NEW YORK - When oil companies this month announced the discovery of a new reserve in the south of Africa's war-torn Sudan, Wall Street analysts took notice.
So did the villagers who lived nearby.
Forces of the Sudanese government, whose oil company is a partner in the consortium, had attacked their village and razed their homes. The attack appeared part of what members of Congress, international aid groups, and human rights organizations charge is an escalating government campaign to drive civilians away from the oil fields it wishes to control.
Oil has become the new front line in the bitter, 18-year battle between Sudan's Muslim government in the north and Christian and animist rebels in the south. Now, as oil developers push forward - and the Bush Administration reviews US policy toward Sudan, including sanctions - critics have stepped up calls for investors to divest. They argue that oil profits aid the government side of a civil war in which more than 2 million people have died from bloodshed, disease, or famine.
This month, clergy, professors, and activists dashed off letters of protest as part of ''Fidelity Awareness Week'' to Boston-based Fidelity Investments, the fifth-largest stockholder - through 29 mutual funds - in Talisman Energy Inc., a Canadian oil company that holds 25 percent of the private-government consortium.
Members of Congress have recently written to the US Treasury, the Securities and Exchange Commission, and the New York Stock Exchange in protest. They say oil companies that do business in Sudan, an act they argue violates the spirit of US sanctions, should not be allowed to trade on the stock market.
Last week, the US Commission on International Religious Freedom seconded the call; congressional hearings on the Sudan on Wednesday will examine the issue.
''Oil is bringing death and destruction to the Sudan,'' said Representative Frank R. Wolf, Republican of Virginia, who called on the New York Stock Exchange this month to de-list PetroChina, a subsidiary of Chinese National Petroleum Co., which has holdings in the Sudan.
But the companies say they are a constructive force.
''Economic development leads to peace,'' said Barry Nelson, a spokesman for Calgary-based Talisman, explaining why the company has resisted calls to pull out.
Some pension and mutual funds have divested from these consortia on moral grounds. The Presbyterian Church recently barred its entities from owning stock in Talisman. Among Boston-based shareholders, State Street Management & Research, which manages money for large US corporate pension plans, recently sold its PetroChina shares but said it was for business reasons. It still holds Talisman stock. Mellon Bank, whose money-management operations are based in Boston, holds PetroChina stock.
Asked about Fidelity's investments in Talisman and the war in the Sudan, Vincent Loporchio, a spokesman, said: ''We believe the appropriate authorities of the world have the responsibility to address matters of this type. Our responsibility is to weigh the impact of these issues on behalf of our fund shareholders.''
BP Amoco PLC, which has a 2 percent investment in PetroChina, says its investments do not go to company operations in the Sudan because of American sanctions.
Africa's largest nation has been engulfed in warfare since 1983. Seeking autonomy, Christian and animist factions in the south have battled the Muslim-dominated government in the north. In addition to those killed, about 4 million people have been uprooted.
The United States has provided $1.2 million in humanitarian aid in the last decade. Washington added the Sudanese government to the State Department's list of terrorism-exporting countries in 1993 and imposed sanctions in 1997, a year after UN sanctions went into effect.
Since oil exportation began in 1999, the war has taken a new form: what the State Department describes in human rights reports as a government scorched-earth policy surrounding the oil fields.
That year saw the opening of a 1,000-mile pipeline built by Talisman and its partners to carry oil from southern Sudan swamplands to Port Sudan on the Red Sea.
Rebels at first warned oil companies to leave or be ''treated like any other military target.'' But government forces appear to have done most of the attacking, in villages near the initial oil fields of Heglig and Unity, not quite 500 miles south of Khartoum. Rights groups say the government was anxious to drive civilians away lest they be sympathetic to the rebels.
Amnesty International, Human Rights Watch, Christian aid groups, UN officials, and a Canadian government commission have found that the government used helicopter gunships, bombs, and local militia against civilians.
''Oil ... has prompted Khartoum to focus its military efforts, including forced mass displacement of civilians, on oil fields and the pipeline,'' the Washington-based Center for Strategic and International Studies declared in a report this month.
Production, now 200,000 barrels per day, is expected to double in the next two years. Proven reserves of more than 1 billion barrels could make Sudan ''a new medium-scale oil exporter,'' concluded the report from the Washington-based center.
This month's oil find by Lundin Oil of Sweden and other companies shows reserves southeast of current fields. Aid workers traveling a new access road to the site had some findings of their own.
''All the villages that once existed along the road,'' said an aid worker with Operation Lifeline Sudan, a UN-consortium of aid groups, ''have been razed by the government of Sudan ... small military garrisons are clearly visible every five kilometers ... the bulk of the population that once lived in villages along the road ... are now out of reach.''
The aid worker, with a worldwide, nonsectarian agency, gave this account in a report obtained by the Globe. The worker requested anonymity for security reasons.
The report cited villagers saying that Soviet-made Antonov planes ''would bomb the villages first to scatter people. Then, government of Sudan troops would come in the village by truck and by helicopter. The troops would torch the villages and kill any people.''
Lundin, the Swedish oil company, said it is investigating allegations of human rights abuses.
A half dozen aid workers working in the Sudan said in telephone interviews that such sights are typical. ''There's been increased bombing in the last nine months, and particularly when there is going to be a new oil site,'' said Sheryl Haw of MEDAIR, a Swiss-based relief agency.
Some 60,000 people who fled the fighting are now in the government-controlled city of Bentiu, 400 miles south of Khartoum. Talisman, the Canadian oil company, argues that the clinics and emergency shelter it opened in that city are grounds for remaining there.
Talisman, which posted record profits of $906 million in 2000, says it will invest $2 million this year in relief projects. ''You don't see that coming from a lot of oil and gas companies operating in equally difficult regions,'' said Randy Ollenberg, an oil analyst with Merrill Lynch in Calgary. Merrill Lynch, which lists Talisman as a buy, is also invested in it.
Barry Nelson, Talisman spokesman, says the firm has ''never been able to confirm any instance of displacement'' in its concession area. However, a Canadian government commission that last year investigated Talisman's operations disagreed, although sanctions were not imposed.
''In Ruweng County it is hard to deny that displacement is now and has been ... because of oil,'' the report said, naming the county adjacent to Talisman's fields. The report also concluded that oil profits were not a cure for Sudan's ills - as long as companies were partners with the government.
''It is difficult to imagine a cease-fire while oil extraction continues,'' the report said, ''and almost impossible to do so if revenues keep flowing to ... the government of Sudan.''
Oil earnings, roughly $500 million, accounted for a 25 percent leap in Sudan's revenues last year, according to the International Monetary Fund. Sudanese government figures indicate defense spending increased by $80 million last year, according to the IMF.
Last year, General Mohamed Osman Yassin, Sudanese armed forces spokesman, boasted to a newspaper that Khartoum would reach self-sufficiency in production of light and heavy weapons because of an ''unprecedented economic boom,'' particularly in oil exploration and exportation.
First Vice President Ali Osman Taha last month contradicted him. ''We do not use the petroleum proceeds in the civil war,'' he said.
Companies that trade on US stock markets must abide by American law, and it is unclear whether foreign oil companies technically do so by operating in the Sudan, against which there are American sanctions.
But some members of Congress aren't taking any chances. In addition to discussion of sanctions, bills introduced before the House and Senate this year call on President Bush to report on oil revenues that finance Sudan's war.
© Copyright 2001 Globe Newspaper Company