1. University of Kent
Canterbury
Kent Business School-KBS
Dissertation
For the award of
Masters in Business Administration
(MBA)
Corporate Social Responsibility (CSR) In the Oil
and Gas Industry in the Niger- River Delta
Basin.
Submission by:
Ehinfun Olusegun Samuel (06903309)
Supervised by Dr. Sue Hornibrook
Declaration: I certify this is my own work except where
acknowledged by citation & references.

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Table of Contents
Abstract 4-7
1.0 Introduction 8-11
1.1 The Essence of Corporate Social Responsibility (CSR) Initiatives 12
1.2 Theoretical Basis- concept of Corporate Social Responsibility 13
1.3 CSR: Definitions 14
1.4 Business Ethics- Relationship between ethics and CSR 14
1.5 Historical Developments -Corporate Social Responsibility (CSR) 15
1.6 Significance of CSR 16
1.7 CSR Modes and Roles: Stakeholders & Shareholders 17-18
2.0 The Niger-River Delta Basin -Southern Nigeria 19-20
2.1 Poverty and abject underdevelopment-the role
of Oil corporations 20
3.0 Problems in the Niger-River Delta Area of Nigeria Created by Oil
& Gas Exploitation. 21-22
3.1 Oil Exploitation: A Long and Notorious History of Destruction 22
4.0 The Concept of CSR by Oil & Gas companies in the Niger-River
Delta region 23-27
4.1 The Roles and Responsibilities of the International
Oil Companies 24-26
4.2 Corporate Social Responsibility (CSR) in the Oil Industry:
Definition, Perspectives, Activities Initiatives 27
4.3 Positive Results of Local Oil & Gas Companies’ CSR Initiatives 28-29
5.0 An Analysis of corporation’s CSR Initiatives- focus Royal Dutch
Shell (SPDC) 30-31
5.1 Royal Dutch Shell (SPDC) & Negative Publicity 30-31
5.2 The Logic of growth in CSR Ethical Programmes 32

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5.3 Impact Assessment of credible CSR Initiatives 33-35
5.4 Joint Venture Partnership and NNPC CSR Policy Initiative
36
5.5 Strained Community Relations-What went wrong? 37
5.6 Suggested Solutions 38
5.7 Holistic View Of CSR Initiatives-Environmental Responsibility 38-40
5.8 The Local Content Policy - an avenue for CSR Initiative 42-43
5.9 Analysis of the Local Content Policy as a Veritable CSR
Policy Vehicle 44-45
6.0 Conclusion 46
6.2 Outlook-The Challenges and Opportunities of a True Corporate
Social Responsibility (CSR) Organisation 46-48
6.3 Integration of Corporate & Business Models with Ethical
Considerations 49-50
6.4 Recommendations 51- 53
List of Reference 54-56
List of Tables & Charts & Appendix
Graph 1.0 Four Corporate Social Responsibility Modes and Roles 17
Table1.0-“Ensuring Stable Niger Delta for Sustainable oil production”
34
Appendix I - Johnson & Johnson’s Corporate Social Responsibility
(CSR) Statement 57
Appendix I - Nigeria’s Joint Venture partnerships (Production Sharing Contracts)
with major Oil companies. 58-60

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Abstract
The problem
Oil was first discovered in Nigeria at Oloibiri by Royal Dutch Shell in 1956, in
present-day Bayelsa State, one of the 6 states within the Niger-River Delta region.
This ushered in an era of prosperity for the Nigerian state.
However, this era of prosperity is seen by oil & gas industry professionals and
international and local civil society and advocacy groups as the “wasted” years.
Wherein, the huge revenues accruing from oil exploration was siphoned through
corrupt enrichment and gross mismanagement by the military rulers and
politicians. This tragedy of maladministration deprived several communities of the
benefits that should accrue to them based on the vast natural resources
(especially crude oil) being mined and exported for millions of dollars in revenues.
The most affected communities are situated within the Niger-delta basin of
southern Nigeria. Farmlands, sources of drinking water and artisanal fishing have
been destroyed by oil spills from burst oil pipelines the surrounding atmosphere
is been polluted on a daily basis through the flaring of gas by the big oil
multinationals corporations (MNCs). The fauna and flora, and the ways of life of
these subsistence communities are being exposed to very hazardous conditions.
Consequently, this has led to daily occurrences of kidnappings/hostage-taking for
ransom situations; and outright vandalism of corporations’ and the Nigerian
state’s vast oil and gas infrastructures.
This report on ‘Corporate Social Responsibility (CSR) in Nigerian Oil & Gas industry
and the Niger-River Delta region’ aims to highlight, analyze and proffer
suggestions and solutions on how corporate responsibility efforts by corporations
can reduce the effects of youth restiveness and pervasive poverty currently
synonymous with communities in the Niger-River Delta regions.

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Companies in general, and multinational corporations in particular control and
implement budgets larger than those of the 6 Niger-delta states in which they
operate and as a result have significant power and leverage with the Federal
Government. However, they also have responsibilities with regard to the
promotion and sustenance of the socio-economic growth and well-being of their
host communities.
Host communities in the Niger-delta river basin areas, local and international
advocacy groups believe that the dominant position of the oil & gas prospecting
corporations in Nigeria makes it incumbent on them to discharge their
responsibilities with regard to promoting and emplacing socially responsible
initiatives, programmes and projects in the host communities where they operate,
further complementing the developmental roles and programmes of the Federal
Government of Nigeria (FGN).
Given the overwhelming role of oil & gas resources in the Nigerian economy,
especially with regard to contributing the largest proportion of revenues to the
FGN treasury, the policies and practices of the oil & gas corporations are important
factors in the decision making of the Nigerian government. This is because the oil
companies are operating joint ventures and Production Sharing Contracts with the
government they have constant opportunities to influence government policy,
including with respect to the provision of security for the oil facilities and other
issues that border on the socio-economic well-being of the communities they
operate within in the oil producing Niger-river delta regions. In chapter 5 and
Appendix II the JV’s and PSC’s would be analyzed and a relationship to how this
swells the coffers of both the FGN and the Oil & gas corporations would be shown.
The role of Royal Dutch Shell (Shell Petroleum Development Company-SPDC) in
Nigeria has received by far the most attention internationally for good reasons: It
is the biggest oil producer in Nigeria with the longest history, dominating the
industry both in the Oil & gas sectors ensuring a monopoly and a privileged
relationship with the Federal Government of Nigeria (FGN).SPDC’s facilities are

6. 6
largely in or near host communities thus exposing them to community protests
(most of the incidents described in this treatise concern SPDC because of this
greater exposure
Methodology
- Structure of Analysis
A case study approach was adopted to examine the complex social events
underpinning corporate social responsibility issues both within the Oil & Gas
industry globally; thus encompassing corporate best practices evolving, and also
captures the unfolding dynamics unfolding within the Niger-River delta basin,
which has a peculiar model of CSR being foisted upon corporations (not just Oil
firms) with operational bases within the sub region.
The focus on Royal Dutch Shell (Known as Shell Development Production
Company-SPDC) is informed by two reasons: SPDC is the largest Oil & Gas
prospecting and producing multinational in Africa, especially in the Niger-River
delta basin, which is the nexus of oil exploration and production activities.
It also involves getting a perspective from the Corporate Social Responsibility
(CSR) departments of Royal Dutch Shell (operating in the Niger Delta as Shell
Producing Development Company-SPDC).
Furthermore, opinions and industry-specific publications of specialists, analysts
and consultants in the oil & gas industry has been sought, distilled and analysed
in this report.
Academic journals used for this research have been sourced from the University
of Kent Library Journals (including on-line publications) and associated research
portals (google scholar.com).
Information for this report has been sourced from a collection of sources and using
a robust research techniques encompassing:
Questionnaire analysis, journals, on-line academic journals, Oil & gas industry
topical text books, authoritative & professional newspaper reports, and Oil & Gas

