Professional Documents
Culture Documents
Companies
Amarachi Okorie
E297c Term Paper
Spring Quarter 2005
Outline
Introduction
I.
Background
A. Oil Producing Regions & Peoples
B. National History of Mismanagement
II.
Legacy of Oil Production
A. Corruption, Crime, Conflict
i. Corruption and Crime
ii. Conflict and Displacement
B. Environmental Disaster
i. Oil Spills
ii. Gas Flares
C. Consequential Poverty
III.
Repairing the Niger Delta
A. Eradication of Conflict and Violence
i. Improving Security Policies
ii. Mediation Within Communities
iii. Judicial Reform
iv. Self-Governance
B. Environmental Restoration
i. Pollutants
ii. Health Education & Benefits
iii. Natural Resource Conservation
C. Addressing Poverty
i. Compensation
ii. Community Building
iii. Education & Employment
IV.
Positive Development
A. Chinese in Africa
B. Renewable Energy
V.
Conclusion
References
Introduction
Although Nigeria is the largest African oil exporter and the fifth among the Organization
of Petroleum Exporting Countries (OPEC), over 70% of its population lives in poverty.
The petroleum sector currently makes up about 40% of the GDP, and about 95 percent of
exports. With over 35 million barrels in oil reserves and producing about 2.5 million
barrels per day, the Niger Delta region in southern Nigeria is a major crude oil exporter to
both the US and Western Europe. But despite the apparent abundance of such a coveted
and lucrative resource, the economic situation in Nigeria is appallingly non-correlative.
The objective of this paper is to examine the role of multinational oil companies in the
culture of economic and environmental impoverishment; to consider what compensatory
action should be taken by these entities, and also recommend various strategies and
programs they should implement to bolster and restore the Niger Delta.
In the following sections, I first describe the oil-producing areas, followed by an
overview of historical factors that have contributed to the long-ailing Nigerian economy.
Next, I examine the socio-economic, political and environmental consequences of oil
drilling and production, focusing on the role of multinational corporations involved.
Third, I prescribe strategies for compensation and development that the oil companies
should adopt in order to rebuild and develop their host communities, as is their
responsibility. And last, I discuss successful investment and development projects to
serve as exemplary models for multinational oil companies.
I. Background
In order to appreciate the oil issues plaguing Nigeria, it is important to first understand
the geography of the oil-producing regions, and identify the primary beneficiaries of the
highly lucrative oil industry.
A. Oil Producing Regions & Peoples
The majority of Nigerian oil is located in close to 250 small fields in the Niger Delta,
with less than 50 million barrels per field. The following map shows the location of the
Niger Delta region, with key oil fields highlighted:
The Niger Delta is in Southern Nigeria and consists of the tributaries that run from the
Niger River, through the land, and into the Atlantic Ocean. The cities of Port Harcourt
and Warri are home to major oil refineries owned jointly by the major multinationals and
the Nigerian National Petroleum Corporation (NNPC). The following table displays these
companies, their stakes in the major fields along with their production quantities.
TotalFinaElf
(10%)
Agip (5%)
55%
ExxonMobil
(40%)
ChevronTexaco
(40%)
None
60%
None
60%
Agip (20%)
Phillips
(20%)
None
60%
TotalFinaElf
(40%)
60%
Production
Barrels per
Day
950,000
(2003 Est.)
500,000
(2003 Est.)
485,000
(2003 Est.)
150,000
(2003 Est.)
150,000
(2003 Est.)
Table I: Oil Fields in the Niger Delta (from the US Energy Information Administration)
The locations listed in the fourth column represents the numerous communities and
peoples of the tribes in Imo, Edo, Abia, Delta, Ondo, Edo, Rivers, Akwa Ibom,
Baylesa and Cross Rivers states. These ethnic groups include the Ijaw, Ogoni,
Urhobo, Itsekeri, Ogba, Egbema and Ndoni.
According to the Nigerian constitution, the federal government owns all minerals,
oil, and gas in Nigeria, and thus has preeminence over the oil in the Niger Delta.
