Shell Oil in Nigeria Essay Example

in 1930, and eureka in 1956 oil was discovered in the Niger River, south-east of Nigeria.

The Nigerian Oil is of a high quality compared to other petroleum resources, in what the industry refers to as “sweet crude. ” This means the oil requires less refining than other oil to turn it into gasoline or other products. The company was a joint venture with the Nigerian Federal Government, which owned 55 percent of the stake, Royal Dutch Shell owned 30 percent and the remaining percentages was owned by two other European companies (Lawrence, "Shell Oil in Nigeria", 2008). To break this down, Nigeria’s portion of the output is about 1 million barrels of crude a day, about half the total output.

Nigerian Oil Dutch/Shell company named the corporation in Nigeria “The Shell Petroleum and Development Company of Nigeria” called by most Shell Nigeria. The corporate vision is “Helping people build a better Nigeria through our commitment to sustainable development. ” The corporate mission or objective is: “To grow a business that positively impacts the business of our customers and the lives of Nigerians through our produce range and presence. To deliver value to customers using the highest standards and simple efficient business processes delivered by motivated and well-trained employees. (Shell Nigeria - About Us)

To make all this happen in 1997, Shell began a major reorganization campaign for the companies in Nigeria. They used workshops and seminars about their values, explained the seven core values, and aspirations of the staff. Many may ask why the make-over when the companies are so successful, over 2000 oil spills in rivers and on farmland. Management Royal Dutch/Shell Group is one of

the world’s largest petroleum companies. They control oil and gas exploration and production; pipelines and tankers carry the oil and gas; which is refined, marketed and distributed.

Their interest does not stop at oil or gas; but goes into coal, forestry, solar, and metal mining. They continue to develop a strong decentralized management style. The company strives to integrate the company into the nation of location, and act flexibly to open up opportunities and unique conditions. Shell Nigeria followed this corporate policy as it has developed. They employ over 2,000 people, ninety our percent of which are Nigerian to include half of the senior management (Shell Nigeria - About Us). This being said very few came from the impoverished delta community, where most of the facilities are located.

Less than 2 percent of Shell Nigeria’s employees are Ogoni (Lawrence, "Shell Oil in Nigeria", 2008). Profits and Motivation The Shell Development Company of Nigeria, accounts for almost 14 percent of Shell production and is the company’s biggest producer outside of the United States. They are the sole operator of a joint venture in which it has a 30 percent interest with the majority partner, The Nigerian National Petroleum Company which holds 55 percent stake in the venture (Shell Nigeria - About Us). Despite the many problems, Shell clearly intends to remain in Nigeria for the long haul.

Oil is the single most important commodity in Nigeria, and Shell is the back bone of the oil market. Shell is currently the largest oil and gas production company in the country, accounting for more than 50 percent of Nigeria’s crude oil output. Oil accounts for more than 90 percent of the

country’s foreign exchange, and more than 80 percent of Federal Government revenue (Lawrence, "Shell Oil in Nigeria", 2008). Shell Oil and Ethics Business ethics is the “application of general ethical ideas to business behavior. ” (Lawrence & Weber, Business and Society, 2008).

It deals with how companies act and protect others from harm. Was Shell Oil ethical in their dealings in Nigeria and did they protect the environment and others from harm? Did they live up to their written objective “to find, produce, and deliver hydrocarbons safely, responsibly, and economically for benefit of our stakeholders. ” (Lawrence & Weber, Business and Society, 2008). What ethical challenges from the people and Government did they face? What have they been doing to make the lives of the Nigerian people better?

The oil and gas industry is a tough field to be in and to compound the problems; Shell is in a country ravaged by poverty and violence by militant groups. The Nigerian government takes in 90% of the oil revenues with little going back for the betterment of their people. Lives are tough for Shell Nigeria employees and the people in this oil rich country. The company workers, with 95% of them being Nigerian citizens, are brothers, sisters and friends of the people in the Ogoni and Delta communities. Shell and outlying communities are intertwined whether or not they want to be.

So who was there to support the Ogoni people and promote their interests? In 1990, Mr. Saro-Wiwa met with Ogoni tribal chiefs and others to draft the Ogoni Bill of Rights, calling in part, for a fair proportion of economic revenue and higher environmental standards and protection. Shortly

following the bill, the Movement for the Survival of the Ogoni People was established focusing on educational and appeals to government and oil companies for changes. Public platforms called for Shell Nigeria to pay $10 billion in damages and royalties to the Ogoni people.

The movement group openly criticized Shell Nigeria’s environmental cleanup practices for oil spills, the above ground pipelines and unchecked and unregulated practices destroying the ecosystem. Shell Nigeria charged back that most of the oil spills were caused by sabotage. Also, they asserted environmental standards were complied with when the pipelines were first installed. Improvement efforts were in progress to upgrade and bury the pipelines. Shell claimed the population has doubled since they first installed the pipelines bringing people closer to their operations.