7. 7
industry sources. Other sources are: chambers of commerce sources & diplomatic
missions.
Findings and the conclusion
This treatise aims to analyze the effects (negative and positive) of oil exploration
and production activities in the Niger-River delta basin; and the contributions or
otherwise lack of it towards engendering a culture of sustainable socio-economic
development through corporate social responsibility efforts and initiatives by all
stakeholders in the Niger- River delta basin of Southern Nigeria.
As leaders of industry in an Oil & gas resource-rich countries like Nigeria, Angola,
Gabon and Equatorial Guinea, oil & gas companies are one of few businesses in
Africa that have the means, resources and capabilities to implement socially
responsible initiatives, projects that can contribute to sustainable economic
development.
The manner in which revenues accruing to the oil corporations, as a result of
operational activities in the Niger-River delta, are utilized towards socially
responsible interventions in their socio-economic sphere of influence (host
communities) makes them model and exemplary businesses.
This treatise is a discussion and proffers remedies and recommendations on how
corporations should be socially responsible; thereby reducing, and ultimately
eliminating the phenomenon of youth restiveness and armed banditry currently
ravaging communities in the Niger River delta basin.
Please note that the writer’s attempt to get Royal Dutch Shell’s side of story was
made impossible by their refusal to provide answers to the questions posed.
1.0 Introduction
At the CSR Partners for Progress round table Conference, the Organisation for
Economic Cooperation and Development in Europe (OECD) avers that
“globalization has altered the internal and external power relations between and
within companies, and in the community as a whole, and society has turned to

8. 8
business to engage in finding solutions to this complex phenomenon. Companies
could no longer manage the effects of their business practices simply by paying
taxes and complying with national regulations. They are expected to take on
greater responsibilities for managing their impact on society" (OECD, 2001:14).1
Corporate social responsibility (CSR) initiatives derived a place in boardroom
decision making of companies from the increasing application of the concept of
ethics into business practices and relationships – with employees, clients, the host
community, and the society at large.
The concept of ethics grew up symbiotically with business from inception, and
became a compulsory and endemic part of it in the middle ages wherever the
Christian church held sway. The church’s position on law, government and
business was overriding and its standard of business ethics was the rule rather
than the exception; It was held that “The rich are measly stewards of their wealth
for the poor”2
The situation with ethics in business changed in the 17th through the 18th
centuries. The onset of the Reformation which bred Protestantism and Calvinism
increasingly tilted the preponderance of informed public thought “to the conclusion
that ethics and economics were two separate departments of life and thought”
and averred that the disposition of the wealth so created,”were matters for the
individual conscience to settle” Arthur Birnie. (1969).²
Dramatically however, ethics returned to the board room of companies for
business planning and performance purposes, and was no longer left to the mood
of the proprietors of business at the end of ‘normal’ job processes. General
Johnson’s well thought opinion in the 1950’s led to Johnson & Johnson‘s credo
statement: which is a one page document translated to more than 60 languages
(See Appendix 1) a culture which other corporations have since followed to
formulate, their own corporate social responsibility (CSR) statements.

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As “the world of business now witnesses an era of ethical boom”³; such ethical
statements and policies encompass written standards of conduct, internal
education schemes, formal agreements on industry standard, ethics offices, social
accounting techniques and social projects.3
The “Ethical boom” in business processes was prompted by three factors4a
: The
first was monetary loss being experienced by corporations due to concealment of
material information that are usually expected by the public to be disclosed. It
damaged the pride of companies like Prudential group, Daiwa Bank, Salomon
Brothers, Kidder, Peabody, Arthur Andersen, and Cadbury.
The second reason is the issue of damaged reputation. It happens where a
company is passive when it should voice out its opinion on what adversely affects
the public in the locations where it operates. For instance, when local
environmentalists were hounded by the Nigerian government in 1996-1997, Royal
Dutch Shell maintained a posture of deafening silence. This ultimately led to the
execution of the Ogoni environmental rights Campaigner, Ken Saro Wiwa, and his
supporters. Shell’s action or lack of it convinced the host Ogoni communities that
the government’s action was at the Corporation’s behest.
The third reason is due largely to promptings by governments, for new designs
of ethics programmes. In 1991, the U.S. Federal Sentencing Guidelines offered
companies a dramatic incentive to make them develop formal schemes of
compliance and ethics programmes.
Donaldson4b
describes the three variants of ethics in business today as firstly:
‘code and compliance’, which regulates the behaviour of employees, and secondly
;identity and values’ which seeks to specify the company’s identity in the world of
its core competence ,and thirdly ,’social outreach’ 0r ‘social projects ,’which specify
what benefits could be extended to the company’s environment at large .

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Donaldson is of the opinion that there exists two variants of the third ethics type
i.e. Social outreach mentioned above as Social Accounting Programmes and Core
Competency Outreach. It is considered appropriate by this writer to separate from
Donaldson’s second variant, another variant termed “Projects”. All these variants
find application in different scenarios, to the demand of corporate social
responsibility (CSR) in respect of oil and gas producing companies in Nigeria’s
Niger River Delta.
Social Accounting programmes rest on the premise that companies should account
for social activities in much the same way as they account for their financial
activities, for example: the Global Reporting Initiative (GRI) formulated by 300
global corporations. While Core competency outreach is undertaken by companies
which endaevour to do things for public good other than writing cheques e.g.
Merck Pharmaceutical in the 1980’s developed a drug ‘Mectizan’ that would treat
the tropical disease called river blindness, to be sold to people of poor countries
at below economic price .
In the case of “project,” host communities who are impoverished by the exploitation
of the wasting assets by the activities of prospecting companies, on their land are
increasingly asking for, first, cash compensation, but lately, both cash compensation
and compensatory projects which would ameliorate the poverty inflicted on them by
land degradation and pollution. Here, there is no tea party with corporations who fall
bellow expectations; a fact this report highlights based on the upsurge of violence
with affected and unsatisfied communities in the Niger-River delta region in Nigeria’s
Southern region.
It is a fact that corporations normally pursue issues that impact their bottom line,
and do not engage in charity for its sake. Corporations must have beneficially
compelling reasons for incurring costs which are ordinarily outside the range of
everyday practices in the traditional business sense. Without an apparent potential
or capability in helping to meet the goals of business profitability, there would be no
need, impetus or drive to incur such outside costs.

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However, current trends and issues have arisen in many developing countries, where
resources are being exploited by multinational companies. In Nigeria’s Niger River
Delta Region, this has compelled corporations to introduce ethics into business
especially in the variant of social outreaches which is one of the raison d’etre of
governments anyway. Paradoxically today, operating companies see themselves
supplanting the government in some social milieus.
The compelling reasons are people needs and environment needs which corporations
see the necessity, or are forced to meet. Of course, compulsorily or voluntarily, it
pays to be good neighbours. But then what is the limit to what has to be done to
become a good neighbour. And what, and who, determines such limits as are capable
of bringing safety and conducive atmosphere for oil businesses to thrive in Nigeria’s
Niger River Delta basin. This treatise seeks to answer those questions.
1.1 The Essence of Corporate Social Responsibility (CSR) Initiatives
Corporate Social Responsibility (CSR) initiative has become an essential plank of
corporations’ business model and unique strategic execution initiatives in the 21st
Century. Businesses’ success rise and fall on theirability to take cognizance of ethical
(as in ethical investing and support of developmental projects), environmental
concerns (carbon management and carbon footprint offsetting and reduction), and
philanthropy and charity initiatives in the aftermath of natural disasters gives a lot
of publicity and positive mileage to corporations.
It is now not uncommon to see labels on products emblazoned with: ‘Our firm uses
Recycled materials’ or ‘Sponsor of the “One Tree’ carbon management Initiative’ or
“Sponsors of Live Earth (Save the Planet) Concerts” or “Proud supporter of the
Regeneration of our host community through building a Youth Recreational Center”
or a “Supporter of Barnados (child charity)”. The list is endless, as it is, with a surfeit
of initiatives and projects being supported across host communities where
corporations (both mid-size and large) have their operational domicile.

