CHAPTER ONE
BACKGROUND OF THE STUDY
Introduction
This study focuses on the corporate social responsibility of shell Petroleum Company as a multinational organization in Jesse community of delta state from the commencement of its operations to 2013. It is important to note that Jesse (Idjerhe) community is located in Ethiope West, Delta State, Niger Delta of Nigeria. The town is about 55 kilometers from the oil city of Warri, Delta State.
The estimated population of Jesse town is 7000. The settlement is rural. The indigenes of the locality are from the ethnic Urhobo Nation. The community is situated on huge commercial deposit of crude oil.¹ like every other multinational organization; the primary aim for the establishment of shell in Jesse community was for profit. But apart from profitability, its main objectives included sustenance of operations into the long term, receiving repeat business and thereby into the long term, receiving repeat business and thereby achieve the satisfaction of the needs of its shareholders. This necessitates the examination of operations with a view to advance objectives such as sustainability which entails being ethical and observing social responsibility.²
Shell is an Anglo-Dutch multinational oil and gas company incorporated in the united kingdom and headquartered in the Netherlands, created by the merger of Royal Dutch Petroleum and UK based Shell Transport and Trading in 1907. It is the second largest company in the world in terms of revenue, and one of the six oil and gas ‘super majors’. Shell is also one of the most valuable companies in the world with revenue of $481.700 in 2013. The company operates throughout the world. Shell started businesses in Nigeria in 1937 as shell d’Arcy. In 1956, shell Nigeria discovered the first oilfield at Oloibiri in the Niger Delta and started to exploit in 1958.³
Shell petroleum development company’s activities since then have expanded greatly in petroleum business. It participates actively in massive explorations, production, and distribution of different range of petroleum products. It operates in oil mining lease area of about 31,000 square kilometers in the Niger Delta region of Nigeria. From its base in the Niger Delta, the company runs a network of approximately 6000 oil pipelines and flow lines, 87 flow stations, about 1000 producing wells in addition to 8 gas plants. To underscore the exhaustive nature of Shell in this area, the oil business of shell is responsible for more than 80% of Nigeria’s total revenue, while about 14% of shell’s total global productions come from their activities in the Niger-Delta region of Nigeria according to a global oil report.⁴
Together with its joint venture partners, SPDC is capable of producing some 1 million barrels of oil per day on an average. Through its community investment programmes, SPDC is demonstrating its commitment to improving the quality of life for all those who live and work in the Niger Delta.⁵
However, the reality is that much has changed in the Niger Delta host communities. Analysis of official sources shows that oil spills are still common place with an increase in number of incidents. The Jesse pipeline explosion of 1998 is renowned for its degree of catastrophic damage it cost to the citizens of the community.
According to the environmental rights action (era), the fuel pipe from Warri refinery passing through many communities in Idjerhe (Jesse) clan through Ologbo down to Lokoja, was laid in the early 70s. Under normal circumstances, the pipe ought to have been changed because it had out lived its usefulness. There were no regular and maintenance of the pipe hence, the leakage at Jesse could not be detected quickly. Worse still, nothing was done immediately to salvage the situation when the leakage was reported. With an estimated 1082 killed in the blast, the 1998 Jesse explosion has the distinction of being the most deadly pipeline explosion to have occurred in Nigeria, its cause ranging from marginalization, and neglect by the oil multinationals specifically shell. This has resulted into several demands on the company by the community for compensation in terms of developmental projects. It is in view of the above that that study examines the corporate social responsibilities of multinational companies in Jesse community of delta state, using the shell petroleum company as a case study.
Aim and objectives
The aim of this study is to attempt an assessment of the corporate social responsibility of multinational companies: a case study of shell in Jesse community of delta state.
The core objectives of the study are as follows:
- To examine the establishment of Shell Petroleum Development Company in Jesse community.
- To analyse the impacts of Shell Petroleum Development Company in Jesse Company in Jesse Community, and the eventual handing over of operations to SEPLAT.