Dragon oil and Turkmenistan

international | anti-capitalism | opinion/analysis

Wednesday October 18, 2006 17:13

by Joseph Peelo

Irish investment in one of worlds worst regimes

Ireland has a company heavily invested in the Caspian sea's oilfields belonging to Turkmenistan. The corrupt and brutal nature of this dictatorship should preclude any ethical company from investing and yet Dragon Oil plc is almost totally dependent for its existence on a Production Sharing Agreement with this repressive regime.

Dragon Oil plc claims to be an Irish company but the majority of its shares are owned by the Emirates National Oil Company (ENOC), 52.64%.

It is invested in the oil and gas fields of the Caspian Sea, the major natural resource for Turkmenistan, for which it has made a Production Sharing Agreement (PSA) with the dictatorship which generously allows this terrible autocracy a giant share. Of the forecast 651 million barrels due in the life of the agreement Dragon Oil are only netting 232 million of them. The Turkmen regime has quite a share. Along with a crashing cotton export economy, oil and gas are the only means for Turkmenistan to earn money and it is being aided and abetted by Dragon Oil.

Why is this bad? Turkmenistan is noted by Amnesty International as having a grave human rights situation. One where there are no opposition parties. Where torture, unfair trials, arbitrary detention, ethnic and religious discrimination, and restricted education are part and parcel of daily life. The CIA have stated that they use oil revenues to bolster this inefficient economy, in effect allowing the regime to survive. According to the best statistics they could garner 58% of people live below the poverty line and there is 60% unemployment. They are thought by Amnesty to utilize child labour to bring in their cash crop of cotton, but they are so repressive as a regime that independent monitors are not allowed in. Yet they have signed up to many of the world's agreements on human rights and liberties. They have embassies from the US and from UAE, home to ENOC. They receive US investment. They are not part of the axis of evil and like Burma seem to be able to maintain international investment inspite of their appalling record.

Over the past few weeks the Irish Times has had small notices in its business pages, little more than company press releases, informing investors of the profits and potential new earnings by the opening of new wells. No mention that Turkmenistan is a dictatorship, that a ruling elite siphon off the wealth of the oil and the majority live in poverty. That education is suffering and libraries closing. The health service collapsing. Instead Dragon Oil's website is clean and colourful, and their press releases focus on barrels per day and health and safety in line with regional operational standards, though what that might mean in a dictatorship is open to question.

The Turkmen government, or its dictator Niyazov, might feel they struck a good deal for themselves considering how little the Irish government received from Shell for the Corrib gas field. Irish investors may not care how their investment is affecting the lives of others, but coporate responsibility is increasingly relevant to both people and governments. If we can't stop Dragon Oil investing in Turkmenistan, or have them put pressure for a more open and less repressive regime, perhaps we can stop them associating this company with Ireland.

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Comments (2 of 2)

Dragon shares

by Brian Golden

Mon Oct 29, 2007 15:03

bgoldenirl at hotmail dot com

Thanks for this article. Found it on a random web search. I invested in Dragon just looking at the financials. Didn't appreciate just how bad the regime in Turkmenistan is. Looking much more into it, there has been a change of leader since this article but still things look very bad. I'm selling pretty much on your arguments as the recent production rates still make the share look cheap. I'm only sorry I didn't see this earlier!

Not all bad

by BigHare - none

Sat Nov 10, 2007 23:32

longniddry at yahoo dot co dot uk

Dragon Oil are not really Irish they are an Arab company UAE based. I invested and hope to make a rich picking from them. Ethical crap like the last comment is so narrow, all middle east is tainted. Buy the shares make the money EOS

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Dragon oil and Turkmenistan

Comments (2 of 2)