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Ethics In Nigeria Oil And Gas Industry Politics Essay

Info: 5472 words (22 pages) Essay
Published: 1st Jan 2015 in Politics

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Nigeria is Africas most populous nation and also its largest producer of oil. The country is ranked fifth in terms of oil exportation to the United States. The country has the potential to reach the third spot replacing Norway in a few years though it is plagued with social unrest as well as corruption in the Niger Delta posing significant challenges to the production of oil. The intermittent economic crisis and the political turmoil the country faces dates back to independence in 1960. At the centre of this is the oil industry. This is highlighted by its human development indicators which are among the lowest in the world even though the revenue from gas and oil has gone up to 40 billion per year. This means that the country’s majority lives in extreme poverty. This fact as well the severe environmental degradation that comes with oil production operations in the region has resulted in a conflict between the transnational oil corporations and the communities that reside in the delta date back to early1990s. This article provides an in-depth analysis that the oil industry in Nigeria is faced with in particular with ethical and public relations practices that continues to exacerbate the conflict in the region. It concludes with offering a recommendation that the companies can now adopt in an effort to maintain socially responsible practices in the country and aid in the development of the local communities.

Introduction

One business sector that has a strong claim to business ethics and/or public relations is the oil and gas sector. The oil and gas Transnational Corporation operating in Nigeria are active in addition to playing leadership roles in developing good codes of conduct and corporate practices in the work place as well as in engaging with different facets of the community. The involvement of Shell, BP-Amoco, Chevron Texaco, ExxonMobil, TotalFinaElf, Occidental, ENI among others in the Global Reporting Initiative (GRI), the United Nation’s Global Impact, the Sullivan Principle, the Millennium Development Goals, the Voluntary Principles on Security and Human Rights, Dow Jones Sustainability Index are some instances (Carrol & Bulcholtz, 2003).

The footprints of these companies are seen in the transfer of foreign direct investment (FDI), technology and skills: accounting for the majority of the state revenue; and a major employer of labor. They have also undeniably have contributed to the development of communities via programs in health, education, commerce, transport, agriculture, construction among others.

Tuodolo (2009) argues that despite the contributions to the community and achievements, the oil transnational Corporations have been the targeted by negative and anti-corporate and negative campaigns in the last two decades. Many civil society actors have been responsible for damaging campaigns against these companies and the institutions that collaborate with them. The strategies they employ in this campaigns include publicity, networking, walk-outs, sit-ins, litigation, lobbying, people’s development plans, socially responsible investment, public hearings, blockades, exposures, seizures and closures. These campaigns cover ethical issues such as human rights abuses, environmental, safety, health, corruption and climate change. In Nigeria, one of the main protests by the civil society against an oil company was against Shell in the Gas flaring taking place in the region and on the Ogoni environmental issues, Niger Delta area (Amnesty International, 1995).

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The world has experiences massive campaigns carried out by the civil society actors against oil giants such as Shell, ChevronTexaco, ExxonMobil, Occidental, ENI. These campaigns often disrupt business activities, damages and embarrass the reputation of the business; the major civil society actors include Greenpeace, Friends of Earth, and the Sierra club, Amnesty, Global Witness, Christian Aid, Oil-Watch, Human Rights Watch and Corp-Watch. Yazji (2006) noted that many civil society actors view the Transnational Corporations more as “strange bedfellows” or “enemies” finding it difficult o associate with them. This is often based purely on grounds of ethics. However, recent years have seen a new trend in the relationship that exists between the Transnational Corporations and the civil society actors. Most notably is the development of collaborative relationships that are aimed at directing funding of programs for the civil society. Many of the civil society actors now maintain very cordial relationships with the oil companies with partners collaborating and doing business with the “enemies”, the oil and gas industry. According to Warren (2005), this is seen to benefits the image and public relation of the business more than the community’s welfare. This has created an image of rapprochement or collaboration between the civil society actors, the public’s watch dog, and the oil transnational corporations. An example of this collaboration in Nigeria is witnesses in community development projects that are run by International Foundation for Education and Self-Help (IFESH) in collaboration with Chevron Texaco (Bendell & Lake, 2000).

