Shell Oil in Nigeria

Courtney Powell

Krystyna Range

Jenecca Williams

Company Overview

Marcus Samuel and family started the foundation of the Shell Petroleum Inc. in 1892. It is known around the world as one of North America’s leading producers of oil, gas, and petrochemicals. In 1907, Shell and Royal Dutch merged together to become The Royal Dutch Shell Group. Shell Petroleum Inc. is a holding company that is 60 percent owned by Royal Dutch Petroleum Company and 40 percent owned by The Shell Transport and Trading Company. This company objective was to gain profits in the automobile industry and compete with the standard oil company. Shell has come a long way, it currently has 45,000 service stations and about 10 million people purchase their fuel every day.

Problems/Key Issues

Degradation of environment by processes of natural gas flaring and oil spills operations in Nigeria have contaminated the land

with oil and brought about the devastation of acid rain to the land.

Acid rain is defined as the precipitation, as rain, snow or sleet, containing relatively high concentrations of acid-forming chemicals that have been released into the atmosphere and combined with water vapor, together; it causes a tremendous harm to the environment (dictionary.com)

Problems/Key Issues

Natural gas flaring is often generated as a result of oil production and instead of injecting this gas back into the ground; Shell routinely burns it off or “flares” it in the fields.

Other Environmental issues include: overfishing, deforestation and loss of biodiversity, water contamination and air pollution from refineries and chemical facilities.

Problems/Key Issues

Ken Saro Wiwa Death and execution of innocent men for expressing

concern for land

Civil Disturbances for Nigerian Gov’t $42 million in damages Shell enlisted the help of the Nigerian authorities

and the Mobile Police Unit “Kill-and-Go Mob” Continued escalation of violence made it very

difficult for Shell to operate peacefully without military protection

Problems/Key Issues

Poverty Shell forced Ogoni citizens to live in poverty and

poor health while the Shell Oil Company made millions.

Frequency of which the water was contaminated Severely under compensated by Shell Ogoniland was a site of great wealth and minerals

Analysis this case centers on a lot of differences in opinion in

not only business operations but in lifestyles, the Nigerian government and Shell Oil Corporation against the Ogoni citizens

those who spoke out against the movement, they were silenced by jail time or death, a highly unfair circumstance.

bouts of civil disturbance brought around a change and the development of a relationship that allows the company to continue to operate in peace while still making their enormous revenues and at the same time allow the Ogoni citizens to positively benefit and preserve their land as best they can.

Analysis

The first thing they had to do was attempt to clean up and restore the land from all of the degradation the company has caused it. Shell Oil Company built oil pipelines through

people’s farmlands and property that leaked and caused not only death to the vegetation but to the surrounding land.

These large amounts of carbon dioxide burning in the air can cause serious problems for younger children and even those with asthma problems depend on how close and thick the smoke is

Analysis

Every citizen should be entitled to the basic necessities in life such as a clean water system that will not harm them every time they attempt to drink probably the only source of hydration they have.

Shell Oil Company is making millions of dollars a day operating out of Nigeria and yet they have not been able to come together to at least provide costs for the damages they personally created.

Analysis

BP Anglo Persian Oil Company that was created in

1908 by William D’Arcy, a very determined man whom gambled away all his money on finding an enormous amount of oil in the sands of Persia.

Anglo Persian Oil Company was renamed to BP and by 1921 there were 69 pumps and over 6,000 by 1925.

BP operates in several places like Africa, North America South America, Australia, Asia, and Europe.

Analysis

BP Cont’d. major functions is providing fuel transportation,

energy services for heating and lighting purposes, retail services, and petrochemicals products (yahoo finance).

Of the three competitors BP is trailing behind in the third, fourth overall

Market Capital: $180.6 billion Stock Price: $58.54

Analysis

BP Cont’d Operate in three sectors:

Exploration and Production, this sector engages in the exploration of oil and natural gas, the development and production process, it is also at this stage the oil the issue of crude oil and gas pipelines are addressed and rectified

Refining and Marketing, engages in the supply, trading, refining, marketing, and the transportation of crude oil, petroleum, and chemicals products to

Other Businesses and Corporate produces and markets rolled aluminum products, as well as generates energy through wind, solar, biofuels, hydrogen, and gas-fired sources

Analysis

BP Cont’d According to Los Angeles Times, The Occupational

Safety and Health Administration has fined British oil company BP $87.4 million, the largest penalty the federal agency has ever issued for safety violations (www.latimes.com).

15 people died and 170 people were injured during the explosion in early 2005, which took place at BP’s stations in Texas

The end result was BP did not stick to their word and this was the reason for the fines OSHA placed on the company.

Analysis

Exxon Exxon Mobil Corporation engages in the

exploration, production, transportation, and sale of crude oil and natural gas as well as engaging in the manufacture of petroleum products, and both the transportation and sale of crude oil, natural gas, and other petroleum products.

primarily has operations in host continents such as the United States, Canada, Europe, Africa, the Asia Pacific, the Middle East, Russia/Caspian region, and South America

Analysis

Exxon Cont’d Exxon is currently the leading competitor in the

market capital with revenues of $353.1 billion above both the Royal Dutch Shell Corporation and BP.

brand names: Exxon, Esso and Mobi exploration and production acreage in 38 countries

and conducts production operations in 23 countries around the world (www.exxon.com).