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However, the functional essence of corporate social responsibility initiatives is as
follows:
 the need to balance corporate power with responsibility;
 promotes long term profit
 protects the image and reputation of companies
A few downside risks exists for corporations adopting a CSR initiatives, among other
factors, viz: there could
 be lower economic efficiency and profits
 exist a competitive disadvantage
 be compromises and could confuse objectives.
This is because all different stakeholders cannot be satisfied.
1.2 Theoretical Basis- concept & definitions of Corporate Social
Responsibility (CSR)
In 21st century corporate boardrooms corporations have accepted to play their part
towards encouraging sustainable socio-economic development in addition to
environmental stability and protection. It has become the norm that being ethical;
environmentally aware and socially responsible is not antithetical to the successfully
fulfilling the wider objectives of such corporations. For instance, British American
Tobacco funded the first CSR study at the University of Nottingham Business school.
This therefore highlights the need to introduce CSR initiatives and policy into
corporate management development, because executives with the industry
knowledge, expertise, abilities, and personal qualities or values will excel in
managing the relationships between corporations and the society (including host
communities where they are domiciled). A notion that is increasingly being given
more credence by the various stakeholders in ensuring an effective CSR drive is
the underlying concept being that everyone has to be open to scrutiny.
1.3 CSR- Definitions

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Although, there is no consensus on a form of universally acknowledged definition
on CSR, this report will highlight some commonly acceptable definitions, within
the context of this treatise, in order to underpin the significance of this concept.
In 2004, the British Minister for CSR, Stephen Timms, averred that CSR is: “how
business takes account of its economic, social and environmental impacts in the
way it operates – maximizing the benefits and minimizing the downsides”. Another
definition by McWilliams and Siegel (2001) is “actions that appear to further some
social good, beyond the interests of the firm and that which is required by law”
There is an evolution of values in society and governments about the
responsibilities of businesses, with regard to what they ought to do and what not
to do. In the early stages of the evolution of CSR, the society viewed the efforts
of ‘big business’ with suspicion and distrust because it was presumed that their
sometimes ‘token’ efforts were all about corporate self interest and not just about
fulfilling an altruistic objective towards the society. It is the summation of this
writer that such attitudes are currently being proved wrong with various
corporations’ efforts at showing themselves as either environmentally or ethically
responsible, which has evolved into business ethics today in stark contrast to a
decade ago.
1.4 Business Ethics- Relationship between ethics and CSR
Business Ethics is what is perceived as morally right or wrong; in other words
actions are judged good or bad according to the ‘greater good’ of society or the
community.
With regard to the relationship between business ethics and CSR, there exists two
schools of thought: the consequentialist school with the belief that ethics is
concerned with the behaviour of the individual; and the non-consequentialist,
belief in the notion that actions are not adjudged good or bad according to the
‘greater good’, but that CSR is primarily concerned with the behaviour of the
corporation or organization.5

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In the business world, the consequentialist view dominates because of the
utilitarian logic that is prevalent when taking business decisions; in other words
the notion that ‘sacrifice is a necessary evil’ if the majority in the society is to
benefit holds sway. 5
1.5 Historical Development of CSR
In the 19th Century, during the age of the industrial revolution governments like
the empire of Great Britain (GB), the Royal Duchy in the Netherlands, Portugal,
France and Belgium with expansionist intentions with regard to amassing
resources from new colonies granted charters to corporations operating in African,
South Asian and Latin American colonies. The notion of limited liability was gaining
ground, so corporations became responsible for the upkeep and welfare of the
employees under their charge and jurisdiction. The notion of Paternalistic
Capitalism was born whereby Companies like Unilever (then Lever Brothers) and
Cadbury assumed the responsibility of developing communities for their workers.
In 1851, Sir Titus Watts undertook the responsibility of building new communities,
providing clean water in Bradford, as this was informed by a sense of moral duty
coupled with self interest. 5
However in the early 20th Century Philanthropy replaced paternalistic capitalism
with immense contributions to societal upkeep and welfare by Andrew Carnegie
and Henry Ford. This sea change in CSR was made possible due to an increasing
gap between the rich and poor, therefore leading to big businesses wanting to
give to society and contribute to sustainable development initiatives.
In the 1960’s and through the 1970’s there was an upsurge of consumer groups
advocating the moral and professional responsibility of producers/manufacturers.
This led to the evolution of the Stewardship Principle, where corporations are seen
essentially as steward-leaders with attendant increase in social activism and
regulatory activity.

15. 15
Today CSR is embedded in the corporate strategy of most businesses and
corporations, commonly referred to as the ‘business case’: a notion that business
and society are interwoven; that business has responsibility to consumers as well
as shareholders and suppliers. 5
1.6 Significance of Corporate Social Responsibility (CSR) Initiatives
CSR is growing in importance due to the inability of governments to solve social
problems; the growth of multinational corporations (MNC’s) with corporate power
increasing; a backlash against globalization; cote governance scandals e.g.
Worldcom, Enron, Parmalat, BCCI; and consumer power with the influence and
reach of corporations like Nike and Royal Dutch Shell.
CSR initiatives are seen to balance corporate power or leverage with
responsibility; discourages government legislation; promotes long-term profit and
is a veritable public relations tool to protect the image and reputation of
corporations. There also exists a downside risk to CSR initiatives as some
corporations view it as leading to lower economic efficiency and profits, placing
them at a competitive disadvantage. In some cases it is considered as
compromising and confusing corporate objectives and distorting a company’s
operational and business model.
1.7 CSR Modes and Roles
Shareholders v. Stakeholders Theoretical Perspective
In 1970 Friedman propounded a theoretical construct of the shareholder model
with a corporate goal towards ensuring corporations’ Profitability; imbibing duty
to shareholders; engendering short- term value creation. 6
The shareholder perspective views the firm as ‘closed system’ with formal links
with Shareholders.
The stakeholder perspective was propounded by Freeman in 19847
as a
theoretical construct that emphasizes multiple goals; a duty to stakeholders;
ensures long term value creation and engenders the notion of the firm as ‘open

16. 16
system’ with unbridled stakeholder engagement interlinked with the corporate
goal towards carrying everyone involved along.
Graph 1.0 Four Corporate Social Responsibility (CSR) Modes and Roles
Shareholder Model Stakeholder Model
Orientations

17. 17
Source: Buono and Nichols (1990) in Weiss (2003)
Shareholder Model
1
Productivism
3
Philanthropy
2
Progressivism
4
Ethical Idealism
Free Market Capitalism- Different Stakeholder groups
Accumulation of profits Responsible Corporate Citizen
1
Productivism
3
Philanthropy
2
Progressivism
4
Ethical Idealism
Free Market Capitalism- Different Stakeholder groups
Accumulation of profits Responsible Corporate Citizen
Stakeholder Model
M
o
T
I
V
E
s
Self-
interest
Moral
Duty
Orientations
M
o
T
I
V
E
s
Self-
interest
Moral
Duty

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In terms of Buono and Nichols (1990) in Weiss (2003), 8 Corporations with an
overarching self interest are driven by the Productivism creed; while corporations
who are driven by a Progressivism creed based on both enlightened self- interest
and morality issues.
While those firms operating based on the philanthropy creed believe it is paramount
to make profits, no matter how it is made, however it will be ultimately given off.
The ethical idealism creed has the notion of corporations becoming good corporate
citizens as its driving force for its actions are directed by ensuring desirable corporate
behaviour. Social entrepreneurships, John Lewis Partnerships and Cooperatives fall
within this category.
2.0 The Niger-River Delta Basin
The Niger Delta, as now defined officially by the Nigerian Government, extends
over about 70,000 km² and makes up 7.5% of Nigeria’s land mass. Historically
and cartographically, the Niger River delta consists of present day Bayelsa, Delta
and Rivers States. In the year 2000, however, President Obasanjo's federal
government expanded it's definition to include the states of Abia, Akwa Ibom,
Cross River, Edo, Imo and Ondo. An estimated population 20 million people of
more than 40 ethnic groups fall within what is known as the Niger Delta, the Ijaw
( a largely fishing community) being in the majority. The plight of the Ogoni nation
(another ethnic group) brought the dire situations in the wetlands of the Niger
River delta to international prominence in 1996.Their livelihoods are primarily
based on fishing and.
Nigeria is Africa’s biggest producer of petroleum and the sixth largest producer in
the world. An estimated 2 million barrels a day (bpd) are extracted in the Niger
Delta. Since 1975, the region has accounted for more than 75% of Nigeria's export
earnings. Much of the natural gas extracted in oil wells in the Delta is, or flared,
into the air at a rate of approximately 70 million m³ per day. This is equivalent to
40% of African natural gas consumption, and forms the single largest source
of greenhouse gas emissions on the planet. The environmental devastation

