Multinational Companies and Their Social Responsibilities (Α Case Study of Shell, Nigeria)
CHAPTER TWO
2.0 AN OVERVIEW OF SHELL DEVELOPMENT COMPANY IN NIGERIA
2.1 Introduction This chapter will provide basic knowledge of Shell Nigeria Oil Company and its operation in Nigeria, in particular regarding its ethics, performance, social involvement, contribution to national income and its contribution to keeping the environment green. Since the Rio Conference of 1992 the code of conduct for all extractive industries including crude oil mining companies has underlined the following principles that should be respected in doing business:
i. Social and economic development of host communities ii. Provision of basic social services iii. Regard for Human Rights iv. Good governance and civil society involvement. There have also been some initiatives by NGOs and interest groups within the extractive industries such as:
i. Publish What You Pay ii. World Bank Extractive Industries Review iii. Extractive Industries biodiversity initiatives iv. Global Reporting initiatives
2.1.1 How far is shell involved in these international processes? Crude oil was first discovered in commercial quantity at Olobiri community in the Ijaw heartland of the Niger Delta region of Nigeria in the year 1956. Two years later other wells were struck in Ogoni community also in the Niger Delta by Shell. The indigenous communities of Oloibiri and Ogoni happily welcomed the Shell Petroleum Development Company to their territories over four decades ago because they believed that the company would open their area to modern development. Since 1956, the relationship between Shell and its host communities in the Niger Delta has deteriorated for various reasons:
i. Shell refuses to recognize them as the landowners as it pays very little or no compensation for their land and trees destroyed as a result of oil prospecting; The 20 percent rent and royalties that should be paid to them is instead paid to the Nigerian central government, in addition to the petroleum profit tax (PPT); ii. In the process
2.0 AN OVERVIEW OF SHELL DEVELOPMENT COMPANY IN NIGERIA
2.1 Introduction This chapter will provide basic knowledge of Shell Nigeria Oil Company and its operation in Nigeria, in particular regarding its ethics, performance, social involvement, contribution to national income and its contribution to keeping the environment green. Since the Rio Conference of 1992 the code of conduct for all extractive industries including crude oil mining companies has underlined the following principles that should be respected in doing business:
i. Social and economic development of host communities ii. Provision of basic social services iii. Regard for Human Rights iv. Good governance and civil society involvement. There have also been some initiatives by NGOs and interest groups within the extractive industries such as:
i. Publish What You Pay ii. World Bank Extractive Industries Review iii. Extractive Industries biodiversity initiatives iv. Global Reporting initiatives
2.1.1 How far is shell involved in these international processes? Crude oil was first discovered in commercial quantity at Olobiri community in the Ijaw heartland of the Niger Delta region of Nigeria in the year 1956. Two years later other wells were struck in Ogoni community also in the Niger Delta by Shell. The indigenous communities of Oloibiri and Ogoni happily welcomed the Shell Petroleum Development Company to their territories over four decades ago because they believed that the company would open their area to modern development. Since 1956, the relationship between Shell and its host communities in the Niger Delta has deteriorated for various reasons:
i. Shell refuses to recognize them as the landowners as it pays very little or no compensation for their land and trees destroyed as a result of oil prospecting; The 20 percent rent and royalties that should be paid to them is instead paid to the Nigerian central government, in addition to the petroleum profit tax (PPT); ii. In the process