Table I shows that the Nigerian government, through the NNPC, holds 55 to 60% of
the production interest in these primary fields. But despite its dominant stake, the oil
revenue has not made significant positive difference in the lives of the citizens of
those regions.
kickbacks, oil-motivated crime and conflict between indigenes and the governmentbacked multinationals, have given rise to unsafe, violence-ridden communities. These
problems have been worsened by a chronic lack of transactional transparency and
concern for the welfare of indigenes. Federal and state government officials, the
military, representatives of multinational oil companies, heads of local communities,
and gangs have jointly woven the tangled web of corruption and crime.
1. Corruption and Crime
The percolating resentment of inequitable and negligent fiscal policies amongst the
peoples and tribes of the Niger Delta towards the government and oil companies has
erupted into more frequent and explosive confrontations in recent years. For instance,
in their desperation to wrest a livelihood for themselves, unemployed youth join tribal
warlords, gangs and militant groups to takeover oil fields, sabotage facilities, kidnap
oil workers, and engage in other aggressive negotiation tactics, intending to force
multinationals to acquiesce to various monetary, political and social demands.
Among the elements fueling tensions is the issue of awarding protection
contracts and employment. Contracts are essentially payoffs granted by oil companies
to local chiefs and influential people in the communities. They are awarded,
purportedly, to protect oil-drilling operations from piracy and crude oil thievery
(bunkering) by other gangs. The contracts are also used to distribute employment to a
very limited pool of indigenes. They are often inequitably and corruptly distributed,
and end up pitting tribe against tribe, gang against gang, and result in intra- and intercommunity rivalries and violence.
2. Conflict and Displacement
In recent years, thousands of civilians have been caught and massacred in the
crossfire between the military-backed oil companies and tribal gangs, and well as
local militants, and even environmentalists. Most notorious were the 1999
assassination of Ogoni environmental and social activist Ken Saro-Wiwa and the
subsequent rioting and annihilation of the town of Odi by Nigerian military forces on
behalf of Shell.
Numerous similar incidents of unrest quelled by force in towns such as
Umuechem and Tombia have resulted in appalling loss of lives and property, as well
as the displacement of citizens, with a handful of major cities like Port Harcourt
experiencing a surge in refugee emigration from the oil-producing regions. There
have also been incidents of peaceful protests, as in the town of Kaiama, during which
hundreds of youths were gunned down and women violated by the federal soldiers
called in by oil companies [BBC].
Such military involvement, at the request of the power-wielding multinationals,
has done nothing to resolve the larger problem of the efforts of the oil companies,
both active and passive -- in collusion with the federal government -- to suppress the
rights and rightful privileges of the Niger Delta peoples by consciously and
systematically eliminating them from decision-making processes. These policies have
Further, the oil companies in the region only train and employ a handful of indigenes
for jobs other than manual labor, choosing instead to bring in predominantly foreign
workers. As a result, the income and profits from oil drilling do not significantly
infuse the local economy. And given the historical lack of adequate economic
compensation or social responsibility, by both oil companies and the federal
government, the peoples of the Niger Delta have continued to marinate in poverty
despite the world-coveted treasure in their own backyard.
Executing these steps would help reduce the awful propensity of security forces
toward violent reprisals in the Niger Delta, and thus interrupt the long-running cycle
of conflict.
2. Mediation within Communities
As a result of their influence on local politics and their contribution to the power
struggles, the multinational oil companies also have a responsibility to reduce the
tensions in their host communities. They must diffuse rivalries and dissent over
ownership of oil-rich land, contracts, compensation, and other resources in the
following ways:
-
3. Judicial Reform
The Nigerian judicial system is crippled by widespread corruption. And since oil
interests fuel the corruption, multinationals should ensure that the citizens of the
Delta find justice in their efforts to protest any form of marginalization, seek redress
for crimes committed against them, or make legal claims. To accomplish these goals,
multinationals must:
Reform of the judicial system will ensure justice for all and contribute to peaceful
interaction between multinationals and their host communities.