19. 19
associated with the industry and the lack of distribution of oil wealth have been
the key aggravating factor of numerous environmental movements and inter-
ethnic conflicts in the region, including recent guerilla activity by the Movement
for the Emancipation of the Niger Delta (MEND) and various other amorphous
militias.
Conflict in the Niger Delta arose in the early 1990s due to tensions between the
foreign oil corporations, the Nigerian federal government, and a number of the Niger
Delta's ethnic groups who felt they were being exploited.
Ethnic and political unrest has continued throughout the 1990s and persists through
2006 and 2007 despite the conversion to a more democratic, civilian federal system
under the ex-President Obasanjo’s government in 1999 to 2003 (first term) through
2007 (second term); However, due to the election of a new President Umar Musa
Yar’Adua in April 2007 there has been a concerted effort to stem the tide of ethnic
militancy in the Niger River delta, through bringing together all the governors and
stakeholders in the Niger-Delta area to form a Committee on Peace and Conflict
Reconciliation on the Niger-Delta Problems.
2.1 Poverty and abject underdevelopment-
Role of oil corporations
The people of the delta states live in extreme poverty even in the face of great
material wealth found in the waters by their homes. According to Amnesty
International 70% of the six million people in the Niger River Delta live off of less
than 1$ US per day. 9 For many people this means finding work in a labor market,
which is in many instances hostile to them. Much of the labor in the past has been
imported. To a growing degree the labor force for the oil companies is now coming
from Nigeria. But discrimination is rampant and for the most part locals are (being)
discriminated against. This leads to a situation where the men in the community
have to search for temporary employment. This has two negative effects on the
community. First it takes the men out of the community as they go in search of
work. The second is the nature of temporary employment sets up unsustainable

20. 20
spending habits. They earn some money and spend it thinking it will be easy to
earn more, when in many cases this does not turn out to be the case. 9
3.0 Problems in the Niger-River Delta Area of Nigeria Created
By Oil & Gas Exploitation.
In the opinion of some industry analysts in the oil & gas sector, the industry has
seen fifty years of oil exploration and production activities in Nigeria, which is being
adduced as the cause of ecological degradation and environmental pollution in the
oil producing areas of Nigeria .10 This opinion though countered by a few analysts
notwithstanding, entry of oil & gas resources has brought significant foreign
exchange earnings to the country, thereby displacing agriculture which was
responsible for most of the earnings before 1960; the attendant result is that
agriculture as a revenue earner has become an unattractive option.
Most of the landmass in the oil-producing region has been rendered unsuitable for
planting crops. The waters have also been polluted and rendered unsuitable for
aquatic culture. Secondly, the inhabitants of oil producing areas experience scorching
heat daily as a result of gas flaring .Thirdly, the Nigeria Delta area is the least
developed part of Nigeria in terms of social infrastructure and modern socio-
economic facility e.g electricity and roads. 10
Paradoxically, above 85% of current export earnings come from the petroleum
resources exploited from the region. Fourthly, neglect by the successive federal
governments (The employer of the oil exploration and production companies) and
the oil companies, themselves, have promoted poverty in the region. Fifthly, ’over
50 percent of the 70,000 sq. km. of the territory has neither motorable roads nor
hospitals. These are refineries and two petrochemical plants (the writer knows of
three – one in the sea-side town of Warri in Delta state, and two in the oil-rich city
of Port Harcourt in Rivers State ),yet fuel stations are not available in 50 per cent of
the area. 10
Sixthly, thermal gas stations in the Niger Delta area account for over 50 per cent of
Nigeria’s electricity supply, yet half of the Niger area has never seen electric light

21. 21
.The result is a plethora of written and low toned agitations for forty (40) years
.When positive reaction was not forthcoming from the government and the
companies, there was a resort to loud agitation and protest, and lately, militancy,
which commenced some 16 year ago, to press home their grievances.
The resultant pacification of the Ogoni region and other despoiled Niger-Delta
heartlands by the military task forces of the Federal Government, culminating in the
execution of Ken Saro Wiwa, and nine other environmentalists, propelled further
violence against the multinationals, particularly Royal Dutch Shell. 10
A curious observer would ask why the communities are confronting the oil production
companies and not the responsible municipal authorities who employed them, and
who ordinarily should provide amenities from the tax extracted on oil production.
Perhaps, this would explain why the older oil producing companies, particularly Shell,
did not act sufficiently early enough to formulate enduring Social Responsibility
programmes to assuage their host’s feelings.
Conversely, why was the oil producing companies not proving to be good
neighbours? It is not an apostasy to seek to be a good neighbour, after all. The
doctrine of corporate good citizenship will not in any way run counter to that of
corporate social responsibility (CSR), which is a way of fostering mutual coexistence
and understanding between profit seeking corporations and their host communities.
What then is Corporate Social Responsibility (CSR) to a corporation?
d

22. 22
3.1 Oil Exploitation: A Long and Notorious History of Destruction
Oil companies have earned their reputation for not respecting local people’s rights.
Oil drilling and pipeline construction have had a severe negative impact on
indigenous communities, peasants and farmers, and herders all over the world.
Forced evictions, harassment, destruction of natural and food-producing resources
are some of the widespread violations and abuses of vulnerable people’s right to
fend for their families and communities.
According to observer groups, the perception about the long and destructive
history of Shell in the Niger Delta area of Nigeria, home of the Ogoni people, and
the 1997 execution of Ogoni activist Ken Saro-Wiwa may be an extreme case, but
it is not an isolated one. 11
The Nigerian government, oil corporations, and oil-dependent Western countries
have been criticized as too slow to implement reforms aimed at aiding a
desperately under-developed area and remediation of the unsustainable
environmental degradation that petroleum extraction has wrought.
All petroleum production and exploration is taken under the auspices of joint
ventures between foreign multi-national corporations and the Nigerian federal
government. This joint venture manifests itself through the Nigerian National
Petroleum Corporation, a government corporation. All companies operating in
Nigeria obey government operational rules and naming conventions (companies
operating in Nigeria must legally be sub-entities of the main corporation, often
incorporating "Nigeria" into its name). Joint ventures account for approximately
95 percent of all crude oil output, while local independent companies operating in
marginal fields account for the remaining 5 percent. Additionally, the Nigerian
constitution states that all minerals, oil, and gas legally belong to the federal

23. 23
government. Six companies are operating in Nigeria and are listed with their
countries of origin (See Appendix II) 12
4.0 The Concept of CSR by Oil & Gas companies in the Niger-
River delta region (Southern Nigeria)
4.1 The Roles and Responsibilities of International Oil Companies
The multinational oil companies operating in Nigeria face a difficult political and
economic environment, both nationally and at the level of the oil producing
communities where their facilities are located. Successive military governments have
misspent the oil wealth which the oil companies have helped to unlock, salting it
away in foreign bank accounts rather than investing in education, health, and other
social investment, and mismanaging the national economy to the point of collapse.
Previous military governments had failed to fund its share of the joint ventures
operated, co-jointly by the national corporation and the multinationals (See
Appendix 2)12, and have in times past played the different oil companies against
each other so that it has not been easy—even for Royal Dutch Shell (SPDC), the
most dominant oil company in the Niger River delta13—to insist that the government
contribute towards the investment needed to keep the industry functioning in such
a way that the social and developmental priorities of their host communities are
taken into cognizance. It is a fact that the costs of buying political favors were
reported to add significantly to the cost of oil production, despite official denials from
the oil companies that bribes are paid.
However, at community level, the oil & gas companies are faced with increasing
incidents of hostage-taking, closures of flow stations, and other acts which they see
in purely criminal terms. While they acknowledge a lack of development in the oil
producing areas, the companies see the problems faced by communities as a
government responsibility, and no different in the delta from elsewhere in Nigeria:
nevertheless, they make substantial investments in development projects for which
they believe they should receive gratitude rather than censure.13

