Oil and Gas Industry and Rural Development in Nigeria: a Study of Shell

Oil and Gas Industry and Rural Development in Nigeria: a Study of Shell

 

Chapter One of Oil and Gas Industry and Rural Development in Nigeria: a Study of Shell

INTRODUCTION

Background to the Study

Nigeria has considerable oil and gas resources that can help accelerate growth on the continent if used strategically. The oil and gas industry is the one of the primary commercial industries in Nigeria and also a major source of wealth as it generates most of the country’s revenue. The involvement of Shell, Chevron, Texaco, BPAMOCO, Exxon Mobil, ENI, Occidental, Total Fina Elf, etc in the United Nations’ Global Compact, the Global Reporting Initiative (GRI), the Sullivan Principle, the Voluntary Principles on Security and Human Rights, the Millennium Development Goals (MDGs), the Sustainable Development Goals (SDGs), Dow Jones Sustainability Index, and the World Summits on Sustainable Development in Rio de Janeiro and Johannesburg.

Many African countries have been advocating on attracting Foreign Direct Investment (FDI) as a means of advancing their economies, including the extraction of Oil and Gas resources. Their footprints can be seen in developing countries most especially in Nigeria, in the transfer of Foreign Direct Investment (FDI), skills and technology, as major employers of labour, and accounting for a large proportion of state revenue. They have contributed to rural area development through different programmes such as education, health, commerce, agriculture, transport, construction among others, also known as Corporate Social Responsibility (Nwosu, 2017).

Corporate Social Responsibility has been a major concern of communities, governments, and civil society organizations in Africa and is expected to be integral to industry today as a password to not only overcome competition, but to ensure sustainable growth. The shareholders and other stakeholders, mostly encompassing the whole community, have supported it. Corporate Social Responsibility in reality is the alignment of industry operations with social values. It takes into account the interests of stakeholders in the company’s business policies and actions. It focuses on the social, environmental, and financial success of a company, the so-called “triple bottom line” with the aim of achieving social development alongside business success. More importantly, Corporate Social Responsibility is the point of meeting various initiatives aimed at ensuring socio-economic development of the community as a whole in a credible and sustainable manner (Nwosu, 2017).

Scholars have also argued that the Corporate Social Responsibility activities of many Multinational Oil and Gas Companies in Nigeria as well as other Africa countries have been mainly counteractive in approach. In other words, they purport that such activities are mainly focused on remedying the effects of their environmentally and socially harmful exploration activities in their host communities. It is, therefore, becoming more apparent that such gestures can amount to nothing significant development wise, not to talk in terms of sustainable development, because sustainable development initiatives are usually deliberate and purposeful attempts aimed at impacting positively the lives of the people and their environment. The focus of Corporate Social Responsibility practice in contemporary times has considerably shifted from mere philanthropic or charitable gestures to addressing real development issues of the people (Ekwok and Ugor, 2018).

However, a gruesome amount of environmental and social challenges has erupted in the region over the years, which have resulted in constant conflicts and war amongst communities, oil and gas industries and the governments in Africa. Various communities have mounted pressure on both the oil and gas industries and the government for some sort of sustainable compensation for the devastation that has plagued the entire region. This has consequently resulted in civil rights groups, voicing out on behalf of communities. These demands have sometimes been acknowledged and granted in the form of initiatives and projects for community members (Makpor and Leite, 2017).

Statement of the Problem 

Under normal circumstance, the Oil and Gas Transnational Corporations played a active role in developing rural area, engage in good corporate practices and codes of conduct in the workplace and manage good relation with the society but it is the order way round in Nigeria. With the huge profit gained from their industrial activities, the Oil and Gas companies have not significantly contributed to the economic growth and development of rural areas, although, Multinational corporations have responded to this challenge by adopting Corporate Social Responsibility strategies as a means of contributing to community development (Nwosu, 2017).

The government has tried different policies in order to ensure the activities of these corporations is beneficial to both the government and her people yet there have been endless conflicts between local communities and Oil and Gas Industries. Sequel to the persistent incidence of Oil related environmental pollutions and degradation, Worker hostage taking, blockage of oil facilities, oil pipeline vandalization and human rights violations with subsequent damage to corporate reputation have had a negative impact on corporate profit, government revenue and rural development. Therefore, the reason for this research is to examine the role of Shell Petroleum Development Company of Nigeria Limited (SPDC) on rural development in Nigeria.

Research Objectives 

The general objective of this study is to investigate the role of Oil and Gas Industries on rural development in Nigeria with focus on Shell Petroleum Development Company of Nigeria Limited (SPDC). The following are the specific objectives of the study are to;

1. highlight the origin and objectives of Shell Petroleum Development Company of Nigeria Limited (SPDC) in Nigeria;
2. analyze the activities of Shell Petroleum Development Company of Nigeria Limited (SPDC) on rural development in Nigeria;

3. examine the impacts of Shell Petroleum Development Company of Nigeria Limited (SPDC) on rural development in Nigeria;
4. identify the challenges of the oil and gas industry and recommend possible solutions on how Nigeria can use the existence of oil and gas industries for rural development.

Research Questions

This study seeks to proffer answers to the following questions:

1. What are the origin and objectives of Shell Petroleum Development Company of Nigeria Limited (SPDC) in Nigeria?
2. What are the activities of Shell Petroleum Development Company of Nigeria Limited (SPDC) on rural development in Nigeria?

3. What are the impacts of Shell Petroleum Development Company of Nigeria Limited (SPDC) on rural development in Nigeria?
4. What are the challenges of the oil and gas industry and How can Nigeria use the existence of oil and gas industries for rural development?