These actions raise many questions that are still to be settled: have the ethical issues that the civil society had campaigned for in the past been resolved or changed? Have the oil industry players changed or repented for the better on the contentious issues that the civil groups raised in the past? Have the actors in civil societies lost track or are they comprised? Have the civil society actors been won over of placated by the big businesses? Or had the public relations machinery and campaigns by the corporations become more effective and can now shield their “bad deeds”.

LITERATURE REVIEW

Oil and gas industry in Nigeria

Nigeria is Africa’s largest oil producer and is ranked eighth in the world. Commercial quantities of oil in the country were discovered in 1956. It can on average pump 2.5 million barrels of oil every day. This accounts to approximately 3 percent of the world’s total consumption. The Wall Street Journal stated in an article that the country exports the majority of this output. Oil provides around 90 percent of the countries total foreign exchange and around 80 percent if the federal revenues. This makes the country the fifth-largest foreign crude oil supplier to the United States behind Mexico, Canada, Venezuela and Saudi Arabia. Despite this richness in natural oil and gas resources, the country is ranked a lowly 20th poorest country in the world. Much of this poverty as well as underdevelopment can be attributed to the bad governance, mismanagement of the county’s resources (oil and gas), political instability and the lack of infrastructure as well as policies to govern industries. Most of the many oil companies in the country are American. They utilize the country’s crude oil and gas resources to gain astronomical profits. These companies also utilize the environment to operate and produce within the oil industry. The Niger delta is the oil-rich region in Nigeria and is currently involved in conflicts that surround the oil companies. These companies are usually viewed as parasitic by the local communities as they take the regions resources while giving nothing or very little in return (Bird, 2004).

Karl (1997) argues that as in many of the other petro states, the windfall revenues from oil and gas have proved to be more of a curse than a blessing. The country is plagued with conflict that stems out of inequitable distribution of oil revenue and the exploitation of the resources by the oil companies operating in the country. According to the constitution of Nigeria, all natural minerals including the gas and also belong to the Nigerian federal government. The government is then responsible for negotiating the terms for oil production with the international oil companies. Most of the production and the exploration of oil in the region is done by United States and European companies. These companies operate joint ventures in collaboration with Nigerian National Petroleum Corporation (NNPCC). The state oil company owns up to 60 to 55 percent of these ventures (Ukeje, 2004).

Public relations and ethical issues facing the oil and gas industry in Nigeria

Most of the ethical issues in the oil and gas industry in the country arise from the poor monitoring and enforcement of laws governing the oil producing companies. This is despite the fact that the laws in Nigeria are comparable to other international equivalents. This has seen the region experiencing significant damage to both the environment and to the livelihood of the people that live within the oil producing companies. The companies have failed in their ethical responsibility to relate well with the communities in which they operate. Compensation for the resultant damages is virtually nonexistent (Frey, 1997).

The transnational corporations (TNC s) operating within the Nigerian oil and gas industry as well as institutions that collaborate with them have over the years come under negative/anti corporate campaigns by the community they operate in as well as by civil society actors. These actors include anti-capitalists, anti-corporate campaigners, anti-globalist, academics and greens. Although this is despite the contribution they seemingly bring to the development of a community, this actors have managed to shed light on unethical practices of corporate ensuring they practice positive public relations. In recent decades however this relationship has developed into a more collaborative one the purpose of which appears to favor the image of the business rather than the society (Newell, 2005).

The other side of Corporate Social Responsibility

There is no dispute that the community development programs initiated by the major players in the oil and gas industry have benefits most of the local communities. It is however important to not that these efforts in public relations have positive as well as negative impacts. Most of the local communities pay a great cost for enjoying the benefits of these Corporate Social Responsibility programs. Either by commission or omission, the activities or of shell and the program delivery processes have a negative impact on the local community that often outweigh the positive benefits of this corporate Social Responsibility endeavors. The role that the oil companies play in social and environment impacts illustrates this point.