24. 24
The further demands made of the oil companies by the residents of the oil producing
areas are therefore often represented as illegitimate; and when protests resulting
from a rejection of these demands are met with repression from the military
authorities the oil & gas companies feel that they are unfairly blamed, since they are
not in control of government’s response.
According to the Human rights Watch (HRW), “acknowledging the difficult context of
oil operations in Nigeria does not, however, absolve the oil companies from
responsibility for the human rights abuses taking place in the Niger Delta: whether
by action or omission they play a role”; this scenario was stated in no unclear terms
in the Human Rights Watch (HRW) report of 1999.12
Niger River delta communities have claimed that operations of oil companies have
damaged the material interests of the peoples of the areas in which they operate.
The incidents involve disputes over legal obligations to provide compensation for
claims of damage, for encroachment on community land or waters, or for access
rights, though claims are often couched in terms of community rights to a “fair share”
of the oil wealth derived from their land.
The evidence in many of the cases suggests that companies benefit from non-
enforcement of laws regulating the oil industry, in ways directly prejudicial to the
resident population. Alternatively, the oil companies benefit from federal decrees
that deprive local communities of rights in relation to the land they treat as theirs.14
Grievances with the oil companies center on the appropriation or unremunerated use
of community or family resources, health problems or damage to fishing, hunting or
cultivation attributed to oil spills or gas flares, and other operations leading to a loss
of livelihood; as well as on oil company failure to employ sufficient local people in
their operations or to generate benefits for local communities from the profits that
they make leads to unrest in the host communities with oil flow stations being
attacked and staff being summarily kidnapped for ransom by unemployed youths in
the Niger River delta regions.14 .

25. 25
4.2 Corporate Social Responsibility (CSR) in the Oil Industry: Definition,
Perspectives, Activities & Initiatives
Taking the description of one of the oil servicing companies is apt – Schlumberger
says, it is “social investment ,social comity and community development” integrated
in policy formulation and delivery to the benefits of their host community 5By this
simple definition ,all the stakeholders are involved in passing appreciable benefit to
a companies host community.
According to Victor Ogundipe, an industry analyst, “what a company formulates as
its own corporate social responsibility (CSR) depends on its mission and strategic
goals.” 15 As such, the corporation should first determine its own strategic mission
and goals, size of market and potential market growth, resource availability etc.
Then the parameters of social responsibility that should be factored in, to assure the
success of their strategic goal, could then be determined.” 15
Consequently, at the stage of the budgeting process, the above mentioned
parameters will enable it to decide, what percentage/proportion of the cost structure
that corporate social responsibility (CSR) initiatives will take, in a sustainable
manner.
In terms of his analysis, ‘’programmes must be conceptualized in a manner where
administrative and cost accountability are factored in, and most crucial achievements
and goals must be measurable and documented. 15 Vague goals and achievement
will only breed cynicism and disbelief in the minds of host communities.
Thus, any meaningful programmes of social responsibility will have to be measured
by certain criteria, which interalia, include “identification with government objectives
concerns, and problems, core demographic coverage, permanent and visible
infrastructure, sustainable annual budgets, and identification with present and / or
future market niches.” For example, the focal point of social responsibility initiatives
may be in the demographic coverage of the 21 year old and above youth segment
of the population.

26. 26
4.3 Positive Results of Local Oil & Gas Companies’ CSR Initiatives
Focus of CSR should be their need, for growth and eventual empowerment, not pent
up demand of consumption, or a superficial effort by oil majors at Public relations.
In Nigeria’s Niger Delta area therefore, it is the corporation(s) which imbibe the
principles enunciated by Donaldson and Ogundipe, above, that would have no
problems with its host communities. And some of them do. They formulate their CSR
in form of MOU’s which have gone through the participatory mill of acceptability.
An example is Chevron, a multinational oil and gas producer, and a behemoth, third
only to Royal Dutch Shell and EXXON-MOBIL, by the size of operation in Nigeria’s oil
sector. Chevron’s strategy is anchored on formulating a ‘Global MOU’ which specifies
Parameters for Fund/ Project allocation to their host communities. Except during the
inter ethnic disturbances of 23rd march 2003 at Warri, in Delta State, 16 their
production process and piping operations of crude oil are rarely disturbed.
In the case of Schlumberger, a Nigerian/US partnership in oil production services,
its own social project is code named SEED (Schlumberger Excellence in educational
Development), which equips selected schools in the Nigerian Delta areas with science
laboratories worth $5m each, by the year 2006, they had equipped 6 such schools.
They have several other educational interventions which are agreed with and
appreciated by their host communities.
In the case of Excel Exploration and Production Company, which is also a foreign
/Nigerian partnership ,the company affirmed that “we also never had any single day
of downtime due to community problems because they could see that we were
making efforts to achieve all that was agreed in the Memoranda of Understanding
(MOU)”17.

27. 27
Excel Corporation’s MOU is hinged on economic empowerment, skills acquisition
programmes and community Development projects.
Royal Dutch Shell, the most pillaged of the oil companies have been quite vocal and
clear that they have long been displaying Corporate Social Responsibility (CSR)
through various community initiatives in Nigeria’s Niger- River Delta areas.
According to “SPDC 2004: People and the environment Annual Report,” the company
have been involved in project over time as the following facts were stated therein by
Precious Omoku (SPDC’s Director of External Relation) viz:
“Firstly, SPDC (Royal Dutch Shell) has only recently (2005) moved away from
initiating projects unilaterally to a participatory scheme with, and for the host
communities.”18 Hitherto, the company had concentrated on awarding scholarship
to Nigerian indigent students with priority for those from the area of their direct
operation since 1960’s to date; It has extended agricultural assistance to its hosts.
“Yielding to pressure” from its host communities, infrastructures such as schools,
roads, hospitals etc were included among their provisions. Several other projects
were being undertaken.
SPDC entered into agricultural development scheme worth (US) $20m with USAID,
for the new cassava Project Initiative, launched by the federal Government –to set
up within 4 years, medium scale Cassava processing plants in Abia state: with UNDP
for the control of HIV/AIDS for US $18m; Roll back malaria Programmes with African
organization for US$4.5m, understanding with Globacom (a telecommunications
firm) to provide 41 telephone call centers for youths in the Niger Delta area ;micro-
credit scheme for women; Potted water, Development programmes in Gbaranubie,
Bayelsa State ,which is a typically swampy area and 19 other communities ,a solar
power scheme in Egbeleku, Rivers State ,with plan for more communities in rural
areas, where electricity may not be easily extended. As a good corporate citizen, it
paid its Royalties totally US$3.1b to the federal Government of Nigeria in 2004 18.

28. 28
5.0 An Analysis of corporation’s CSR Initiatives- focus Royal
Dutch Shell (SPDC)
5.1 Royal Dutch Shell (SPDC) & Negative Publicity
What a commendably diversified programme in its corporate social Responsibility
chest! But then, why are they the oil corporation that is most loved to hate in the
Niger Delta Region?
The reasons are not far-fetched. One is damaged Reputation. According to
Donaldson, Royal Dutch Shell (SPDC) had exuded the image of partnering with an
adversary Federal Government (Abacha Regime) in persecuting environmentalists
fighting the local cause, for which they were guillotined, by reason just that Royal
Dutch Shell did not chorus loudly against the Government’s legal process, like some
other people did whilst it lasted.
Secondly, according to their own insider Report for 2004, Royal Dutch Shell admitted
“yielding to pressure,” before deciding on providing infrastructure, which the host
communities badly requested for. This shows that their earlier projects were not
participatory in their conception. Later day oil producers, particularly Chevron, and
Schlumberger proactively learnt from Royal Dutch Shell’s (SPDC) mistake to
commence formulating the concept of memoranda of understanding (MOU’S) and
implementing them to the letter.
Thirdly, series of the dispute between Royal Dutch Shell (SPDC) and its host
communities resulted in an arbitration exercise conducted by the National Assembly
of Nigeria at the request of Ethnic Ijaw Nationality, between their community and
SPDC. The Assembly agreed to the community claim of US$1.5b against Royal Dutch
Shell (SPDC), being damages based on their accumulated environmental pollution,
and destruction of their farm and fishing opportunities from 1956 to date. 19
A subsequent judicial action by Royal Dutch Shell (SPDC) at a Federal High Court to
overturn the Assembly decision, on the grounds that the Assembly was not the court
of law that could rightly take a binding decision resulted in the High Court Judgment

