English homework answers

Shell Operations in Nigeria The Royal Dutch Shell Group, more commonly referred to as Shell, is a group of more than 1,700 companies all over the world. 60% of the company is owned by Royal Dutch of the Netherlands and 40% is owned by Shell Transport and Trading Group of Great Britain. The full merger between these two companies was official in 1907. This conglomerate of companies includes companies such as Shell Petroleum of the USA, Shell Nigeria, and Shell Argentina. The company’s mission was to bulk ship and export oil revolutionizing the transport of this precious resource. Soon after the merger was complete, the company rapidly expanded across the world with both marketing offices and exploration and production facilities. Within twelve months, both of the struggling entities were transformed into successful ones.

In 1937, Shell entered the Nigeria making it the first energy company to enter the market in this country. By 1938 they were granted an exploration license that allowed them to prospect for oil in the region. It was not until January of 1956 that the company drilled its first well. Later that year, the company changed its name to Shell-BP Petroleum Development Company of Nigeria Limited (SPDC). Over the course of the next twenty years Shell entered into a number of agreements with the Nigerian government that gradually increased the government’s ownership of the company from 35% all the way up to 80% in 1979.

As it stands today, Shell operates two businesses related to the exploration, pro- duction, and transportation of oil and gas within Nigeria. The SPDC still exists and is the largest private sector oil and gas company in Nigeria. It is a joint venture between the government owned Nigerian National Petroleum Corporation (NNPC) which owns 55%, Shell which owns 30%, Elf Petroleum Nigeria Limited which owns 10%, and Agip which owns 5%. The other business operated by Shell in Nigeria is called Shell Nigeria Exploration and Production Company (SNEPCO)

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which was formed in 1993 to develop deep water drilling resources. It operates two deep water licenses and a production sharing contract with the NNPC.

The SPDC’s operations are spread over a 30,000 square kilometer area in the Niger Delta. Its network consists of 6,000 kilometers of flowlines and pipelines, 90 oil fields, 1,000 producing wells, 72 flowstations, 10 gas plants, and two major oil export terminals. This business unit is capable of producing up to one million bar- rels of oil per day on average. The SNEPCO is committed to the discovery of new resources and sources of oil and is charging towards the goal set by the Nigerian government of being able to have a capacity of four million barrels per day.

While Nigeria was once the shining star of Shell’s portfolio, it is now a large black cloud that hangs over the entire organization. Shell Nigeria has been accused of pol- lution, collusion, corruption, bribery, and false accounting. Every time the company settles a claim or accusation, another one pops right up. The following provides an account of the accusations and corruption that have scared this organization through- out its history.

Ken Saro-Wiwa Shell’s first problems began in the early 1990’s when criticism of human rights pol- icies and the destruction of the environment in Nigeria became a hot topic. Ken Saro-Wiwa was a leading environmentalist and author who happened to be a Nigerian native and part of the Ogoni tribe. He was one of the more determined and articulate critics of the government and of Shell Oil’s destruction of his home- land. He argued that neither party had appropriate regulations for protecting the Ogoni people’s land and did not return any of the immense wealth that was taken from their region.

Saro-Wiwa organized a group called the Movement for Survival of the Ogoni People and quickly grew to be the largest political organization in the region. This group began to protest and demonstrate for an end to destructive behaviors such as oil spills, gas flaring, and the destruction of property to make way for pipe- lines that Shell was building. They also began demanding they be given a share of the revenues from the land Shell was using. Shell denied these claims and stated the group was greatly exaggerating their claims.

Nigeria’s military began to respond to the groups claim through a strategy that has been referred to as a “scorched earth campaign against the Ogoni” which included burning villages and committing rapes and murders. Shell refused to get involved stating that the company does not get involved in politics. This led to Saro-Wiwa and eight other Ogoni members were arrested on charges that west- ern governments and human rights groups called trumped up. The Nigerian gov- ernment ultimately executed all nine with Saro-Wiwa’s body being burned with acid and buried in an unmarked grave.

This event ignited world-wide protests and criticism against Nigeria, the African oil industry, and Shell. Shell was sued in a New York court by Saro-Wiwa’s family and was accused of bribing soldiers who carried out human rights abuses in addi- tion to playing a role in the capture and execution of the nine. Shell eventually settled this case out of court for $15.5M.

Oil Spills Oil spills are quite prevalent in the Niger Delta and it is estimated that the equiva- lent of the Exxon Valdez spill has occurred every year for the past 50 years. There is no other place in the world that has been as battered by oil as this region. The

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Nigerian Government and international environmental groups sponsored a report in 2006 that concluded as many as 546 million gallons of oil have spilled into the region of the past five decades. This has led to the destruction of swamps, aquatic life, and the main food source for many of the tribes.