Nigerian Oil: The Role of Multinational Oil Companies

Amarachi OkorieE297c Term Paper

Spring Quarter 2005

Outline

IntroductionI. Background

A. Oil Producing Regions & PeoplesB. National History of Mismanagement

II. Legacy of Oil ProductionA. Corruption, Crime, Conflict

i. Corruption and Crimeii. Conflict and Displacement

B. Environmental Disasteri. Oil Spills

ii. Gas FlaresC. Consequential Poverty

III. Repairing the Niger DeltaA. Eradication of Conflict and Violence

i. Improving Security Policiesii. Mediation Within Communities

iii. Judicial Reformiv. Self-Governance

B. Environmental Restorationi. Pollutants

ii. Health Education & Benefitsiii. Natural Resource Conservation

C. Addressing Povertyi. Compensation

ii. Community Buildingiii. Education & Employment

IV. Positive DevelopmentA. Chinese in AfricaB. Renewable Energy

V. ConclusionReferences

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:

Figure 1: Map of the Niger Delta

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.

Major Nigerian Oil Production Joint-VenturesOperator(% interest) 

OtherPartners(% interest)

NNPC(% interest)

 Major Producing Fields 

ProductionBarrels per Day

Shell (30%) TotalFinaElf (10%)Agip (5%)

55% Bonny or Eastern Division - Nembe, Cawthorn Channel, Ekulama, Imo River, Kolo Creek, Adibawa and Etelelbou Forcados or Western Division - Forcados Yorki, Jones Creek, Olomoro, Otumara, Sapele, Egwa and Odidi

950,000 (2003 Est.)

ExxonMobil (40%)

None 60% Edop, Ubit, Oso, Unam and Asasa

500,000 (2003 Est.)

ChevronTexaco (40%)  

None 60% Meren, Okan, Benin River, Delta/Delta South, Inda, Meji and Robertkiri Funiwa, Middelton, North Apoi, Pennington and Sengana

485,000 (2003 Est.)

Agip (20%) Phillips (20%)

60% Obama, Obiafu, M'Bede, Abgara and Oshi

150,000 (2003 Est.)

TotalFinaElf (40%)

None 60% Obagi, Aghigo, Okpoko, Upomami, Afia and Obodo-Jatumi

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.

B. National History of Mismanagement

Since 1970, when Nigeria began large-scale exportation of crude oil, a long string of corrupt military dictators, politicians and government officials, both domestic and international, have profited from bribery, kickbacks, and other dishonest means, on a relentless march of exploitation that has consistently sunk the oil-rich country into the list of the 30 poorest countries in the world. A 2002 World Bank document on the OPEC revealed that approximately 80% of revenues from Nigerian oil and natural gas accrue to only 1% of the population. The other 20% of revenues is spread out to 99% of the population, “leaving Nigeria with the second lowest per capita oil export earnings put at $212 (N28,408) per person in 2004” [Vanguard].

Additionally, there are the losses caused by corruption and crude oil theft, estimated at more than 100,000 barrels a day. According to anti-graft chief Nuhu Ribadu, corruption costs Nigeria 40 % of $20 billion annual oil income, and about 4% of national oil exports are stolen every day in Nigeria (Reuters). Also, a commission of inquiry lead by economist Pius Okigbo, appointed by General Abacha shortly after taking power in 1993, estimated that $12.2 billion in oil earnings had disappeared between 1990 and 1994 [HRW]. In a government rife with bribery and corruption at all levels, many such incidents of wrongdoing occur with no individual or organization held to account.

In the remainder of this paper I highlight the role of multinationals in funding and perpetrating such systematic abuse of power and resources by first examining the socio-economic and environmental impact of the presence of oil corporations in the Niger Delta area of Southern Nigeria.

II. Legacy of Oil Production

There are 18 international oil companies operating in Nigeria, with a few dominant players such as Shell, Exxon/Mobil, Chevron/Texaco, Elf and Agip accounting for an estimated 99% of the crude oil production [NIPC]. Some of these majors, for instance Shell, have had a presence in Nigeria since the 1950s; it is thus important to examine the long-term impact of their presence and policies on the tribes and peoples of the coastal Niger River Delta in order to determine a path towards repair of economic and environmental damages. The most serious consequences of oil drilling and production in the Delta include the persistence of unrest and crime due to corrupt, ineffectual governance and the degradation of life-engendering natural resources.

