A Calgary energy company that drew fire for investing in war-torn Sudan has made a $300-million deal to explore for oil in Iraq.

Last week, Talisman Energy announced it had bought shares of two blocks in the Kurdistan region of northern Iraq.

“First production is at least five years off,” says company spokesperson Teri Keyser. “It’s a major opportunity in an under-explored area.”

The area where Talisman will drill is virtually untapped, but a nearby oilfield is thought to contain 100 million barrels of oil. Talisman believes its holding could eventually produce 50,000 barrels a day, Keyser says. The company is partnering with Western Zagros, a small Calgary company that will operate the wells, and the Kurdistan Regional Government.

From 1998 to 2003, Talisman had a controversial stake in Sudan, which was embroiled in a civil war. Sudanese refugees alleged that Talisman’s money was propping up the Islamic government in the north of the country, which was accused of genocide and other war crimes against the Christian south. Two million people, most of them civilians, died in the war and four million were displaced.

Human rights activists and members of Calgary’s Sudanese community campaigned for Talisman to withdraw from Sudan, holding annual protests outside the company’s shareholders’ meeting for several years. Community workers even launched an unsuccessful $1-billion lawsuit against the company.

Under pressure from investors, Talisman sold its stake in Sudan in 2003, two years before a peace accord ended the civil war.

The company, however, isn’t concerned about running into the same problems in Iraq. Keyser says Talisman will abide by the same human rights and environmental standards as it does in Canada.

“They don’t want the same attention as they got in Sudan,” says Kam Sandhar, an industry analyst with Peters & Co. While Iraq could be a problematic investment, he believes the human rights issues present in Sudan aren’t really at stake in Kurdistan.

However, he warns that the volatile nature of the country could lead the federal government to ask for its cut of the oil money if the region starts producing. “There’s still a little bit of unrest between the regional and the central government,” he says.

Talisman’s investment came as a surprise to the industry. Just two months ago, the company decided to focus on developing its current reserves, particularly natural gas. However, it left open the possibility that it would explore for oil in areas where it wasn’t now operating. If all goes well, the company anticipates Iraq will become one of its core areas of investment and the payoff could be huge.

“In terms of geology and proven reserves, the potential is enormous,” says Sandhar.