According to Human Rights Watch (1999), the Niger Delta in general and Nembe in particular, the oil activities have resulted in serious environment damages. This has been as a result of oil spills from flow stations, pipelines, well-heads; discharge of production and drilling waste; and gas flared from several oil fields. All this has occurred in/on creeks, air, sea and land of Nembe. In the process, fish ponds and farm lands are destroyed, sea and forest animals and plants are forced to migrate or are destroyed; as well as the air being polluted. This environmental degradation has negative impacts ranging from loss of livelihood (farming and fishing), low farm produce, limitation of economic activities, diseases, polluted water, food shortage among others. In certain cases, death of unsuspecting fishermen has occurred after oil spills occurred in the Nembe creek. The negative impact this has on the local communities’ livelihood and health is enormous. The community at one time indicated that they are all fishermen who rely on fish for their survival. They also claimed that the oil spillage by Shell wells were destroying the marine life and in extension the peoples occupation. The farmlands as well were not fertile anymore from the pollution and the fish in the river had died. The people are only left with the option of fishing in the high seas which is very dangerous undertaking (Tuodolo, 2009, p.532)

Shell on its part has not denied that its operations have been responsible for the degradation of the environment but has adamantly disagreed on the extent the damage to the environment resulting from its activities. Shell alone recorder 3,214 incidents of oil spillage from 1995 to 2004, an average of 300 incidents annually. This has resulted in a spillage of more than 450,000 barrels of oil onto the environment in the Niger Delta and the flaring of large volumes of gas, approximately 604 millions scf daily (SPDC, 2006). Considering that this are figures from only one company, the consequences experienced by the local community in terms of environment, livelihood, climate change or global warming are unimaginable.

According to Agagu (2008), negative impacts of the corporate social responsibilities are further illustrated by the social effects they have on the local community. The Nembe case becomes significant once again. The relationship that shell has with the local community via the development programs and its operations have resulted in conflicts being commercialized where groups and individuals constantly fight over the patronage or benefits from shell; funds for community development are misappropriated, mismanaged and embezzled by the leaders or shares amongst cliques and community leaders to the exclusion of the other members of the community. Further negative effects include destroying of community governance by emerging youth groups that usurp the authority and powers of the chieftaincy institutions as well as the exacerbation of several forms of social disorder such as an increase in illiteracy, proliferation of arms, lawlessness, criminality and the disintegration of culture and tradition. These youth groups were apparently armed by the Corporation.

Shell sponsor some youth in the community, purchased arms and ammunition for them to fight whoever that is fighting them or protesting for their right from Shell (Tuodolo, 2009, p.538). From 2000 to 2006, the number of intra-communal conflicts numbered 21 with six of these inter-community conflicts being linked to the activities that shell was involved in

The oil companies, particularly Shell, Agip and their servicing companies, are central to the crises in the community (Tuodolo, 2009, p.538).

The Nembe Indigenes summarizes the social impacts resulting from Shells activities as,

These oil or multinationals have thrust a knife in our midst and we have fallen apart. The love for money and our political selfishness have set us against each other and we no longer see ourselves as brothers, fathers, chiefs, sisters, we disregard ourselves for temporary and temporal things, which have led to the formation of nocturnal and clandestine groups which have transformed Nembe to Sicily (Italy). Groups that are sponsored by chiefs, elders, politicians, government agents and the multinationals have succeeded in causing our aged parents and children, while our young men die prematurely in arms struggle, our parents die of heart attack and the children are denied knowledge by preventing them from going to school (Tuodolo, 2009, p.538).

And,

“What wrong has the Nembe man done to Shell and the Federal Government that all these wrongs are visited on him within a decade? (Tuodolo,2009, 538)

This continues to raise ethical questions related to the true intentions and the practices of these transnational corporations, the efficacy of their machinery of public relations or the position and campaigns of the civil society actors. This paper attempts to answer the question of dilemmas that the oil and gas industry face in public relations management and ethic by examining the activities of the oil companies in Nigeria. Particular attention is given to the impact of these companies on the communities residing in the oil rich Niger delta region. The paper is based on review of articles that have been written on the matter ranging from academic articles to newspaper articles.