A. Corruption, Crime, Conflict

Over the decades of oil production, the severe corruption problem at the federal level has seeped down to local levels, to the heads of the communities in the Niger Delta. With numerous complicated layers composing the system of bribery, payoffs and

kickbacks, oil-motivated crime and conflict between indigenes and the government-backed 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 CrimeThe 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 inter-community 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

resulted in decades of blatant dispossession and exploitation of land resources without substantial reciprocal compensation or community development. Moreover, lack of self-determination and social justice leads to further unrest, as uneducated, jobless and hungry young men continue to join ethnic and political militias to vent their frustration and earn livelihoods from oil bunkering and piracy.

B. Environmental Disaster

The regions of the Niger Delta are known for their highly swampy conditions ideal for a fishing economy, but after over four decades of oil spills and gas flares, much of the fishing creeks are now barren; land has been seriously damaged and reduced to wasteland.

1. Oil Spills, Leakage and WasteBased on quantities reported by the operating companies, the NNPC estimates that approximately 2,300 cubic meters of oil are spilled in 300 separate incidents every year. And due to under-reporting, the aggregate spillage is believed to be at least ten times higher. A Human Rights Watch report also cites statistics from the Department of Petroleum Resources (DPR) that between 1976 and 1996 a total of 4,835 incidents resulted in the spillage of about 2.5 million barrels (102.7 million U.S. gallons), of which an estimated 1.9 million barrels (79.7 million U.S. gallons; 77 percent) were lost to the environment [HRW]. Records for the period show that approximately 6%, 25% and 69% respectively of the oil spilled in the Delta were in land, swamps and offshore ecological beds [CEAR].

A 1998 Oil Spill Intelligence Report documents the largest Nigerian spill, an offshore well blowout in 1980, during which more than 200,000 barrels of oil (8.4 million U.S. gallons) discharged into the Atlantic Ocean from a Texaco facility. DPR estimated that over 400,000 barrels (16.8 million U.S. gallons) were spilled in this incident [OSI]. Following this major 1980 spill, as many as 180 people from one community were reported dead as a result of water pollution. In fact, tests conducted to determine the hydrocarbon content of drinking water in some Delta communities found levels of 360-600 times the levels allowed in European Union countries [HRW].

The saturation of soil with hydrocarbon content from oil spills is similarly dismal. In addition to harming human life, vegetation such as mangrove forests is particularly susceptible to oil spills, because the soil soaks up the oil, and it is released every rainy season. The 1980 spill destroyed 340 hectares of mangroves. And all over the Delta there have been numerous reports of dying marine life, of severe impact to fishing communities.

In a human rights violation press release, the Environmental Rights Action (ERA) in Nigeria held ExxonMobil responsible for a 1998 oil spill in Akwa Ibom State, which released over 40,0000 barrels of crude oil into area rivers, creeks and farmlands. The spill has continued to affect the ecological systems of several neighboring communities in Rivers, Bayelsa and Delta states [ERA]. Other oil

companies, including Shell, have received similar attention for environmentally destructive production and disposal practices.

In addition to oil spills, damaged and corroded pipelines have leaked significant amounts of oil and production waste into the environment. Oil and gas pipelines are ubiquitous and have contributed to the devaluation and destruction of farmland and natural vegetation.

High pressure pipelines are susceptible to oil leaks; they “spurt out over a wide area, destroying crops, artificial fishponds used for fish farming…economically valuable trees…and other income-generating assets….a small leak can wipe out a year’s food supply for a family, with it wiping out income from products sold for cash” [HRW].

2. Gas FlaresIn addition to degradation of air and water quality from oil pollution, gas flaring – the practice of burning off natural gases that are byproducts of oil production - causes acid rain, which damages and hinders the pollination and growth of crops in these predominantly farming communities [TO]. An estimated 20% of global gas flares occur in the Niger Delta, from approximately two billion cubic feet of natural gas burned daily. Gas flares are also suspected to contribute to global warming which leads to increases in GHG emissions and frequency of natural disasters like flooding.

