Map showing Nigerian states within the Niger Delta (Image via wikipedia)
Murder.
Brutal repression.
Razing of villages.
Air bombing campaigns reducing villages to rubble.
Arrests and subsequent hangings without due process.
Endemic corruption at various levels of government.
Broken promises of oil revenues being shared with locals.
Eviction from property with negligible compensation.
Forced abandonment of crops such as cocoa, cotton, rubber and groundnuts.
Oil spill cover ups
Gas flaring near villages
Waste dumping.
Ethnic rivalries.
Destruction of farming and fishing.
Impunity for environmental and human rights abuses.
Internal displacement of around 10,000 internal refugees.
Endemic poverty and people growing poorer since the 1960s
Have I left anything out?
Things have not exactly turned out the way they should have in the Niger Delta – where the 1960s discovery of oil was supposed to bring great wealth and abundance.
Granted, not all of these problems are the sole responsibility of Royal Dutch Shell Corporation. Nor were they caused entirely by Chevron, Nigerian National Petroleum Corporation or any of the other firms which operate in the Niger River Delta region – governments have had a fair part to play.
But given the extent of the debacle surrounding the region over recent decades, you can hardly expect locals to love the multi-national oil giants. And it is hard to escape the conclusion that some of the problems which the oil industry faces – sabotage of operations and kidnapping of workers, are their own doing to some extent.
(Refer articles here and here for more information about the social and environmental problems over the past few decades associated with oil production within the Niger Delta Region)
Real business problems and a management lesson
As well as being a human and environmental tragedy, the Niger Delta debacle highlights a key management lesson for the oil industry: look after the local people and environment or suffer the consequences.
To be sure, if it weren’t for the direct impact upon operations, it would be easy for big oil management to avoid paying a great deal of attention to the impact of their operations from a social and environmental perspective, be it in the Delta or anywhere else.
But big oil is concerned. Militant activity, including the sabotage of production facilities and the kidnap for ransom of oil workers, has long had serious operational implications. In April, security concerns forced Shell to completely shut down operations. As recently as October, the company was still producing only 120,000 barrels per day in the region, compared to 300,000 prior to a surge in activity.
More broadly, as at October, that same surge had caused total production in the region, which has capacity of 3.6 million barrels per day, to sink to 2.2m b/d (refer article).
Add to this the financial cost of ransom for kidnapped staff (from what I have read, big oil almost always pays up), and it becomes more than clear that the problem is not one which oil companies can ignore.
Why big oil should be proactive
Granted, big oil is not the sole cause of this mess. Indeed, most of the problems relate to government and military abuses, and in no way can Shell or anyone else be held accountable for these.
(That said, some of the problems, such as waste dumping and oil spills and cover ups, can be directly blamed on big oil. And there are other problems still, such as the destruction of farming and fishing, with regard to which oil production is no doubt a significant and directly contributing factor)
Granted, also, that whilst no doubt the vast majority of those involved in the sabotage of the oil fields have legitimate grievances, some are simply thieves and professional criminals.
Nevertheless, the troubles of the Niger Delta region highlight the need for oil firms to undertake pro-active measures to prevent or minimize any adverse social or environmental impact in areas in which they operate.
Due to post length issues, I will not go into the specifics about what kind of action companies like Shell should take in this regard (I may share a few of my thoughts on this in a later post, and suggestions from readers are certainly welcome). For now, suffice it to say that steps to eliminate waste dumping and prevent further damage from accidents and oil spills would be a welcome step, as would investing within local communities and the local region (outside of those investments which directly relate to operational requirements) so that local residents could see some real community gains flowing from big oil’s presence.
Rather than getting into the ‘how to,’ my main point here is to empathize the need for a proactive approach in this area.
The big picture is simple – production problems in the region won’t stop until social and environmental problems stop.
Clear also, is the lesson for big oil: look after the local people and environment - or suffer the consequences in kidnapped staff and lost production.
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