4. Self-Governance
The Nigerian constitution grants all lands and resources to the federal government,
which has in effect acceded much of its authority to oil interests, both foreign and
domestic. And despite Nigerias independence from colonial rule under Great Britain
in 1960, the peoples of the oil-producing Niger Delta region have continued to suffer
decades of oppression and denial of their right to self-determination, at the hands of
the federal government and oil companies. Consequently, the region has become a
hotbed of conflict between frustrated citizens and oil interests.
Therefore, given their political and economic power, multinational oil companies
must play an active role in giving the people a voice in matters than greatly affect
their livelihoods. Multinationals must take the following steps towards that objective:
1. Pollutants
The severe effects of long-term release of oil and other hydrocarbon pollutants into
the land, water and air need to be addressed promptly. Crude oil contains thousands
of different chemicals, many of them toxic and some known to be carcinogenic with
no determined safe threshold for human exposure. Oil companies must do the
following:
-
Educate people about respiratory illnesses caused by air pollutants (released from
plants, gas flares, etc)
Educate people about poisoned freshwater fish and marine life
C. Addressing Poverty
Multinational oil companies need to work with the local leadership and government
to end the extreme poverty that has persisted as a result of economic marginalization
of underrepresented ethnic groups in the Niger Delta.
In particular, oil companies should pressure and assist the government in providing
essential infrastructure and development for these indigenes, as return for the decades
of wealth and profit mined from their oil-rich wetlands.
1. Compensation
Multinationals can help improve the standard of living and provide solutions to the
long-term exploitation and repression of the Delta people in the following ways:
-
Working with local commerce groups and community leaders to develop new
economic initiatives and businesses to replace lost farming and fishing jobs
Providing trade-facilitating infrastructure such as roads and inexpensive public
transportation
Installing basic social amenities such as water and electricity
Working with international charities to donate necessities (clothing, toiletries, etc)
Providing communications infrastructure. Some proposals suggest extending oil
company private infrastructure (telephone/internet lines) and providing service at
reduced cost to oil-producing communities
These types of programs will enable more Delta citizens to participate in and benefit from
the oil economy.
having trained about 7,000 experts for Africa, including diplomats, doctors and
agricultural professionals. China had also sent 500 teachers, doctors and other experts
to several African countries, accepted more than 15,000 African students to study in
China, and provided more than 1,500 scholarships for African countries per year
[China2].
China has also partnered in agricultural development with countries like Tanzania and
Zambia to reclaim wasteland and resurrect crop-trading economies.
Multinational oil companies can study and engage in similar effective development
programs to benefit their host communities.
3. Health Aid
The Chinese have also provided healthcare and personnel to African nations by
funding research, dispatching teams on medical missions, providing free medicine,
medical instruments and materials, and training for African personnel. Aid also
includes medical services like sanitation quarantine, pharmaceutical inspection,
disease prevention, health care, and medical equipment maintenance [China2].
These are critical services that would particularly benefit regions such as the swampy
Niger Delta where diseases like malaria are prevalent, and similar programs should be
adopted by oil multinationals in those areas.
2. Renewable Energy
Another essential investment direction is in renewable energy sources to reduce
environmental pollution worldwide, as well as the pressure on oil-producing regions
and to prepare for a post-oil economy.
One example of realized conservation technology is Changing World Technologies,
Inc. (CWT)s Thermal Conversion Process. CWT funds the development of processes
that solve energy and environmental dilemmas.
1. Thermal Conversion Process
CWTs most outstanding and successful venture has been developing and deploying
its patented Thermal Conversion Process (TCP). TCP technology replicates natures
geothermal processes by utilizing water, heat and pressure to reform industrial and
agricultural by-products into oils, gases, specialty chemicals, carbons and fertilizer
[CWT].