Further, the toll exacted by air pollution and induced hotter temperatures on the health of the people who live in very close proximity to the oil plants, and who live in impoverished village settlements without hospitals, electricity or clean running water, has been extreme and largely disregarded by oil companies, the Nigerian government, and the international community at large.

C. Consequential Poverty

Most communities in the Niger Delta earn their livelihoods by fishing and farming. But with the land devaluation and damage to natural resources, agriculture has suffered, food has become increasingly expensive and even scarce, and exportation of key crops such as palm products has decreased dramatically.

With corrupt administration at all government levels, necessary infrastructure such as roads, clean running water and electricity are unavailable to these communities, worsening their conditions. Proper healthcare is also not accessible to numerous localities, where the effects of environmental pollution are the most evident.

Exacerbating the poor living conditions is the widespread lack of formal education and literacy. Moreover, adequate higher education is for the well-to-do, leaving virtually the entire population barely literate, unemployable and collectively incapable of communal self-development.

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.

III. Repairing the Niger Delta

In view of the devastating legacy of oil production in Nigeria, and the lack of just, corruption-free government, I propose that the multinational oil companies take a more proactive role in securing and safeguarding the right of the peoples of the oil-rich Niger Delta to freedom and a livelihood. They should implement reparatory action to mitigate the decades of damage wrought on the peoples and lands of the Delta as a result of oil production.

In this section I recommend action for the oil companies to take in response to the major problems presented in the previous section. National and international rights groups such as the Environmental Rights Action (ERA) group in Nigeria and Human Rights Watch have made some of these recommendations in the past.

A. Eradication of Conflict and Violence

Oil company prerogatives have long been at the heart of conflicts and crime waves that have claimed the lives and livelihoods of many indigenes of the Delta. With great leeway given by the Nigerian Federal government to largely act as sovereign entities, multinationals have great responsibility in ensuring that the unrest arising from discontent over their policies be handled with methods in keeping with human rights standards.

1. Improving Security PoliciesAs discussed previously, multinational oil companies have employed security forces, including the Nigerian military, navy, and police to secure their holdings against vandalism, attacks, and to suppress protestors. But in the process, these personnel have repeatedly committed acts in violation of human rights by use of excessive force.

In a 1999 report, Human Rights Watch called on multinationals to jointly establish a committee of the Oil Producers Trade Section of the Lagos Chamber of Commerce to monitor the human rights situation in the oil-producing communities and “make public and private protests to the Nigerian government when violations

occur” [HRW]. In addition to forming this organization, I am recommending the following actions to provide transparency and facilitate order:

– Report and account for all hired personnel– Conduct background checks and cease from employing individuals with record of

past human rights violations– Set up procedure for hiring and training both company security employees and

contracted personnel according to human rights standards. Provide training for:o Managing peaceful protesto Dealing with environmental activists, researchers and investigatorso Resolution of armed and unarmed conflict with appropriate force

– Report all intervention by federal military forces, whether or not they are sent at the request of the company

– Publicly protest any violations of human rights and record all armed confrontations by the Nigerian government on behalf of oil interests

– Publicly condemn acts of repression against environmental activists, independent investigators and whistle-blowers

– Pressure the Nigerian government to undertake prosecution of personnel involved in human rights violations

– Report and record all negotiation and confrontation with community members, leaders, militant groups or activist

– Ensure that all orders and purchases of weapons and security equipment (helicopters, tanks, firearms, etc) meet international standards for peacetime security, and are reported and recorded

– Advise community leaders and citizens of security policies

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 CommunitiesAs 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:

- Initiate negotiations with disenfranchised groups including local militants and gangs, rather than waiting for eruption of armed confrontations. Attacking oil pipelines and engaging in other aggressive action has often been the most effective way to gain the attention of the oil companies and the government. Multinationals can change this trend by providing a table of equal, active and productive exchanges between the host communities and company representatives

- Involve third-party mediators (not including the Nigerian government) in negotiations with community representatives to ensure that all parties receive fair

hearing in disputes. Many groups frequently resort to violence because negotiations are often biased towards oil companies.