When the Ogoni’s young men saw no improvements resulting from the Bill or Rights or movement platforms, they took action in their own hands. Violence pursued with attacks on Shell Nigeria employees and their operations. The damage to the equipment and loss through theft was unprecedented. Shell Nigeria called for military protection and action to stop the violence and destruction. Military action was swift and merciless with many people, friends and relatives of Shell employees, losing their lives. Shell was criticized for how they handled the problems and having military in their back pocket through pay offs.

Shell claimed they didn’t know the military would take this type of aggressive action. The atmosphere continued to be hostile. In 1995, World Bank released a report that found significant problems of air pollution, oil spills not being cleaned up properly and poor waste management practices. Gas flaring was a twenty-four seven operation producing large

amounts of carbon dioxide and methane. This practice subjected the local people to heat and air pollutants and is a direct contributor to acid rain and global warming. It was evident that the lax enforcement of environmental regulations was taking a toll on the land and people.

To make matters worse, Mr. Wiwa was taken into custody along with other tribunal chiefs. After mistreatment and an unfair trail, Mr. Wiwa and five others were hung. During this period, repeated requests were made to Shell Nigeria to intervene and help free Mr. Wiwa. Shell did not respond until after the trail and then half-heartedly requested his release. After his death, Shell claimed they couldn’t intervene in government issues. The international community was outraged at Shell Nigeria and their lack of action, to intervene, to save this intellectual hero. What could Shell Nigeria have done better ethically and morally?

Shell could have made more of an effort to save Mr. Wiwa. They failed to live up to their ethical responsibilities to protect others from harm. This is a company with a powerful footprint in the country and means to have their voice heard. In addition, they could have mitigated the environmental impacts in air, land and water. They lost sight of who the stakeholders really were and failed to listen and get their input on decisions that affected them. A committee appointed to represent the residents could have avoided some of the issues and mitigated or deflected some of the violence.

Working together and listening to their concerns and implementing procedures to make their lives easier. What has Shell been doing to turn the tides of public criticism and their

ethical troubles? According to Shell’s website, numerous programs have been instituted to help the people. A program such as LiveWIRE Nigeria have trained and helped 263 people start their own small business. They have worked with the Foundation for Ethnic Harmony in Nigeria, sponsoring 200 youths so they could attend nonviolence and conflict management training.

Other community involvement programs are taking place through partnership initiatives between Shell Nigeria and other organizations. It is a step in the right direction, but time will tell if it is enough. Environmental Issues Many activist groups in Nigeria felt that Shell was responsible for several environmental problems that were facing the country. In one speech that was given by one the leaders of the UNPO, he said “oil exploration had made Ogoni into a wasteland. The land, streams, and creeks are polluted and the atmosphere is filled with harmful gases such as carbon monoxide, carbon dioxide, and soot.

Many high pressure oil pipelines cross over most of the region’s farmland and villages. Oil spills, oil blowouts, and acid rain had destroyed the land along with other pollutants that could completely destroy the ecosystem in Ogoni. Shell disputed these allegations and said that they could not be held responsible for this because they have strict environmental laws they most follow. They had a program where they continually replaced and upgraded pipelines and infrastructures, and buried above ground pipes, and cleaned up oil spills.

Shell also charged that many of the oil spills were done by rebels that were trying to sabotage their operations. One of the biggest oil spills in the region that happened over twenty-five years ago damaged over 25 acres of

land. The oil penetrated deep into the ground and polluted the drinking water. The land was considered useless because the oil burnt and crusted over, killing precious farmland. Many activists felt that Shell was responsible and did a poor job of cleaning up the spill. Shell swore they were innocent and that the spill was caused by troops during the country’s civil war.

Other allegations against Shell stated that Shell intentionally located oil pipelines near the villages, but Shell reputed this allegation. In many cases, people moved near the refiners in search of work, making homes near pipelines and flow stations. One of the biggest problems facing the environment associated with the oil refineries was gas flaring. This is the process where extra gas was simply burned off in the production fields. The world average for the process of gas flaring is about five percent, but seventy-five percent of Nigeria’s natural gas was flared.

Flaring produced large amounts of methane, green house gases and contributed to global warming. The pollution levels in Nigeria are up 700 percent compared to what the country of Europe allows. It is estimated that gas flaring in Nigeria emits upwards 1100 million cubic feet of gas every day. The people in these areas are exposed to noise, heat, and soot contamination that greatly affect their health. Many activists feel that Shell and the Nigerian government refuse to do anything about these conditions because it would cost about $4 billon to clean up the environment.