METHODOLOGY

This study utilizes qualitative content analysis so as to explore the conditions that the oil and gas industry in Nigeria operate in that create the dilemmas in public relations and ethics of practice. This is according to recommendation by Jensen (2002) on qualitative research. The study is iterative/repeat process as this topic has been covered numerous times before. As such, this method allows for an application of analytical procedures and theoretical concepts employed to a variety of empirical domains that is flexible. This discourse will contain information source from academic articles from online journals, press releases and webpage pieces from the oil corporations operating in Nigeria and news paper articles that span the last two decades that have seen the ethical issues and public relations deteriorate as well as receive world wide attention. In addition to these article, particular case study on dilemmas faced by in Particular Shell are employed to give a clearer picture of the situation in Nigeria as well a to provide for a fuller analysis.

Sample

The method of data collection used in this discourse studies information content in article spanning two decades, from the 1990s to current date. The documentation is comprised of academic articles, magazine and newspaper articles, government reports and civil society articles and reports produced in the contest of normal publicity business to address the crisis facing the oil industry in Nigeria. According to Lindolf & Taylor (2002), this ensures that the sources are free of bias from the researcher. A limitation of this method is that it may prove to have a limited or indirect exploratory value for the research questions to be addressed. However, it will be able to fully address the question of ethical and public relations dilemmas faced by the industry. This is because of the intense media civil society and international attention this case has received over the years with particular emphasis being placed on the misdeeds of the oil multinationals operating in the Niger Delta.

ANALYSIS

The analysis section will focus on a debate that addresses the various issue faced by the oil corporation and in particular Shell in their operations. This will lead up to the various public relations steps and strategies employed by the companies to address their alleged ethical misconduct in the wake of political and economical turmoil allegedly exacerbated by their operations in the country. In their attempt to maintain a public faces, the companies spawned public relations strategies that aimed to portray them as saviors to a people long subjected to poverty as a result of bad governance. This is through the numerous development projects that are operated under the patronage of these companies in the country. On the background of this is the numerous environmental and human right violations that have continued unhindered as a direct or indirect result of these companies’ continued exploitation of Nigeria’ natural resources, oil and gas, to meet their bottom line, astronomical profits. The case of Ken Saro-Wiwa and the Ogoni People initiated the international concern in the region and offers a backdrop to the origin of the conflict between the oil corporation and government of Nigeria on one hand and the people of the Niger Delta in general on the other.

DISCUSSION

The debate on dilemmas in public relation and ethics in the oil and gas industry in Nigeria

Milton Friedman (1970), a free-market economist, ascertained that a business’s one and only social responsibilities involves the making of profit. This view is less popular in present day business. However, many economists and business leaders still believe that the best way for a company to promote the local community’s social development is comprised simply of increasing the overall level of activities in economy through investment and trade. In taking this view, the administration of revenue generated, environmental standards tolerated of the respect for the human rights in the community residing in the area of operation are simply not relevant. These factors are in fact viewed as hindrances to the corporations’ main business and in the long run to the country’s social development itself. If standards employed for developed countries are duplicated in the developing countries, then they will simply never catch up, this is because dangerous working conditions, below-market wages that workers in third worlds are subjected to are justified as being better than there being no jobs at all. The corporations’ shareholders make the situation worse by justifiably complaining if the directors pay attention to issues that may negatively impact the company’s financial bottom line (Soremekun, 1995).