- Pressure the Nigerian government to enter mediated negotiations with host communities over land ownership and property allocation

- Institute and publicize new procedure for granting any employment or contracts- Work with communities to end competition among ethnic groups for resources,

and end preferential treatment of one tribe or clan over another- Find equitable units for distributing resources such as oil royalties- Fund retraining of militia members for peace-keeping and community-building

efforts

3. Judicial ReformThe 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:

– Cease from influencing judicial officials to protect their interests– Publicly condemn acts of injustice against indigenes of their host communities– Call for independent, internationally-supported investigations of legal complaints

against them by environmentalists, human rights activists, and citizens who are generally at risk for abuse within the legal system

– Pressure the Nigeria government to institute due process for citizens under prosecution by publicly protesting incidents of unwarranted or prolonged imprisonment, torture, and other intimidation tactics used to secure oil interests.

– Work with UN, the African Union, and other international bodies to set up judicial processes for regulating multinational oil companies and for addressing past atrocities and human rights violations committed against the peoples of the Niger Delta

Reform of the judicial system will ensure justice for all and contribute to peaceful interaction between multinationals and their host communities.

4. Self-GovernanceThe 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 Nigeria’s 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:

- Actively advocate locally elected leaders- Cease from supporting government appointees selected to secure oil interests- Cease from financially or materially influencing political campaigns, with the

intent of installing oil “puppets” i.e. politicians sympathetic to oil companies to the detriment of the community

- Publicly advocate increased and adequate representation of the people of the Niger Delta at the national level. Improved representation will improve allocation of resources and revenues

- Work with local representatives and international organizations to establish working democracies at the state and local levels

Increased self-governance will reduce tensions as well as the incidence and perception of political and economic oppression.

B. Environmental Restoration

In addition to ending violence in the region, multinational oil companies must rebuild the Niger Delta by engaging in activities that both restore and preserve the natural resources. They must begin by adhering to existing environmental standards.

There are several environmental standards and legislation in place, such as the Mineral Oils Safety Regulations of 1963 (enacted as part of the Mineral Oils Act), which effectively bind oil companies to respect international standards in their operations in Nigeria [HRW]. Moreover, the Environmental Impact Assessment Act of 1992 requires an environmental impact assessment (EIA) to be carried out “where the extent, nature or location of a proposed project or activity is such that it is likely to significantly affect the environment.”

But despite these regulations there has persisted a lack of enforcement to abide by them or to perform adequate EIAs, by the agencies charged with supervision of natural resource use, such as the Federal Environmental Protection Agency (FEPA) and the Department of Petroleum Resources (DPR). An environmental survey on the Niger Delta concluded, “Most state and local government institutions involved in environmental resource management lack funding, trained staff, technical expertise, adequate information, analytical capability and other pre-requisites for implementing comprehensive policies and programs.” The study also found that shared mandates and jurisdictions often lead to competition between agencies, thus rendering their efforts ineffectual and counterproductive [HRW, ERM].

In the absence of effective and enforceable mandates from the Nigerian government, oil companies must spearhead the development and implementation of technologies and practices that will repair and prevent future damages to the environment and people of the Delta.

1. PollutantsThe 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:

- Cease illegal dumping of oil wasteo Create procedure for training workers in waste treatment and disposalo Alert authorities to harmful substances released to the environmento Prosecute employees and oil officials responsible for, or authorizing

illegal dumpingo Prepare annual reports of oil production by-products, accounting for all

input and output- Adhere to DPR regulations for cleaning up oil and chemical spills

o Consult independent supervisors to ensure that standards for prompt rehabilitation of polluted soil and water are met

- Upgrade facilities according to current standards. Replace leaky, corroded or damaged pipelines and equipment

- Install adequate facilities for treatment of oily or chemical waste- Conduct “environmental impact assessment,” according to the EIA Act, to

research solutions to problems identified by EIAs, prior to erecting new facilities. Cancel projects if the problems cannot be resolved