29. 29
which, rather than being over turned, was affirmed supporting the decision of the
National Assembly. This was on the grounds that SPDC (Royal Dutch) Shell had
voluntarily submitted itself to the arbitration processes. The judgment was appealed
to a higher Court by Royal Dutch Shell.
5.2 The Logic of Growth in Corporate Ethics Programmes
Corporations have been known to have well oiled machinery for effecting
CSR in varying degrees among their host communicates but how do these
extraneous activities impact on the bottom line?
Thomas Donaldson examines the logic behind the growth of corporate ethics
programmes and seeks evidence for their success or failure4a. He referred to how
some companies undertake core-competency outreach efforts, whereby they
endeavour to do things for the good of the public (other than writing cheques),
even when such efforts and costs are not meant, and would not have any
immediate prospect of commensurate gain .He recalled how Merck pharmaceutical
company in the 1980s developed a drug ‘Mectizan’ that would treat the tropical
disease ‘river blindness’.
It was not adequately profit-rewarding at first, because it was meant for poor
countries where the disease was endemic, and so was sold below its economic
price. But the effort ended up generating good reputation, world wide
commendation, popularity and late, big sales, and big profit (by reason of a high
elasticity of demand over a sustained long period of time) for Merck.
Also, in the Niger-River delta area of Nigeria, the companies mentioned above,
who operate on Memorandum of Understanding (MOU’s) with their host
communities normally “never had any single day of downtime due to community
problems”20 It stands to reason that they could steadily reach their production
targets and projected sales income. They are able to plan for expansion as
exemplified by the practices of Chevron, Excel and Schlumberger. Conversely,
Royal Dutch Shell (SPDC) who had to shut in about 800,000 barrels of crude oil

30. 30
per day since 2005 in some restive and turbulent communities would not be able
to meet both its production and sales income targets. 20
5.3 Impact Assessment of credible CSR Initiatives
This shows that meeting credible CSR initiatives impacts positively on the bottom
line by permitting of: uninterrupted production, implementation of good strategic
goals and possible long term expansion in production and income levels.
Conversely, evading requested and necessary CSR projects or performing them
shoddily will only result in poor corporate image (like Arthur Andersen) or
disrupted oil and gas production and targeted income like in the case of SPDC.
So, in Nigeria’s Niger-delta, the effects of disrupting SPDC operation impacts
negatively on all the stakeholders concerned, as follows:
(i) 1/3 of Nigeria’s target output is shut in, and cannot be brought out to the
market;
(ii) Reduced income to SPDC translates into reduced incomes also to all the
stake holders involved in the production sharing contract 19, particularly the
NNPC/NPDC representing the Federal Government of Nigeria (FGN). This in
turn, translates to under performance of the economy, and reduced GDP per
capita than projected.
(iii) Joint Venture partnerships on expansion of exploration, production, and
construction of on-going LNG factories will be affected negatively because less
cash contribution will only come from reduced income, based on several of
contributions which had been projected. Growing the economy for upward
growth would be adversely affected

31. 31
(iv) On the part of SPDC, it will be contributory to any cause for disinvestment
in Niger-delta area operations. So, the nations direct Foreign Investment
(FDI’s) would be directly affected
So, a solution needs to be found and the government, being a production and
profit partner of the major oil companies- see Appendix II (having 52% PSC-
Production Sharing Contract; share & profit tax)19 Government could not leave
the oil companies alone to effect a magic solution, because:
(1) It is the municipal authority that should provide security for business
and social life to thrive
(2) It is a direct beneficiary of their operations
(3) It is also an exploration and producer through NNPC
Accordingly, the federal govt. of Nigeria swung into action and achieved
substantial progress in calming restiveness between 1999 and 2005, as shown
by the following statistics 20
Table 1.0-“Ensuring Stable Niger Delta for Sustainable oil production”
Source: This Day 13/11/2005.

32. 32
What accounted for the reduced militancy and production disruption within this
period?
Upon closerscrutiny, it is mostly attributable to the Nigerian Federal Government’s
(FG)/ Nigerian National Petroleum corporation’s (NNPC) policy action20.
This policy initiatives boosted accountability, especially with the establishment of
NEITI (Nigeria Extractive Industries Transparency Initiative), and various Security
and Alternative Dispute Resolution processes. The NEITI is an arm of the
Extractive Industry Transparency Initiative (EITI), a watchdog created by
Transparency International (TI). 20
Incidents Year Disturbances Improvements (2005)
a. Oil spill incidents 2000 340 Under 100
b. Volume of spills Barrels Per day (bpd) Barrels Per day (bpd)
2001 78,000 5,000
400,000 200,000
c. Production deferments 2003
Percentage (%) Percentage Improvement (%)
d. Gas flaring 2000 68% 38%
e. Gas flaring stop (target) 2008 negligible On course (nil)

33. 33
5.4 Joint Venture Partnership and NNPC CSR Policy Initiative
The Nigeria National Petroleum Corporation (NNPC) and its joint venture
partners, complemented direct government action by taking some operational
initiatives which progressively advanced its social overhead investment from
‘community assistance’(CA) to ‘community development’(CD) and to
sustainable community development (SCD).
SCD is considered to be more proactive and innovative, and was summarized
as ‘participative partnering, local capacity build –up, economic and social
empowerment, environmental protection, enhanced security and community
driven sustainable development projects. I would wish to summarize all this by
saying that effective consultation and collaboration processes were put in place.
The above stated action of the federal and state governments, and that of NNPC
and its (multinational) joint venture partners achieved so much between 1999
and 2005, but has been unable to stem the sustained momentum of Niger Delta
militancy campaigns since early 2006.
Militancy has now assumed a progressively more dangerous and daring
dimensions of kidnapping of oil and gas workers who are foreign nationals and
their spouses and children, Nigerian counterparts, killing of some of their
Nigerian counterparts, daring engagement of soldiers in the swamps and

34. 34
intermittent acts of economic sabotage on oil production and supply
installations.
5.5 Strained Community Relations-What went wrong?
“Most community – related unrests in the oil producing areas of the Niger-River
delta are traced to the haphazard manner in which the major oil corporations
(SPDC, Chevron-Texaco, Exxon-Mobil, Agip, and TotalFinaElf) approach the
issues of community relations. The following ‘lassiez faire’ attitude led to a
spike/resurgence of criminal activism by the youth of the Niger Delta region
according to the Nigerian Senate committee on Energy’s findings.21
1.) Some MOUs entered into with host communities, promising project
performance stated therein were not implemented.
2.) Some projects implemented were different from those for which MOUs had
earlier been entered into
3.) Sometimes outrageous contract amounts were being announced for
projects of doubtful importance and value to the communities
4.) The oil companies often anchor their operational stability on setting up one
community group against the other, over handouts that could otherwise have
been constructively utilized for the development of the communities involved.
5.) The long drawn financial compensation claim by the Ijaw Ethnic Nationality
groups against SPDC (Shell Petroleum Development Company) (US$ 1.5b) still
remains unresolved.

35. 35
6.) The Nigerian constitutional review conference (2005) failed to agree on a
requested upward review, by the delegation from the Niger-River Delta region,
of the 13 per cent (%) derivation fund earlier mentioned and so, they walked
out on the conference.
According to Emmanuel Usanga, a member of a Niger-delta host nationality
group, they are demanding participation, in the business of oil exploration,
production and in the downstream operation of refineries. The federal
government (FGN) is moving in this direction by granting oil mining and oil
prospecting licenses (OML & OPL) to qualified indigenous professional
companies which has members of the Niger delta region on its management
board.22
5.6 Suggested Solutions
What then should be considered as the lasting and agreeable corporate social
responsibility parameters that will usher in sustainable security and stability for
the smooth running of oil and gas operation in Nigeria’s Niger delta region?
The biggest target of youth militancy, for now, is the SPDC. And until the lingering
claim for compensations of $1.5billion by the Ijaw community is amicably
resolved, all other expensive projects by SPDC will remain unappreciated by the
host community. So it is in the interest of oil & gas corporations for the imbroglio
to be quickly resolved in a sustainable manner; emplacing lasting projects and
programmes that would develop the communities.
Secondly, MOUs drawn up by the operating oil and gas companies must be
implemented as agreed with the host communities after a negotiated deal that
must be brokered by agents of government.
The older multinationals must see wisdom in why relatively newer entrants into
the oil communities (e.g. Schlumberger and Excel) and to some extents, Chevron,
have little or no disrupting problems with their host communities

