The Evolution Of The Oil And Gas Sector Management

Add: 27-11-2017, 17:05   /   Views: 204

The major sector in Nigeria is the oil and gas sector with the agricultural sector tagged as its second major sector.

This sector has played a dominant role since its discovery in 1956 by contributing over 20% of Nigeria' Gross Domestic Product, 65% of its budgetary revenue and over 90% of its foreign exchange earnings (OPEC 2010).

This contribution lays emphasis on the dominance of the production and export of petroleum in the Nigeria's economy.

The evolution of the oil and gas sector began with the discovery of oil in the Olobiri oilfield in the Niger Delta region of Nigeria which was after half a century of exploration.

This discovery was made by Shell-BP Petroleum Development of Nigeria plc then known as Shell D'Arcy Petroleum who was the sole concessionaire and it enabled Nigeria to join the list of oil producing countries in the year 1958, producing 5,100 barrels per day (Shell 2012).

After the country's independence in 1960, NNPC extended exploration rights offshore and onshore areas adjoining the Niger Delta region to other multinational oil corporations (such as Total, Mobil) so as to increase the pace at which petroleum was being explored and produced (NNPC 2012).

In the year 1972, the quantity of crude oil produced increased to 2 million barrels per day with Shell producing close to a million a day ranking Nigeria as the 7th major oil producing nation in the world.

Shell has been a leader in the industry by contributing the largest amount of crude oil being exported by the Nigerian Government, operating Nigeria's largest liquefied gas plant and the largest international multinational corporation operating in Nigeria (Pengasson 2010).

Majority of Shells activities (such as exploration and production) is being done in the Niger Delta region of Nigeria.

The discovery of oil has brought about great wealth for Shell and Nigeria, yet majority of the Niger Delta population (about six million) live in poverty.

Oil has cost them dearly in terms of deteriorating environment and underdevelopment (Boele et al 2001, Amnesty international 2009).

The activities involved in the extraction and production of crude oil which are done offshore (on sea) and onshore (on land) have led to pollution of the environment in which majority of the population depend on for survival.

Gas flaring, oil leaks and spills are examples of the effects of extracting oil, and these are major costs to any economy especially an agricultural and fishing economy like the Niger Delta (Boele et al 2001).

Oil spills are still a major source of conflict between the communities and oil companies till date (Frynas 2005).

These oil spills destroy and damage the quality and productivity of soil, crops, kills fishes and contaminates water for drinking and used for domestic use (Amnesty International 2009).

Also, the oil fitting and gas flaring that are presently situated in these communities makes the people vulnerable to all kinds of health issues.

This constant environmental pollution and degradation have led many observers to suggest that multinational corporations owe a higher responsibility to the communities in which they are situated.

This has also led to questioning the practice of Corporate Social Responsibility in the region by the Multinational corporations especially Shell.

As stated by Frynas (2009), organizations are increasingly expected to support the government in addressing many of the problems faced by the world, such as climate change, poverty reduction, thus leading to the concept of CSR.

Supporting this, the World Bank in its definition of concept of corporate social responsibility (cited by Doane 2005) described the term 'CSR' as a company's obligation to be accountable to all of its stakeholders(including the government) in all its operations and activities.

Hopkins (2007) cites the UK government's Department of Trade and Industry-sponsored corporate responsibility group who defined CSR as: "The management of an organization's total impact upon both its immediate stakeholders and upon the society within which it operates".

These definitions have something in common that every organisation has a pertinent role to play in the development of any community in which they operate and it also means that CSR is a response to a re-thought role of a business that goes beyond making profit .


This research study is important and essential not only because it would fill the gap in existing literature between leadership and CSR but it would also help students, practitioners and organisations who are interested in CSR understand the important role business leaders play in ensuring the effective implementation of CSR practices in the life of every corporation or organization.

Since CSR practices are crucial in every organization, the research study will help SPDC in understanding the factors that would likely influence business leaders in carrying (finish it)

The findings made by this research study would be valuable as it would shed light on how organizations can ensure good and effective CSR practices in the communities they operate.

The study would help in furthering knowledge in areas of leadership style and emergent business ethics of corporate social responsibility.