in this area.

Talisman's management have committed to respecting indigenous rights, but the gap between policy and what is happening on the ground in Peru appears to be due to failures in communication and a lack of understanding of territorial issues and the complexities of indigenous decision making.

Respecting the principles of FPIC goes beyond a superficial commitment to "community support". Have the right people been consulted? Has the company conducted due diligence to identify whose rights will be infringed upon by their operations? Who do they need agreement from? Has there been coercion or manipulation and have people been free to make a decision prior to contracts being signed or the start of project phases?

In Amazon Watch's recent report "The Right to Decide: The importance of respecting FPIC" we identify some of these challenges and how a failure to meet them fails to address the underlying business risks associated with operations that affect indigenous peoples. In Peru, despite their new policy, Talisman has failed to address some of these key challenges and the company has failed to look beyond their obligations under national law to their broader responsibility to respect human rights independently of the state.

Talisman needs to stop, take a step back, and truly listen to what the Achuar are saying and understand how they are encroaching on their rights, and cease operations where they don't have consent. Meanwhile Talisman's new Global Community Relations Policy presents an opportunity for the company to learn from this experience and meet the challenges of FPIC in order to avoid repeating this situation in the future.

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