36. 36
Thirdly there is a compelling need to have a holistic view of corporate social
responsibility in the Niger Delta, which will be capable of achieving sustained
peace and security. The issues to be considered here revolve around environment,
compensation for degradation of economic ventures and opportunities, economic
empowerment of the youth, the extractive industry transparency initiative and
most importantly, the local content issue.
5.7 Holistic View of CSR Initiatives-Environmental Responsibility
Environmental issues must dwell on all of toxic waste management, oil spill
amelioration and heat inducing gas flaring. Two principal types of waste
management control systems are required to reduce or eliminate environmental
degradation and health hazards in the region, and thereby contribute to reducing
tension.
The first one is remediation of contaminated sites especially due to oil spills. The
immediate and visible result of this waste is aggravation of the host community’s
poverty index, destruction of avenue of self-empowerment, farming and fishing,
lack of good drinking water and disruption of smooth water transportation. What
matters here is rapid response capability in order not to jeopardize the quality of
life. Otherwise, life will be short.
The second waste management control system required is the detoxication and
convenient disposal of toxic wastes generated by oil and gas operations. The
damaging result of an absence of a quick response is the immediate aggravation
of the host community’s health and eventual death of some members of the
population in the short run.
The dumping of toxic wastes by an Italian Oil company on the plot of land of one
Sunday Nana in Koko, near Warri, Delta state resulted in the death of the
individual; consequently the consciousness of the riverine communities of Koko to
the hazards of untreated wastes was suddenly awakened. Such isolated cases are

37. 37
primarily responsible for the upsurge in youth restiveness and the growth of
unscrupulous private militia gangs in the Niger-River delta.
Consequently, the regulatory authorities in Nigeria have responded by passing
some operative laws, joining international protocols e.g. the Montreal protocol,
Bamako convention, which determines the approved hazardous control system
the world would adopt. 23
The political authorities also build, and counsel on provision by others, of
incinerators, which so far are incapable of handling certain categories of waste
classified between M and Z. This is the class that identifies waste – containing
mercury and some ozone depleting chemicals which cause cancer.
Africa had no technology establishment that could treat toxic waste issues until
August 2005. In the treatment plants, the toxic waste residue had to be stock
piled and shipped abroad for treatment. In the interest of good health of host
communities, the treating technology needs be emplaced in the Niger Delta
region. Fortunately, DEL Oil Resources, an oil service company established one in
Port Harcourt in August 2005 23.
The on-going West Africa gas supply pipeline (WAGP) spanning the countries of
Cote D’Ivoire, Togo, Ghana and Nigeria should have to be completed on schedule
so that the expanded market with the potential of exporting to target markets of
Europe and America, which can easily absorb gas exports being produced through
the WAGP. It will have a beneficial effect in meeting the government’s target date
of 2008 for stopping gas flaring; with the result that flaring will stop affecting local
oil bearing communities who have suffered environmentally and health-wise.
Regarding compensation for destroyed economic ventures and houses belonging
to individuals, as well as the one payable to a host community for the destruction

38. 38
of community fishing opportunities e.g. due to river pollution, a Bureau be opened
for this purpose by the commercial agency of the regulatory authority-NNPC.
NNPC’s representative, those of the oil/gas companies and representatives of the
host community should meet at the bureau to assess and agree on the quantum
of a fair compensation payable any time a new claim arises.
The extractive industries transparency initiative (EITI) should be passed into law
by an act of the national assembly, because of its role in establishing the basis of
accountability and transparency in accounting for oil and gas production, sharing,
sales/export, income proceeds accruing to the government, and more importantly,
the accuracy of the percentage passed to the Niger Delta communities.
Moreover, the oil and gas production companies must be transparent in the
payment of statutory levies which are required payable to the Niger Delta
Development Commission (NDDC). This is another volatile and touchy issue in the
view of the host communities of the Niger Delta Area. The oil company’s must be
seen to be transparent both in accounting for overall production by each
corporation and in the development charge to communities.

39. 39
5.8 The Local Content Policy - an avenue for CSR Initiative
The most recent issues causing conflict and which have ignited the fire of
adversary publicity and agitation for fairness in the Niger Delta are those of NEITI
and local content, because it touches the underbelly of the growing army of
educated and wealthy elite of Nigeria, particularly those of the Niger Delta region.
Issues of environment, compensation and empowerment had solely been bandied
about earlier. Due to the unemployment and underemployment of Nigerian high
level manpower in the science and engineering fields and the new self-
employment drives of the new corps of youthful, wealthy, albeit, rather
experienced Nigerians, the local content issue has become touchy in an economy
that has been tottering and now searching for stability.
The report of the Nigerian Senate Committee on Oil & Gas Upstream Sub-sector
in the 2004 legislative year is as follows:
“Registered reputable indigenous contractors should be given a pride of place in
contract awards by Joint Venture companies. It is disheartening to observe that
in last year’s budget where US$4.8b (billion) worth of joint contracts were
awarded, above 85 per cent of the contract sum, specifically speaking $4.2b, was
awarded to foreign companies.24
The figures quoted above is against the backdrop of the Federal Government’s
(FG) targets of 45% (for 2006) and 70% (for 2010) with regard to local content

40. 40
policy. This clearly depicts the achievement recorded so far as 15% (2003) and
17% (2005); which is a far cry from the objectives and targets of the policy
initiative.24
Specifically, the local contents principle in the oil and gas industry in Nigeria refers
to the minimum share of contract jobs which must be awarded to capable Nigerian
companies, inclusive Nigeria/foreign business partnerships in a way that the
growth and benefits of economic activities in the oil and gas sector will have
multiplier effects in growing the local economy and providing for jobs for the
growing crop of capable hands. 25
The job content within which the local content issue must be effected as
specified by the Federal Government policy initiative are as follows: 26
a.) Exploration and production in the marginal fields.
A marginal field could be a well or a couple of few wells within given oil block
acreages usually awarded to local and small exploration oil & gas companies who
are incapable of bidding for a whole block acreage. The bigger residue of the block
is awarded to rather more capable multinationals like SPDC, Chevron-Texaco and
Exxon-Mobil.
b.) Local Small-size Industry participation
The local content operation also applies to engineering fabrication like FEED (Front
End Engineering Design works, whose local content must grow to 100% in 2007)
and FPSO (Floating production, Storage and Offloading). Both job variants can
take any of the following sub-job contents, viz:
- Engineering Design (for which there must be a local design centre, which
Schlumberger opened in 2005 and SPDC-Shell opened in 2007)27, fabrication and
construction, materials and manufacturing, shipping and logistics. Included also
are banking and insurance.

41. 41
These jobs are highly technical requiring experience and hands-on expertise in
top-rate technology and performance. It is so capital intensive that even big
multinationals like Royal Dutch Shell, Chevron-Texaco, Exxon-Mobil, etc synergize
in forms of partnerships and Joint Ventures with one another towards exploiting
some blocks for petroleum. In like manner, smaller local engineering and
petroleum producing companies seek for and seal partnerships with more
experienced foreign oil & gas companies; this enables them to build capacity.
5.9 Analysis of the Local Content Policy as a Veritable CSR Policy Vehicle
This operating principle of cooperation in expertise and performance should be
seized upon as an opportunity by the Oil & Gas multinationals to synergize with
willing and capable entrepreneurs, in addition to undertaking manpower training
programmes for local residents within their host communities.
This would serve the purpose of assisting the multinationals achieve the
mandatory local content target set by the Federal Government and also show
them as conscientious and ethical corporations who take the concept of corporate
social responsibility (CSR) seriously.
Thus, enabling local entrepreneurs and huge numbers of unemployed youth learn
from their expertise, in addition to ensuring sustainable host community
development and growth; and satisfying the local sensibilities in the Niger Delta
Area. This will put the final seal on the whole context and concept of social
responsibility (CSR) as being demanded from the multinationals by their host
communities.