- Fund independent scientific research of the long term effects of hydrocarbon pollution in the Niger Delta

- Fund independent studies to quantify and publish the aggregate damages to the ecological system (lands, fauna, flora) and human life due to hydrocarbon pollutants

- Cease burning of excess gas by flaring o Improve processes for collecting gaso Develop and deploy air-cleaning technologies for areas affected by years

of gas-flaring and other pollutants from oil production and refiningo Adhere to CO2 emission standards

- Fund research to determine aggregate effect of gas flaring (quantify effects on global warming, flooding, etc)

2. Health Education & BenefitsThe indigenes of the Delta have suffered years of illnesses and deaths from pollutants, and lack of adequate healthcare. The responsible oil companies have an obligation to:

- Educate people about respiratory illnesses caused by air pollutants (released from plants, gas flares, etc)

- Educate people about poisoned freshwater fish and marine life

- Support independent investigation on effects of effluent and oil waste on crops and fish stock

- Fund medical facilities and personnel to provide healthcare for the communities affected by oil production

- Provide clean drinking water

3. Natural Resource ConservationIn order to move toward environmental restoration, ensure land and wetland conservation and to prevent further damages, multinationals must commit to:

- Fund and aggressively pursue research of technologies for natural resource recovery

- Restrict activities to expand oil drilling and production- Develop and deploy neutralization technologies for treating polluted water

(swamps, creeks, rivers, lakes, etc)- Repopulate marine life- Develop and deploy land treatment technologies - Invest in renewable energy with the intent of scaling back oil production

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. CompensationMultinationals 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:

- Hire independent claims investigators to determine disbursement recipients- Compensate the loss of life, health and livelihood

o Work with independent organizations to set up a system for disbursing funds, medicine and aid

o Support and fund welfare system for the old, sick and disabledo Honor claims for crops destroyed, damaged fisheries, loss of property and

other sources of income affected by the presence of oil companieso Provide relocation compensation for property lost to oil-related

development- Provide resources for importing food at reduced cost in affected farming and

fishing communities- Initiate profit-sharing schemes for future oil ventures. According to a Shell study,

black-market trade makes oil theft lucrative, accruing an estimated $3.75 billion

annually [CDA]. A suitable profit-sharing program would make piracy less attractive in comparison

o Allocate shares of oil corporations to oil-producing communitieso Represent indigenes on the board of oil companies

2. Community BuildingThere have been numerous reports by international human rights organizations, activists and independent agents advocating programs by multinationals to stimulate local industry and bring development to Delta communities. These recommendations have included:

- 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

3. Education and EmploymentEducation is an essential element of growth and development, as is the availability of jobs and employable individuals. And to prepare the Delta people for participation in the political and economic advancement of their communities, they must be equipped with literacy and intellectual power. To that end, multinationals should take actions such as:

- Actively supporting improved public education systems byo Donating school buildings and materials like computers and textbookso Funding training programs for teachers and administratorso Working with international charities and religious groups to provide

supplies- Funding higher education scholarships for the youth to attend secondary schools

and universities- Providing formal job and trade training- Employing more indigenes for both skilled and unskilled labor

These types of programs will enable more Delta citizens to participate in and benefit from the oil economy.

IV. Positive Development

In the preceding sections I have stressed the need for active involvement of the multinational companies in developing their host communities for the purpose of reparations, as well as economic and political stabilization in the interest of further development.

In this section, I discuss programs initiated by various organizations to develop oil-producing communities as examples for multinationals operating the Niger Delta to emulate.

A. Chinese in Africa

Since the establishment of the China-African Forum in 2000, China has committed to extensive investment and joint development projects in Africa. Much of these undertakings intended to increase the volume of trade between China and African nations have been established through efforts that ensure egalitarianism for all parties. This paradigm is effective as a consequence of the equal standing that the Chinese has sought to promote, and is worthy of emulation by multinational oil companies operating in the Niger-Delta in their dealings with the citizens of the oil-producing communities. They must similarly seek to work together with Delta citizens in community development.