The World Bank conducted an investigation and found many environmental problems. Shell was held responsible for some of the problems but reports stated that many of the problems come

from overpopulation, poverty, and weak enforced environmental regulations. In an effort to quiet some of its stakeholders, Shell came up with a process to help deal with flaring. The extra natural gas would be pipe to a ship and be shipped to other countries to dispose of. All flaring in Nigeria was scheduled to cease by 2008.

Nigeria has environmental regulations in place, but the government has little incentive to strictly enforce these environmental rules. The Ogoni People The people of Ogoni have a population of about 500,000 and live in an area called Ogoni which is in Nigeria. This whole area encompasses about 650 square kilometers; this causes the area to be overpopulated. The fruitfulness of the land has afforded the people of this country to obtain a very good living by farming and fishing. According to the Movement for the Survival of Ogoni People (MOSOP), the Ogoni people’s normal way of living was threaten when Shell discovered oil in 1958.

During this period, the country’s leadership was under British colonial rule and the people had no say in the exploiting of oil in the country. In 1960, Even though the Ogoni people had their independence; their input did not mean a thing. A lot of this had to do with being a minority in a country that has a population of approximately 88 million. The main challenge for Ogoni people is the makeup of the Nigerian state. Throughout history, the region of Nigeria was dominated by three groups of people: the Hausa-Fulani, the Yoruba and the Ibo.

The conflict between these three groups has led to a lot of instability in the region. The Ogoni people

were excluded from positions of power. In 1989, the government held the rights to minerals and did not respond to the objections from the Ogoni, even though at this time it was suppose to be under a democracy at the time. The Ogoni people started an organization called MOSOP, the Movement for the Survival of Ogoni People to protest against the actions of Shell actions and the government of Nigeria.

They believed that they deserve some of the profits the Shell and the government received from producing oil. The leader made a statement to describe the struggle: "The Ogoni people have now decided to make a last ditch stand against the government and against Shell that have ripped them off for the last 35 years. " (Factsheet on the Ogoni Struggle) In 1993, it was suppose to a peaceful protest against Shell and to show how the Ogoni land was being destroyed. This actually resulted in a Shell employee being beaten and Shell deciding to withdraw its workers from Ogoni.

The military began to use force against Ogoni protesters. The Ogoni people boycotted the election because they did not want to vote for a government which would not ignore the voices for minority. The Ogoni people began another march to protest, this also resulted in beatings and arrests of people. Government soldiers sealed off Ogoni with roadblocks. A few days later, a series of brutal attacks were initiated on the Ogoni people leaving 750 people dead, 30,000 homeless, homes and properties being were destroyed. In the end, the leader of MOSOP was executed.

The government eventually decided to use 3 percent of the oil revenue to promote infrastructure

development where oil was produced. (Lawrence, "Shell Oil in Nigeria", 2008) The acts of Shell showed lack of social responsible, they should have thoroughly research this particular country and specific region; so that the community could benefit from them occupying the town. Instead, their lack of social responsibility led to social unrest in this region. Ken Saro-Wiwa One of the Ogoni’s most famous and distinguish leaders was Ken Saro-Wiwa (1941 – 1995). Mr.

Saro-Wiwa was born in Bori, Rives State, the son of a business man and community chief. After graduating from the University of Ibadan he taught at the government college an later became a television producer, wrote satirical novels, children tales and plays. He was most noted for being the founder of the MOSOP, an organization set up to defend the environment and human rights of the Ogoni people. He cited corruption and condemned Shell and British Petroleum. , in an article Nigeria, The Brink of Disaster and Genocide in Nigeria (1992). In January 1993 he gathered 300,000 Ogoni to march peacefully against Shell Oil activities.

Arrested several times in 1993, he was adopted by Amnesty International as a prisoner of conscience. Mr. Saro-Wiwa, Senator Birabi, and representatives of the River State Security Council arrange a meeting which led to the creation of a Peace Committee, headed by Claude Ake. In October an agreement is sign concerning the violence but without the signatures of Mr. Saro-Wiwa or the communities involved. Claude Ake sent a letter to the governor stating his disapproval in the peace agreement. The agreement had no affect on the violence in the region and in some instances it seemed to even escalate.

In

October 1995 a military tribunal tried and convicted Saro-Wiwa and eight other Ogoni leaders of murder. Governments and citizens organization all over the world condemned the trial as fraudulent. Many asked the Nigerian dictator to spare Saro-Wiwa life and for shell to intervene, Shell response was silence on the issue. Saro-Wiwa and the eight other Ogoni rights activist were hanged on November 10, 1995 in Port Harcourt. It is said that the only crimes Saro-Wiwa and his co- defendants committed was to demand environmental clean- up and compensation for the devastation against the Ogoni people.