42. 42
Another solution is the need for frequent institution of a host communities’ youth
and public awareness programmes in the Niger-River Delta area. This will show
how host communities can realistically apply themselves to seeking gainful
opportunities (employment or business) in the industry without recourse to
threats, intimidation or violence. Such awareness and enlightenment programmes
should include trainings, workshops and seminars which should be participatory
and open.
A youth awareness programme held in the oil city of Port Harcourt in October
2006, along these lines tagged ‘vision2020: restoring hope through youth
empowerment ‘was organized by smaller oil operators – Lonadek Oil and Gas
Consultants and Addax Petroleum Development company 28.
Corporate social responsibility should therefore, be holistic in its approach and
implementation and not limited to intermittent under-hand acts doling out
cheques to militant groups or unscrupulous community heads or even
unsustainable projects.

43. 43
6.0 Conclusion
6.1 Outlook-The Challenges and Opportunities of a True Corporate Social
Responsibility (CSR) Organisation
6.2 Outlook for CSR –Current and future trends
In July of 2001, The United Nations launched "Global Compact", a joint initiative
in support of universal values and responsible business operations. The Compact
challenges business leaders to promote and apply within their corporate domains
nine principles in the field of human rights, labour standards, and the
environment.
The principles are derived from the UN Declaration of Human Rights, the
International LabourOrganization's Fundamental Principles on Rights at Work, and
the Rio Principles on environment and development. Nearly fifty transnational
companies from sectors such as media, mining, automotive, services, telecom,
banking, petroleum, pharmaceutical, software, and footwear took a public stand
on the Compact and its principles. Business associations also undertook to initiate
concrete plans intended to advance the goals of the Compact.
The International Chamber of Commerce and the World Business Council for
Sustainable Development propose to use the framework of the Compact to
address not only environmental but also social issues and development when

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preparing the business contribution forthe Rio-plus-ten conference in 2002. Whilst
it is heartening to see such initiatives,voluntary initiatives of the kind represented
by the Global Compact are no substitutes for action by governments. Effective
governance is critical for the promotion of human rights, decent work,
environmental protection, and development.
In January 1999, the European Parliament passed a Resolution on Standards for
European Enterprises Operating in Developing Countries. The Resolution calls on
the European Union to establish legally binding requirements on European MNEs
to ensure that they comply with international law relating to the protection of
human rights and the environment when operating in developing countries. The
resolution proposes that European MNEs be monitored by a panel comprising
independent experts and representatives from European businesses, international
trade unions, environmental and human rights NGOs, and from the developing
world.
A similar piece of legislation has been proposed by US Representative Cynthia
McKinney, which would require all US-based corporations with more than 20
employees abroad to enact a code of conduct which would also apply to the
companies' subsidiaries, subcontractors, affiliates, joint ventures, partners, or
licensees. The Code would require companies in their overseas operations to pay
a living wage; ban specific practices - such as mandatory overtime for workers
under 18, respect identified international labour standards, and provide extensive
information on employment and environmental practices. It is envisaged that
enforcement would be achieved through the US government giving preference to
complying corporations in contracts and in export assistance and allowing the
victims of violations of the bill, including non-US citizens, to sue US companies in
US courts.

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These legislations are an indication that national governments and international
organisations such as the UN are keen to develop an international framework for
the regulation of MNEs.29
6.3 Integration of Corporate & Business Models with Ethical
Considerations
According to Donaldson4, the world of business processes is now fully integrated
with ethical considerations and his elucidation of the Social Outreach variant, and
its sub variants of Social Accounting, Core Competency and Project, are very much
illuminating in explaining how Corporate Social Responsibility (CSR) issues should
best be examined and determined in Nigeria oil bearing Niger Delta area.
The demands of Social Accounting have been streamlined by the Nigerian
Extractive Industries Transparency Initiative, such that issues of Transparency
and Accountability in production records and what resources go into extending
social benefits to host communities, including educational, manpower
development and recreational facilities, are well accounted for.
The aggression shown by host communities to the oil producing companies, has
been a transferred one, having been neglected in the past, in the provision of
socio economic amenities by the government. Hence the communities demand
input into what would satisfy them as projects to be provided by their oil producing
neighbours (the companies). So the present process of consultation in arriving at
credible memoranda of understanding (MOUs) should not be disturbed or
discarded. As such, the emergence of global ‘MOU’ by Chevron, which all
stakeholders seem to have imbibed, with effects is salutary.
Any civilized legal system would acknowledge a ‘person’s or a ‘community’s right
to claims of fair compensation for the destruction of private or communal means
of livelihood by the continual activities of another party. In repeated activities
nothing will work in a society if at each turn, the wronged flock daily to the counts
for redress. So between the oil producing companies and their host communities,

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good neighbourliness’ would rather demand that a proactive system be evolved
for quick arbitration in such disputes as they occur, implying thereby a process of
peaceful negotiation and settlement.
Moreover, then strategic importance of evolving corporate social responsibility by
the oil companies in their area of operation in Nigeria’s Niger Delta cannot be
overemphasized. Ogundipe’s concept of the need for a properly conceptualized
programme of factoring CSR issues and parameters into the budgeting process is
apt.
6.4 Recommendations

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According to Oil & industry analysts, oil corporations can initiate strategic studies
of their operational environment, to determine their long term goals, missions,
related costs and benefits Nigeria is the world’s 6th longest exporter of oil24, and
the 8th largest producer and the largest producer and exporter of crude oil in
Africa. Nigeria is the 8th largest producer of natural gas and has one of the biggest
reserves of it in the world, at 185 trillion cubic feet, in spite of the fact that some
75% of it is being flared, by the estimate of the World Bank.
Whenever the on-going plants for the production of liquefied natural gas
are completed natural gas alone will be expected to rake in a whopping US $12.5b
in annual sales 30 In such an environment as this, an oil producing company can
evolve a properly formulated CSR initiative in order to achieve an enduring host-
corporation relationship with its host communities.
Meeting the demands of the municipal authority and the negotiated MOUs will
enable the oil company’s operation to endure. For instance, meeting the targets
of local content policy of the government of NEITI, pollution amelioration and
control, waste management and empowerment of the youth in the company’s area
of operation will make the companies pass all test of social responsibility in the
enclave.
It is the just expectation of host communities in the Niger- River delta to benefit
from a flow of opportunities arising out of the exploitation of economic units in
their oil-rich communities. The growing army of high-level manpower, ambitious
and wealthy citizens wishing for participation in the economic activities within
their, cannot be ignored with ease.

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Consequently, oil producing companies operating in Nigeria’s Niger Delta should
contribute to enduring security by meeting the evolving people needs,
environment needs, government operating and employment objectives, and the
emancipation of citizens who offer to synergize with them in profitably exploiting
the abundant resources of Nigeria’s Niger Delta. In that wise, Shell (SPDC) will no
longer be forced to shunt in its production. Job planning and execution will be
smooth. The bottom line like in the case of Merck pharmaceutical will be better
enhanced when an appropriate corporate social responsibility policy is evolved and
operated faithfully by the oil producing companies. All the stakeholders will earn
their just dividends.
Concerted efforts are being made by public policy activists, advocacy groups and
some state governments in the Niger-River Delta to prevent multinational
organisations like Royal Dutch Shell (SPDC), Chevron-Texaco, Totalfinaelf, Agip,
and Exxon-Mobil from using their financial and political power to abuse the rights
of theiremployees. This article has discussed some of the human issues associated
with multinational enterprises (MNEs) and has outlined (hereunder) current trends
in government efforts to ameliorate the socio-economic conditions of the host
communities of the Niger-River delta basin; and regulate multinationals in terms
of their active or inactive efforts and socio-economic initiatives, towards
enhancing, through CSR Projects, the plight of the Niger-River delta host
communities.
In terms of Multinationals’ capacity to influence a prosperous and productive
growth in socio-economic conditions possible areas of influence that can be
explored are as follows: The role of encouraging the implementation of
educational, manpower training and development, environmental sanitation of
despoiled host oil & gas bearing communities. Second, Multinationals can be
encouraged to use their power to influence governments in the countries in which
they operate to ensure socio-economic rights for the population of host
communities is assured.

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This is because owing to their overbearing presence in a specific country, and in
the case of the oil majors in the Niger-River delta basin, the PSC and JV contracts
agreements with host governments gives them considerable leverage to demand
action on a government's policy and actions, howbeit subtly and through a
participatory approach at financing projects in those host communities and
countries.