1. Investment & InfrastructureThe Chinese government has been working with such countries as Ethiopia, Mozambique, Nigeria, Zambia and Angola on infrastructure projects including construction of transportation systems, power plants, telecommunications, and water conservation projects [China2]. It has also engaged in joint investment projects in manufacturing commodities such as electronics in countries like South Africa. These joint ventures enhance the transfer of knowledge and technology and create employment while financially benefiting the shareholders on both sides.

2. Resource Development In the preamble establishing the China-Africa Forum, China pledged to “encourage its enterprises to take an active part in Africa's infrastructure projects and expand cooperation in transportation, telecommunication, energy, water supply, electricity and other fields” [China]. The preamble also states:

“China will, in the next three years, further increase its financial contribution to the African Human Resources Development Fund for the training of up to 10,000 African personnel in different fields.”

Since then China has set up an African Human Resources Development Fund for the exclusive purpose of training African personnel. And as of 2003 China reported

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 AidThe 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.

B. 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 ProcessCWT’s most outstanding and successful venture has been developing and deploying its patented Thermal Conversion Process (TCP). TCP technology “replicates nature’s 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:

- Mixing the organic and inorganic materials with water- Releasing the gases from the initial reaction by turning the mix in lower pressure- Separating oils from gases by heating the oily substance and evaporating water- Heating the mixture to its reaction temperature- Separating solids from volatile chemicals with a reformer reactor- Separating and storing light oils and gases

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 FactorsAccording 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 world’s 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 plant’s 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 TechnologyRES 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, CWT’s 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 socio-economic 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. CWT’s Thermal Conversion Process is a self-sustaining, cost-effective 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.

News & References

[Vanguard] Igbikiowubo, Hector. Vanguard: “Just 1% of Nigeria' s population gets 80% oil/gas revenue — World Bank”. October 26, 2004 [EIA] Energy Information Administration: Country Analysis Briefs. 2005.

[NIPC] OIL AND GAS: Major Industry Policies.

[CIA] CIA’S World Fact Book

Obasi, N.K. Foreign Participation In The Nigerian Oil and Gas Industry. 1998.

[CDA] Althaus, Dudley. HIGH COST OF ENERGY: NIGERIA. Houston Chronicle, 2004.

[TO] Community Defence Law FoundationSimon Amaduobogha Interview: http://www.truthout.org/issues_05/031605EA.shtml

[CDD] Okonta, Ike. The Lingering Crises in Nigeria’s Niger Delta and Suggestions for a Peaceful Resolution. CDD; March 2000

[ERA] Environmental Rights Action [ERA] Condemns EXXON/MOBIL'S CORPORATE MISBEHAVIOUR. Urhobo Historical Society, 2001.

[HRW] THE PRICE OF OIL: Corporate Responsibility and Human Rights Violations in Nigeria’s Oil Producing Communities. Human Rights Watch, 1999.

[EIA] Environmental Impact Assessment Decree, Decree No. 86 of 1992, section 2(2).

[ERM] Environmental Resources Managers Ltd, Niger Delta Environmental Survey Final Report Phase I, Volume I, p.263.

[OSI] “Effect of Nigerian Spill Termed ‘Minimal’ as Last Known Patch Disperses,” Oil Spill Intelligence Report, vol.21, no.4, January 22, 1998. Environmental Resources Managers Ltd, Niger Delta Environmental Survey Final Report Phase I, Volume I, p.250.

[BBC] BBC News UKOil giant admits Nigeria aid woes Extra troops for Nigeria oil townAmnesty. Huge Nigeria delta tollOdunfa, Sola. Nigeria's oil capital under siege

[CEAR] Adenikinju, Adeola. Resource Ownership, Human Development and Economic Growth. Conference on Sustainable Development: Resource Ownership in Nigeria by Institute of Public Policy Analysis. September, 2002.

[China] Preamble: FORUM ON CHINA-AFRICA COOPERATION - ADDIS ABABA ACTION PLAN. December 2003.

[China2] China-Africa Cooperation Forum

[CWT] Changing the World Technologies, Inc. http://www.changingworldtech.com/who/index.asp