Impact on Corporate Social Responsibility of a Multinational Oil and Gas Company on It’s Host Communities
CHAPTER ONE
Objectives of the Study
The main objective of this study is to determine the impact on corporate social responsibility of a multinational oil and gas company on it’s host communities. The specific objectives therefore include to
- Examine the extent to which oil companies provide jobs opportunities for graduates in their host communities.
- Ascertain the extent to which oil companies provide employment to unskilled workers in their host communities.
- Ascertain whether oil companies empower the household through award of scholarship to their children.
- Determine the relationship between oil companies CSR and community development of host communities.
CHAPTER TWO
LITERATURE REVIEW
For easy understanding, the work will be discussed under; 2.1 Conceptual frame works on oil and gas, development, sustainable development and corporate social responsibility are discussed. 2.2Theoretical framework takes care of some related theories like free prior consent, livelihood approach, reducing reliance theory, unbalanced growth theory, big push theory, the institutional theory and social exchange theory and under 2.3 Empirical framework , were studies done by other researchers that relate to the current study are discussed with their finding. Then is the summery of the work.
Conceptual Review
Concept of Oil and Gas industry
Natural gas is made up of just two elements – carbon and hydrogen. It is part of a family of chemicals known as hydrocarbons, which also includes oil and gasoline. As its name suggests, natural gas comes out of the ground as gas oil, gasoline and other hydrocarbons are recovered mixed together in a liquid called crude oil. It is formed as microscopic plants and animals living in the ocean millions of years ago which formed their food in the presence of sun, when died and sunk to the bottom of the sea layer, over millions of year layer after layer of sediment and other plants and bacteria formed. As they became buried ever deeper, heat and pressure began to rise. The amount of pressure and the degree of heat, along with the type of biomass, determined if the material became oil or natural gas. Very high heat or biomass made predominantly of Plant material produced natural gas (Yalaju, 2006).
In Nigeria, oil and gas operations commenced effectively in 1956, with the first commercial quantity found in that year by the then Shell D’Arcy in Olobiri in the Akwa Ibom state. Before this time, from November 1938, almost the entire country was covered by a concession granted to the company to explore petroleum resources and in 1971, Nigeria joined Organization of Petroleum Exporting Countries (OPEC) as a member. This period witnessed the emergence of National Oil Companies (NOCs) across OPEC member countries, with the sole objective of monitoring the stake of the oil‐producing countries in the exploitation of the resource (Labara 2009).
Multinational Oil Companies (MNOCs) were allowed to continue with such operations under Joint Operating Agreements (JOA) which clearly specified the respective stakes of the companies and the Government of Nigeria in the ventures whereas in other OPEC members’ countries, they have direct control of production operations. Currently in Nigeria,(MNOCs) operate under production sharing contracts due to the emergence of offshore oil and gas operation. This shift is attributable to a number of factors ranging from the complexity of operations in the offshore terrain which regulation under JOA, it will be difficult and also leads to dwindling of resources. Production sharing arrangement is the type of arrangement, in which the oil company will bear the operating cost and after then share the profit with federal government based on Memorandum of Understanding (MOU) after deducting petroleum profit tax (Onduku, 2009).
This period witnessed the arrival of other MNOCs in the sector such as Gulf Oil and Texaco (now ChevronTexaco), Elf Petroleum (now Total), Mobil (now ExxonMobil), and Agip, in addition to Shell, which was already playing a dominant role in the industry. They play major role in the sector with shell accounting for just less than 50% of Nigeria’s total daily production, which currently stands at about 2.4 million barrels of oil.
The oil industry is in charge of exploration, extraction, refining, transporting and marketing petroleum products of which the volume products are fuel oil and gasoline. These products serve as raw material to many chemical products including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is divided into three major components which are: upstream, mid stream and downstream. Upstream activities are oil company’s activities which takes place in the oil field. This is a situation where oil wells are contracted to drilling contractors and oil companies, which involves discovery, production or extraction of oil and gas and their treatment, transportation and delivery to designated export terminal or processing plants.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the methods adopted in gathering data for the purpose of this study. it described the research design, sources and instrument for data collection, population of the study, sampling technique, sample size determination, validity and reliability of the instrument used for the study then the method of data presentation.