Analysis

Exxon Cont’d Valdez, Alaska

Over 10 million gallons of unrefined Alaskan crude oil into Prince William Sound, causing the largest oil spill in North American history

Crude oil is defined as a naturally occurring, flammable liquid found in rock formations in the Earth consisting of a complex mixture of hydrocarbons of various molecular weights and compounds (wikipedia.com)

Analysis

Exxon Cont’d Given 6 months to clean up oil spill Response: hired over 10,000 people to get the

job done Result: city grew 3 ties normal size and many

prospered from the oil spill

Analysis

Shell Royal Dutch Shell is a Dutch and British based

company that in 2009 was named the world's largest corporation by Fortune and world's second largest corporation by Forbes (wikipedia.com)

Shell is ranked 2nd, 3rd overall Market Capital: $180.8 billion

Analysis

Five Segments of Shell Oil Company: Exploration and Production- finding new

locations with the best oil source, the best source of income for the company.

Gas and Power- developing cleaner and more environmentally friendly fuel that burns off better.

Oil Sands- operations of crude oil. Oil products- turning crude and synthetic crude

oils into several of refined products with domestic, industrial, and transportation uses.

Chemicals-development of petrochemicals for industrial purposes.

Analysis

Though one is ranked higher than the other, what makes one company that much better than the other outside of financial status?

If any business had to stand out a little more than the other on these notes, I would say that Exxon in fact is doing better on the social responsibility and business operation.

Recommendations

1. Develop a relationship of trust among the Ogoni people

1. Government built a new housing development that provided the citizens with fresh water and more safe living establishments

2. Opening lines of communication between the company and the community

1. Allowing citizens to play a small role in the decision-making process can go a long way in rekindling a tarnished relationship

Recommendations

3. Work to develop better company practices to promote a higher sense of ethics and their climates in the workplace

1. At the beginning Shell has taken on an egoistic approach

2. Shell’s desire for personal gain and greed were the destructive forces in the company

Recommendations

4. Change their business approach from an egoistic approach to a benevolent (a concern for others) or principal-based approach (Integrity approach based on laws, a professional code approach

Operating with a sense of social responsibility is necessity in the workplace

If Shell is able to live out these commitments, they would become more sustainable, reliable and competitive in their industry

Rationale

Reasons to believe why Shell should follow our recommendations that were previously given

Build a relationship of trust Recently there was just a settlement offered to

the Ogoni people for millions of dollars Allowing communities to be heard will embark on

the path to a stronger relationship. They will be able to scan the environment and

know the needs and wants of it and how it will affect it.

Rationale

Ethics climate is the part of corporate culture that sets the ethical tone in a company

The principle climate could exist when employees interact with the public or government regulators a society focus coupled with a principle pr integrity approach might be found (Lawrence and Weber, 2008)

At the same time I think a bit of egoism is needed within a company. Egoism shares the interest of the company and economic efficiency

Rationale

With the law and regulations that have been created, Shell should conduct business on a daily basis with keeping the Ogoni Bill of Rights a focus within their activity.

People should have rights to their fundamental liberties

Building a foundation of corporate responsibility- an expected element within the culture of an operating company.

Conclusion/Results

Although Shell is a very lucrative company that makes millions of dollars a day, they would be very hurt to lose this business operation base in Nigeria

Shell went from an egoistic operation in Nigeria to a benevolent and principle based operation.

If Shell even took on a larger sense of social responsibility, they would have gained a larger competitive advantage over the competition

References

Chomsky, J. (2009, June 08). Wiwa v. shell. Retrieved from

http://www.ludd.net/retort/msg01276.html Chope, C. (1997). Do or die. Critical Element, (6), Retrieved from

http://www.eco-action.org/dod/no6/shell_nigeria.htm Lawrence, A., & Webster, J. (2008). Ethical Climates. New York, NY:

McGraw-Hill/Irwin.  Shell Nigeria. (2009). Gas flare out. Retrieved from

http://www.shell.com/home/content/nigeria/about_shell/issues/gas_flaring/gasflare.html

BP Gas Company. (1999-2009). History of BP: a century a searching. Retrieved from http://www.bp.com/sectiongenericarticle.do?categoryId=2010123&contentId=7027817

BP Gas Company. (1999-2009). About BP. Retrieved from References http://www.bp.com/marketingsection.do?categoryId=2&contentId=7013628

References

Muskal, Michael. (2009, October 30). Osha issues record $87.4-million fine against bp. Los Angeles Times-Nation, http://www.latimes.com/news/nationworld/nation/la-na-osha-bp31-2009oct31,0,7107891.story

Exxon Mobil Corporation. (2003-2009). About Exxon Mobil. Retrieved from References http://www.exxonmobil.com/Corporate/about.aspx

Valdez Convention and Visitors Bureau, Initials. (2007). Exxon valdez oil spill. Retrieved from http://www.valdezalaska.org/history/oilSpill.html

Crude Oil.. (2009). Petroleum. Wikipedia. Retrieved (2009, November 20) from http://en.wikipedia.org/wiki/Crude_oil

Shell. (2009). Royal Dutch Shell. Wikipedia. Retrieved (2009, November 20) from http://en.wikipedia.org/wiki/Royal_Dutch_Shell