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However, this attitude is increasingly changing as the companies come under more pressure from activists and consumers who are worried about the impact globalizations of the economy is having on the world’s poor. In addition, directors of these corporations have come to see that wider issues of social development have a direct or indirect impact on their operations. This trend has brought with it the buzz phrase “triple bottom line” encompassing social, economic and environmental outcomes. A good reputation for the corporation is seen as a valuable asset as it attracts customers and helps in recruiting competent employees. Good public relations with the local communities promoted by development programs that are properly administered as well as good labor relations minimize the shut-downs that cause protests directed towards the operations of the company. Even though low environmental standards and low wages can in the short-term be useful to the company, in the long run the company makes more money if it is accountable for its operations. Studies carried out, have not revealed any correlation between the foreign direct investment that oil transnational corporations inject into the developing countries itself and the respect for human rights in these countries. In Nigeria, the presence of the oil multinationals is viewed to have seemingly contributed to promoting the successive military regimes that ruled the country for a long haul. These regimes were responsible fro multi human rights violations in addition to misappropriation of funds meant to promote development. The companies’ interest should therefore focus on the promotion f steps geared at the positive development of the communities’ social welfare. They should also minimize their environmental effects while also aiming for their core business, maximizing profits (Uduaghan, 2008).

Oil multinational corporations have increasingly become more powerful within the global economies. The companies operating in Nigeria have substantially large global resources than the country itself. This has resulted in the country being almost paralyzed in enforcing international and/or domestic law against these companies. This is especially true when these companies have diplomatic support from the first-world country where the corporate headquarters are located. May of the laws that have been developed to govern the conduct of multinational across the world have been largely opposed to by the developed countries. This is especially because of their provisions/recommendations of treatment of the multinationals by the host countries. An example is the U.N Code of Conduct on Transnational Corporations. As such, no laws are currently legally binding in terms of the public relations responsibilities of the multinationals. Some companies have recognized that it is in their best interest and have started initiatives to address questions raised regarding their operations. However, human rights and environmental activists have notes that the companies’ statements of intent are not worth it without the strategies meant to ensure they are implemented. They also call for independent auditing of the human rights and environmental performance. Up to date, no oil corporation, Shell include, has agreed to be subjected to such an audit (Nigerian Tribune, 2008).

The experience of Shell in Nigeria offers a glimpse on how an oil transitional corporation ought to learn from a significant sustainability dilemma. In response to these significant challenges, shell setout to develop practices and policies that were designed to address the problems. They included the company engaging the local community the international forum and the civil society in dialog. In addition it began to actively participate in the developments of norms for corporate citizenship (Eyinla & Ukpo, 2006).

Having operated in the Niger Delta since the 1950s, Shell’s operations and the influence it had politically in the region only came under scrutiny after the execution of Ken Saro-Wiwa author-activist and a member of MSOP, Movement for the Survival of the Ogoni People, in 1995. The author and activist castigated the company’s operations in Nigeria, gaining international attention. He highlighted the role that the oil industry had played in the stagnation of the economy of the Delta. The Nigerian economic growth pace has not kept abreast with the growth that the county’s oil industry has been able to achieve. The industry is currently able to produce in excess of 2 million barrels of oil daily (Eyinla & Ukpo, 2006).

Shell has reportedly admitted that the approach it has taken in public relations causes the disorder in the community. The cash payments made, for instance standby labor, access fees to community youths, have seemingly been at the center of inter-community disputed as well as for the distortion of genuine needs of the community. Despite all this, Shell has yet to change its practices although it still claims it is practicing corporate social responsibility (Tuodolo, 2009).

According to Birnbaum (1995), the inequitable distribution of the oil revenue, the high rates of poverty coupled with the episodically harsh rule is responsible mainly for spurring the conflict in the Niger Delta. The Human Right Watch (1999) cited that “while the people of the Niger Delta have faced the adverse effects of the oil extraction, they have in general also failed to gain from the oil revenue”. By galvanizing the up to 500,000 people of the Ogoni-land in MSOP, Saro-Wiwa was able to draw the world’s attention to the grievances of his people. He constantly cites Shell’s complicity as the symbol of the status quo. Eventually, the federal police forces acted to shutdown MSOP. This saw numerous people being detained, injured or even killed. Nine activists, among them Saro-Wiwa were arrested in 1994. This was allegedly because of murdering four local leaders. All the accused would go on to be executed in November 1995 after court proceedings that the then United Kingdom Prime Minister John Major termed as “judicial murder.” (BBC News, 1995).