Research Design
In this study, a Cross-sectional Quantitative research design approach was used. The justification for considering this method was the need to accurately appraise the extent to which Oil and Gas companies in the Akwa Ibom state of Nigeria fulfil their social Responsibility.
Source of Data
This study used Primary data through questionnaire administration in collecting data in line with the objectives of the study; to examine the extent to which multinational oil companies employ graduates, empower unskilled labour, empower the youth through award of scholarship and assist in community development of their host community.
Population of the Study
The population of the study were the people of the four (4) local government area each of the four (4) Akwa Ibom state states. In order to get the estimated 2018 population of the people, the population figures of these people according to the 2006 National Population census was increased by 2.5% for the eight years. It was estimated that Nigeria population grows at 2.54% National Population Census (2010).
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
Introduction
This chapter tested and analyzed the data generated for this work, which comprised the independent variable, dependent variables as well as the control variable. The hypotheses formulated for the entire study were as well tested and conclusions appropriate for the appraisal of the CSR practices of the oil companies operating in the Akwa Ibom state of Nigeria were taken. Survey report and respondents’ demographic data are shown in table 4.1 to 4.5 below, the analysis of respondents’ responses are based on the research questions; and tests of hypotheses.
It is seen from the table above that one of the CSR performed by the Oil multinational oil companies in the Akwa Ibom state is Recruitment of University Graduates To show whether the Oil Companies do perform this CSR, the opinions of the people of Niger-Delta gathered on this were presented on Table 4.5 above. 708(39.9%) of the people strongly agreed that the Oil Companies operating in their region do recruit their university graduates as a way of showing how socially responsible they are. 385(21.7%) of the people also agreed, 363(20.5%) could not decide, 198(11.2%) disagreed while 121(6.8%) others strongly disagreed. These opinions showed that, majority of the Niger-Delta people are in support that the Oil Companies in their region do recruit their university graduates.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
Summary of Findings
The Findings at the end of this study include the following:
- MNOC to a large extent contributed to the provision of employment to university graduates from their host community (R = 0.816, f= 3526-223, t=59.382, p<0.05) ii.MNOC to a large extent contributed to the provision of employment to unskilled workers in their host communities as a give back strategies (r. = 0.893, f= 7017-812, t= 83-772, p<0.05)
- MNOC to a large extent contributed to household empowerment through the award of scholarships (r. = 0.852, f= 4707.438, t=68.611, p<0.05)
- MNOC to a large extent contributed to community development through the provision of some basic infrastructures (r. = 0.853, f= 4721.904, t= 68.716, p< 0.05)
Conclusion
The study has examined the level to which MNOCs incorporate integrity as a concept through the performance of their corporate social responsibility in oil host community as a strategy of giving back to the community from which they plough their profit and at the same time as a response to the physical and socio economic problems of the region.
Indeed, from the findings MNOCs carried out their responsibilities through provision of employment to graduates from their host community, create massive employment to unskilled workers, build schools and awards scholarship to children from that region and also participate in community development but in reality the Corporate Social Responsibility effort has not really enhanced sustainable development in Akwa Ibom stateregion due to persistent environmental degradation, poverty, biodiversity problems that stands as treats to human existence and future generation survival for sustainable development is a conglomeration of environmental development, social development and economic development.
Recommendation
Sustainable development in Akwa Ibom state cannot just be solved by a single police rather variety of policies from all stake holders which will need to be promoted and implemented by diverse group of actors including international financial institution, government and as well MNOC USAID (2000). MNOCs should enhance their corporate social responsibilities beyond just community assistance project to how the activates line can be managed with sustainable development principles. Government as an institution through initiating policy reforms should enhance transparency, civil participation strengthen local institutions to enhance social equality. Furthermore, there should be redress in polices and laws that will guide how petroleum licensed companies will carry out the activities for that will stand as watch dog and demand for explicit sustainable measures.
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