By accelerating natural geological processes the CWT process can potentially enable
independence from fossil fuels and help preserve the environment. When applied to
food waste, products of the TCP process typically consists of 75% oil, 15% fuel-gas
and 10% carbon and minerals by mass. The process involves:
The oil from TCP is the same species found in petroleum-derived fuels. According to
CWT, the fuel from TCP does not have the typical solubility problems of bio-diesel
and other fuel alternatives. TCP transforms animal and vegetable fats into
hydrocarbons that have 20 or fewer carbon atoms resulting in a more complete
combustion, reducing particulate emissions, thereby mitigating air pollution
potential [CWT].
2. Production Factors
According CWT estimates, operational plants can be constructed within a year and do
not require permits, because the TCP process and related technologies do not emit any
waste by-products and exclude any combustive processes. Types of waste that can be
converted to fuel include food or agricultural products, automotive parts such as tires,
plastics, and municipal waste.
CWT is credited with launching the worlds first commercial-scale TCP plant through
its subsidiary Renewable Environmental Solutions, LLC (RES). RES was
incorporated to commercialize TCP technology in the agricultural and food
industries.[CWT]. Located in Missouri, the plants facilities includes a production &
raw materials receiving area, a process area where TCP is applied, a coker area, raw
materials storage, and produced water area.
The TCP process is also rated as cost-competitive with other oil-producing methods,
particularly for small to medium exploration and production companies. Oil
companies should fund extension of such technologies for larger scale production.
3. Self-Sustaining Technology
RES estimates that at full capacity, the Missouri plant can convert 200 tons of organic
and agricultural waste per day into energy and industrial products. This translates to
approximately 500 barrels of oil per day, as well as natural gas, liquid and solid
fertilizer, and solid carbon.
In addition to converting hydrocarbon and organic waste into useful fuels and
chemicals, CWTs TCP is environment-friend. By recycling surface carbons into fuel,
fertilizer and other raw materials, natural carbon deposits underground are preserved
from mining. As a consequence less CO2 is released to the atmosphere, helping to
curb global warming.
The TCP process is also efficient and self-fueling. CWT estimates that for every 100
BTUs available in agricultural waste product, 15-20 BTUs are needed to supply
energy to the plant and the remaining BTUs will be converted to marketable fuel, .i.e.
the TCP achieves 80% efficiency.
These salient characteristics make the TCP technology an excellent candidate for
further development and deployment by oil companies.
V.
Conclusion
This paper examines the role of multinational oil corporations in the Niger Delta, in
particular, the long-term effects of their presence on the indigenes of oil-rich region and
their habitat. The critical problems of corruption, conflict, human rights violations,
natural resource depletion and pollution, extreme poverty, and stifling lack of socioeconomic development in the Delta are long overdue for eradication. And as a result of
their status as major players and dominant contributors to these problems, oil companies
must spearhead efforts to rectify the situation in cooperation with citizens of their host
communities.
I have presented several recommendations for mitigating the plaguing issues, in
accordance with guidelines from international NGOs such as the Human Rights Watch
and the Environmental Rights Action groups. These recommendations include reforming
security policies, improving the mediation processes with and within the communities,
pushing for judicial reform, investing in environmental research, contributing to human
resource development by providing employment and education, and engaging in
development projects to promote health, stimulate economic growth and eliminate
poverty.
Lastly, I discuss effective development programs that oil companies can emulate to bring
progress and restoration to oil-producing communities and to civilization at large.
The first example is the China-Africa Forum set up to foster joint investment and
increase trade between the two sides. Outcome from this union has included contracts for
infrastructure in several African nations, joint ventures in areas such as agriculture and
electronics, transfer of expertise and training of thousands of African professionals, and
provision of medical care and Chinese medical personnel to 35 African nations.
Multinational oil companies should engage in similar programs in the Niger Delta to help
compensate decades of massive exploitation.
The second example is the development of a renewable energy technology by Changing
World Technologies, Inc. CWTs Thermal Conversion Process is a self-sustaining, costeffective process that converts hydrocarbon and organic waste into oil, gas, carbon and
minerals. Oil corporations should invest in large-scale deployment of such technologies
and programs to provide alternatives to fossil fuels and slow the march toward global
environmental collapse.