The role that Shell played in the Ogoni incident is a complex one. The company is reported to have sought clemency for the nine accused. In several statements, it lamented about the heavy handedness and the violence that both sides of the conflict in Ogoni-Land had over time displayed (Human Rights Watch, 1995)”. Contrary to these statements, the company later disclosed it had on several occasions in 1993 made direct payments to the states security forces under duress. Appearing before the U.S House of Representatives International Subcommittee on Africa in 1996, Stephen Mills, the environment and human rights campaign director for the Sierra Club stated that

“The Sierra Club is of the opinion that Shell should feel considerable responsibility for the death of Ken Saro-Wiwa and the other Ogoni activists. Shell’s massive pollution, repeated denial of responsibility for it, its refusal to clean up the Ogoni territory, and its appeal to the Nigerian military to silence the protestors is what incited the civil unrest” (Sierra Club, 1995).

In a recent statement, Mills released a follow-up piece that stated,

“A peaceful solution to the crisis in the delta seems remote as anger grows over record oil profits amid the striking poverty. The Riyal Dutch Shell earned a whooping 18.5 billion dollars in 2004 yet some villages within sight of the gleaming shell facilities have no electricity or running water. However, the campaign Ken Saro-Wiwa led to hold Shell accountable for their pollution and complicity in human rights violation has not been in vain. After the death of Saro-Wiwa, the company did adopt stronger social and environmental responsibility guidelines. It is up to communities in the delta and groups like mine to make sure that Shell and other oil companies live up to their promises” (Sierra Club, 2008).

Shell as under severe criticism for the perceived role it played in the events that lead up to Saro-Wiwa’s death. Amnesty international however recognized the company’s willingness to discuss the groups concerns regarding its human rights record. In a report released in 1996, Amnesty International noted that only Shell has responded to its appeal to Shell and other oil transnational companies operating in Nigeria to acknowledge that they have a responsibility to at all costs uphold the human rights under the Universal Declaration of Human Rights. Despite this, many questions still lingered on the company’s operations in the region. The UN Special Rapporteur of the Commission on Human Rights issued a report in 1997 calling for attention to be renewed on the persistency of oil spills in the delta region. Some of these spills were as a result of sabotage. The report raised deep concerns about the severe and widespread environmental damage to the River Delete region as a result of the oil operations and exploration by Shell. The company took account of the issues that were raised and undertook a major review of its internal operations (Newell, 2005).

Meanwhile, by the turn of the century, the relationship between Shell and the communities in the oil producing region had worsened since Ken Saro-Wiwa had been executed. This was despite the efforts of the company to improve on Public relations, in particular by increasing its spending on developments and the professionalization of the developmental projects’ management. It is fair to note that most of the deterioration experienced was as a result of the government failing to respond to the demands that had been presented by the Delta communities rather than by the activities of the company. The continuing dilemmas and problems illustrate just how difficult it is to put the fine words contained in the Statement of General Business Principles into actual practice (Tuodolo, 1999).

Shell and public relations in Nigeria

Shell has undoubtedly contributed immensely to Nigeria’s economic growth as well as to the development of the local communities residing in the company’s area of operation. Shell’s activities employ around 12,000 persons as skilled and unskilled labor making it a major employer of labor. The greatest evidence of shells effort to maintain positive public relations are in its development programs in the communities it operates in. Through community development programs, the company contributes to development of education in the local communities. The company achieves this through the provision of scholarships from primary up to university level, to local level, construction of classrooms, provides appliances and equipments and at times pays allowances for teachers in post primary. For some of the communities, shell provides or sponsors training in basic skills such as joinery, mechanics, craftsmanship, tailoring among others, for the indigenous (SPDC, 1999).

Shell also plays an active role in several other sectors aimed at community development, for instance, transportation: building jetties, construction of roads, donation of cars and speed-boats; agriculture: donation of equipment for farming, microcredit schemes for the farmers, training of farmers; water: construction of water pipelines, sinking boreholes; electricity: supply of diesel, donations of power plants; and the provision of infrastructures such as land reclamation, shore protection comm

 

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