Niger Delta Crisis – Big Oil’s Big Lesson

Human Rights 6 Comments
Map showing Nigerian states within the Niger Delta (Image via wikipedia)

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.

 

6 Responses to “Niger Delta Crisis – Big Oil’s Big Lesson”

  1. Brad Shorr Says:
    December 11th, 2009 at 10:18 pm

    Andrew, What a horrible situation. Here’s a chance for corporations to step up and do the right thing where it really counts … but sadly it appears that’s too much to ask. What is it about Africa that brings out the best and worst in human behavior? It seems to be one big playground for vice, and yet you have incredibly courageous charity workers and independent individuals risking life and limb to make a tiny bit of difference. The whole situation is appalling.

  2. Andrew Says:
    December 12th, 2009 at 8:22 am

    Brad,

    I must admit that Africa is one continent which I do not understand, and probably never will unless I ever travel there (which is not on the cards in the medium term future).

    Granted, some parts of the continent suffer from harsh conditions. But this is not the case in the Niger Delta, where huge oil reserves should have guaranteed prosperity for all.

    Of course, oil companies cannot prevent government and military abuses, but they can prevent environmental damage to some degree, and they can (within reason) invest in local community infrastructure to ensure that the benefits of oil wealth are equitably shared.

  3. Alina Popescu Says:
    December 13th, 2009 at 9:08 pm

    Terrible situation indeed. And I am sure the money paid to kidnappers would be better spent on environmental programs. I am sure companies know or could find out fast what they can do to improve the current situation. I am also sure that kidnapper know, at least on some level, that their actions don’t change much, but make them some money…

    I remember seeing a video about abuses in Africa and the woman in the video was saying Africans need to help themselves first. They need to take action and then make use of all the help they get from Europe or the US.

    I know many young Africans from countries throughout the continent come to European countries to get a college education (many of them come to Romania as well) or a master’s degree. Yet few of them go back and try to change anything.

    As for other countries, we try to help out while also causing damage every day… I have to agree with Brad, Africa does bring out the very best and worst in humans!

  4. Andrew Says:
    December 14th, 2009 at 7:13 am

    Alina,

    Absolutely right, and some of the South Africans with whom I was close friends in Korea expressed sentiments along similar lines.

    The world can send all of the aid that it wants, but in the end, the future of African nations rests with themselves, not with the outside world.

    Granted, there is not a great deal that individual Africans can do on their own to change things. But it is up to each individual African nation to accept a degree of responsibility for their own destiny.

  5. Cath Lawson Says:
    December 19th, 2009 at 4:46 pm

    Hi Andrew – It’s a real mess. And they really need to stop dumping waste like yesterday and attempt to clean up some of the damage they’ve caused.

    I know Africa has huge problems but big international businesses make it far worse for them.

  6. Andrew Says:
    December 19th, 2009 at 8:43 pm

    Hi Cath,

    Yep the whole thing certainly reflects some very poor practices over a very long time – including from big oil.

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