Canadian oil giant Talisman Energy has bowed to pressure from human rights protesters and shareholders and quit a controversial Sudanese drilling operation.

Talisman has sold its 25% stake in the Greater Nile Petroleum Operating Company, which accounts for the bulk of Sudan's oil production, for 1.2bn Canadian dollars (�491m; US$766m)

It is an excellent project and has been a very good deal for Talisman shareholders

Jim Buckee, Talisman chief executive

The disposal followed claims that Sudan's government was using revenues from the project to fund repression of Christians and animists in the south of the country.

The stake was sold to India's national oil company, Oil and Natural Gas Corporation, which now faces protesters' wrath.

Besides making Talisman a target for humanitarian and religious activists, the holding has also risked leaving the firm open to US sanctions.

The US House of Representatives last year voted to bar oil firms with investments in Sudan from raising capital on US markets although the legislation has yet to be enacted because of opposition from President George W Bush.

"The controversy surrounding this asset certainly played a part in our decision," Talisman chief executive Jim Buckee said.

"The controversy... detracted from the strength of our other assets."

Mixed feelings

Talisman's move was welcomed by rebel movement the Sudan People's Liberation Movement/Army (SPLM/A).

"We think that other oil companies should also stop exploiting the blood oil until we conclude a just and fair peace agreement," an SPLM/A spokesman said.

But Mr Buckee expressed some regret at the sale of a stake which had proved highly lucrative since it was bought in 1998, proved highly lucrative.

"It is an excellent project and has been a very good deal for Talisman shareholders," he said.

Nonetheless, investors warmed to the deal, with Talisman stock standing 4.3% higher at C$58.60 in early trade in Toronto on Thursday.

Oil security

Indian Oil Minister Ram Nail defended the purchase as giving India - which imports 70% of its oil - "much needed security" in the market.

"The driving factor for this deal was that we need oil and at appropriate prices," Mr Nail said.

"We on our own are not in a position to meet even 50% of our demand."

Oil companies from Russia, France, Norway, the UK, China and Malaysia were already operating in Sudan, he added.

India's prospects of meeting its own energy needs were also boosted on Thursday by the discovery of a 7,000 billion cubic feet gas field off India's east coast.

The find, by Reliance Industries, India's largest private sector company, was one of the gas market's largest discoveries this year.