Oil Change?

By the summer the oil company Shell was hearing criticism of its ethics on many more issues than its questionable lobbying. The company faced multi-million dollar class-action suits brought by enraged investors, and five legal investigations including by the US Justice Department and Securities Exchange Commission. Everything had been called into question and little was clear following the shock announcement earlier in the year that the company had "lost" one-fifth of it's assets, leading to dramatic revisions of its global reserve bookings: the honesty of directors, what assets the company actually had (there were four successive revisions,) Shell's ability to deliver on Corporate Social Responsibility and even the veracity of its accounts were now in doubt.54

Despite changes in the boardroom and a noticeable shift of tone towards a more contrite approach to admitting its mistakes, the company seemed to be engulfed in the kind of identity crisis which either break institutions, or from which they emerge fundamentally transformed. The new Shell Chair Ron Oxburgh - whose appointment followed the departure of three senior managers including the former Chair Sir Philip Watts - didn't even seem to be sure that Shell should be in the oil business at all: "No one can be comfortable at the prospect of continuing to pump out the amounts of carbon dioxide that we are pumping out at present ... with consequences that we really can't predict but are probably not good" Oxburgh told the Guardian newspaper.55

If Oxburgh's reflective mood signalled that Shell wanted to rethink everything, including it's contribution to climate change, what better place to start than its long-criticised Nigerian operations? Nigeria was the focus for successive reserves booking revisions.56 Activists and oil-producing communities in the poverty stricken Niger delta were unsurprised by the findings of a leaked WAC Global Securities report commissioned by Shell into the depths of their problems, which states that Shell Nigeria is "part of Niger Delta conflict dynamics and that its social licence to operate is fast eroding", and that if events continued as expected, it would be "surprising" if the company could operate onshore beyond 2008.57 Shell rejected this suggestion of a move offshore, which communities and environmentalists claimed would leave behind a legacy of pollution, poverty, corruption and communal violence.

The WAC report claimed that militia groups involved in "bunkering" - theft of oil - were importing Rocket Propelled Grenade launchers and Surface to Air Missiles. Independent observers on the Niger delta have identified a marked increase in militias since armed gangs were employed by various political groups to rig Nigeria's 2003 election process. There is 90% unemployment amongst young men in the oil-producing region of the Niger delta, despite Nigeria being the fourth biggest OPEC producer as of writing.

Shell Nigeria was contrite in accepting some of the blame for the mess that oil-dependency has created in Nigeria, but its contrition only went so far. "As part of an industry inadvertently contributing to the problem, we are also determined to help" Emmanuel Etomi, Sustainable Community Development Manager for SPDC (Shell Nigeria) reported on shell.com at the time of the launch of its Nigeria social and environmental reporting for 2003.

Yet the WAC report does not find the role of Shell Nigeria's staff in fostering violence is so inadvertent. "Instigating violence in the community so that claims based on 'force majeure' can be made towards the [Shell Company in Nigeria] has become a business in itself among some contractors." The clear implication of the report's findings is that - by tacitly approving of what their contractors are doing - Shell Nigeria is part of the problem. "This logic feeds into an 'it's-not-our-fault' mentality that becomes an obstacle to conflict resolution." The WAC authors conclude.58

If Shell wanted to find a way out of this mess it has helped create on the land in Nigeria - rather than be forced into the sea, it could make a start by ending gas flaring, environmentalists said. Alternatives to Shell's practice of burning off natural gas produced along with oil (associated gas) in to the atmosphere are to gather it for processing (the purpose of the long-delayed Bonny Liquified Natural Gas project) or to re-inject it into the oil deposit. The Nigerian oil industry is the world's leading practitioner of gas flaring, accounting for about one fifth of all gas flared in the world. World Bank officials have suggested that gas flaring in the Niger Delta has "contributed more emissions of greenhouse gases than all other sources in sub-Saharan Africa combined" and that the energy lost is equal to more than half sub-Saharan Africa's thermal-based power generation.

An activist who has worked on Nigerian issues since the early 1990s with the Ogoni organisation MOSOP, Tim Concannon argues the company has a come to a crucial turning point. "Shell has played an historic role across the globe in creating a culture based on oil, and in fuelling conflicts in places like the Niger delta. If Shell is serious about being an ethical company it has to move beyond nice words, glossy brochures and esoteric audit systems. Shell needs to shake off its olds habits, and begin delivering real answers to these problems."