Shareholders of the oil multinational, BP Amoco, will vote at an April 19th Annual General Meeting in London on a resolution directing the company to sell its 2.2% stake in PetroChina.

The proposal has been tabled by a consortium of NGOs and individuals who bought shares in BP Amoco in order to advocate from within for ethical investment and business practices. The NGOs are concerned about two aspects of PetroChina's operations: natural gas exploration and pipeline projects in the Qaidam Basin of Qinghai and the Tarim Basin of Xinjiang; and the substantial investment of PetroChina's parent company, the China National Petroleum Corporation (CNPC), in the oilfields of war-torn Sudan.

The state owned CNPC oversees more than two thirds of China's domestic crude oil production, and has concessions to work overseas fields in Kazakhstan, Venezuela, Sudan, Iraq and Peru. In 1999 it established the holding company, PetroChina, and in April 2000 an initial share offer of 10% of PetroChina's stock was made on the New York and Hong Kong stock exchanges. Uptake was relatively slow among the large institutional investors, possibly in part because of concerns over human rights and labour issues raised by an international coalition of interest groups. BP Amoco, however, spent USD 578 million acquiring a 2.2% stake in the Chinese state company. This makes BP Amoco the largest foreign investor in PetroChina, and consolidates its place as the largest multinational player in China's oil market, well positioned for long term strategic partnerships. Apart from its PetroChina stake, BP Amoco has joint venture operations in the Bohai Sea and in the Yacheng gas field (currently China's largest) off Hainan island; and is actively exploring in Shanxi province. It also has plans to become involved in the retail sector.

In October 2000, shortly after BP Amoco bought into PetroChina, the Tibetan government in exile, headed by the Dalai Lama, called for a halt to oil and gas extraction and pipeline projects in ethnic Tibetan areas, claiming that these would 'accelerate China's policy of transferring Chinese settlers into Tibetan areas.' BP Amoco, Enron and Agip were named as associated with ongoing or planned projects.

Largest of these is a planned USD 7 billion, 4,000 kilometre gas pipeline from Xinjiang to Shanghai. A second line, to pipe natural gas from Qinghai to Gansu, is under construction. These projects are important planks of China's overall energy policy to increase low-polluting natural gas from a current 3% of total domestic energy consumption to more than 10% by 2010. Supporters of the pipelines may therefore argue that they are good for the global environment. A more moot point is how good they will be for upstream local communities.

BP Amoco has in fact declined to become directly involved in these projects. Chinese hopes of substantial foreign investment in the pipelines have so far been largely disappointed. However, the government is determined to proceed through its own company, PetroChina.

The BP Amoco divestment motion was originally submitted by the Free Tibet Campaign, but it has also received backing from groups concerned about Chinese involvement in Sudan. PetroChina's parent company, CNPC, is a 40% stakeholder in the Sudanese Greater Nile Petroleum Operating Company, and Chinese workers are employed in Sudan at the point of production. (Shell, Agip, Total-Fina-Elf and smaller oil companies from Austria Canada, Malaysia and Sweden also have operations in Sudan). Amnesty International, a UN special rapporteur and numerous international press reports have alleged that the Government of Sudan is pursuing a 'scorched earth' policy of driving local communities away from oil installations and pipelines in order to protect an industry that provides the Sudanese government with revenue of USD 500 million per year, some of which is used to prosecute a civil war against the predominantly Dinka people in the south of the country.

BP Amoco has rejected any link between their investments and CNPC's operations in Sudan, insisting that PetroChina is a legally separate company from its parent, devoted to operation and development of Chinese markets, where BP's main interest lies. The company also argues that it's 2.2% stake in PetroChina give it only limited influence over the company's operations.

The divestment resolution has very little prospect of succeeding, although it will generate publicity for the Free Tibet Campaign and serve to keep BP Amoco's China operations in the public eye.

A second, more moderate resolution to the Annual General Meeting, tabled by the Ecumenical Council for Corporate Responsibility, would almost certainly have found broader support among church and ethical investment fund managers and mainstream investors who are increasingly influenced by public concern for international business ethics. This resolution called for BP Amoco to apply, in any investments it made in companies such as PetroChina, similar ethical standards to those it upholds in its own operations. It was, however, rejected by the BP Amoco board on a procedural technicality.

Over the last twenty years, BP has worked hard to project itself as a flag-bearer for a new kind of socially responsible, corporate behaviour. Chief Executive, Sir John Browne, has argued that 'companies like BP have to be transparent in all their dealings' because they 'cannot afford to disappoint the general public.' He outlines a vision of corporate citizenship which amounts to 'investment in communities and support for a few key objectives, in particular for the creation of wealth and jobs wherever we operate, and for wider efforts to create a sustainable society.' (Visions of Ethical Business www.business-minds.com 2000).

In China the says it has pursued a policy of 'constructive engagement,' bringing and promoting among partners western business practices with higher environmental standards, greater transparency and better working conditions. It also has a corporate philanthropy programme which has included the funding of environmental education initiatives piloted by the World Wide Fund for Nature and the State Education Commission. The company recently agreed to contribute a further USD 1 million to bring this project to a 'full implementation' phase, which will include establishing six environmental education centres in normal universities. According to a Beijing spokesperson for the company, it has recently completed a 'social investment strategy review' in China, which will serve as the basis of expanded philanthropic activities. Although not itself directly involved in western China, the company is actively considering philanthropic 'opportunities' in the context of the Western Development Strategy.

International NGOs generally stress the distinction between corporate philanthropy (charitable donations) and corporate responsibility, which addresses the nature of core business operations. The growing determination of some organisations to act as watchdogs of the corporate sector, lobbying for more ethical standards in deed as well as word, signals a major shift in the way that international development NGOs are beginning to conceive of advocacy work.

Some of the agencies involved in the BP-Amoco divestment campaign are not special interest groups but mainstream development NGOs. Such organisations are increasingly switching their advocacy focus from international agencies such as the World Bank and United Nations to the hugely influential private sector. A policy spokesperson for one such UK based development NGO commented that 'oil companies above all have extremely close relations with foreign governments and a great deal of influence, because developing country governments need their technology and know-how to convert their own resources into revenue streams. There is a critical opportunity here [for companies to publicise the terms of their agreements with government] because once the oil or gas starts coming out of the ground the influence of the companies tends to decline.'

This changing advocacy approach of development NGOs may, however, also portend internal problems for organisations which run development projects. Field programme staff need to build good relations with government in order to maximise the impact of their work, and this will naturally be more difficult if their head office policy advocates are pursuing campaigns that may affect developing country access to foreign investment.

Nowhere could this be a more vexed issue than in China, where government attitudes to international NGOs are distinctly ambivalent - and also almost certainly impact on attitudes to the development of indigenous civil society.