Introduction
The political instability inherent in emerging economies make for very challenging business environments. In late October 1995, Royal Dutch Shell founds itself in just such a tenuous environment in Niger. As Paine and Moldoveanu (2009) outlined,Shell came under scrutiny in the 1990’s for the environmental impact that they were having on the Niger Delta. Shell was accused of creating an “ecological disaster” on the region, caused by oil spills, emissions from flaring of natural gas, and drainage of contaminated water into the waterways (Paine & Moldoveanu, 2009). Adding to the operating complexity, the Nigerian government and its leader faced escalating international condemnation for the actions of a special military tribunal
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Shell’s decision to pump for oil, although legal and in development for decades, had major negative repercussions on the local environment. Some, such as Norma Bowie, argue that because they were operating legally, Shell’s obligation to protect the environment isn’t very strong. Others, such as Arnold and Bustos, assert consumers/ stakeholders cannot be held responsible for policing the operating companies if the government doesn’t give them that sort of power, and therefore Shell had an obligation to protect the stakeholders (Arnold et al, 2012). The arguments must be weighed by any company that has the potential to augment the environment in which they will be operating. In another industry, chemical companies are regulated well in the U.S. to keep them from contaminating the local water supply, but in countries without these regulations is it ethically responsible of the company not to damage the ecosystems surrounding them, although they are not legally bound to do so. Another major learning point is what the involvement of major companies in politics can do to an economy and its people. Had Shell utilized their power in the region to perhaps mediate between the activists and Nigerian government perhaps the outcome of the trial could have been different. Given the unstable situation, politically and socially in Nigeria, Shell’s decision to work quietly with international leaders “behind the scenes” and offer on their local manager, Brian Anderson, to issue a public statement on the necessity for a “fair trial, medical treatment, and lawyers of their own choosing” (Paine and Moldoveanu, 2009), may have been the best option available at that time and can serve as a point of learning for other companies operating in such volatile, unstable, and complex international situations. This is also a tough concept to argue
In addition, this type of negligence is also associated with the Niger Delta part of Nigeria where most of the petroleum Industries are performing there operations. Oil spillage is a major problem in this area causing environmental and ecological hazard for the people in this area but the Industries and the government fails to compensate them.
Chevron comes under very stringent environmental regulations, having faced very costly litigations on environmental protection and has a pending litigation on it due to the contamination of the Ecuadorian Amazon rainforest, where the plaintiffs have made a claim of over $24 billion. Nigeria’s political instability has also created challenges to Chevron, which is a substantially large oil export in Africa.
This relates back to Congo, where violence spurred by ethnic rivalries is due to local groups’ desire to make money by getting into the extractive industries. In another example, Newmont, an American company, mines Ghanaian gold and pays the government part of the profits. Here, Burgis shined the spotlight on an environmental issue: the sodium cyanide spill in Kwamebourkrom that killed aquatic life and posed hazardous living conditions for locals (Burgis, 134). Finally, in the last few chapters, Burgis touched on Cecil John Rhodes’ legacy as the founder of De Beers, blood diamonds, imperialism, and violence carried out by local governments and mining companies in order to protect their interests.
This is not the first time that BP is at fault. They have had criminal convictions in places such as Endicott Bay in Alaska, Texas City and Prudhoe Bay. Jeanne Pascal was a part of the Environmental Protection Agency (EPA) and was assigned to watch over BP. Pascal was watching over companies such as BP that were facing debarment. Under her watch, BP was charged with four federal crimes. Over the past twelve years, Pascal’s seen BP patterns as misconducts. She attempted to warn the government about BP’s safety and environmental issues that would most likely lead to another disaster. While she was watching over BP, the company misinformed and misled her about things that resulted to the felonies that they have committed. Sensing that some things were not right about the company, she presented a case of their unsafe working environments.
BP was founded in 1908 under the name Anglo-Persian Oil Company. They changed their name to British Petroleum in 1954 and merged with Amoco in 1998. (BP Public Website, 2010) “The Texas City Refinery is BP’s largest and most complex oil refinery... It was owned and operated by Amoco prior to the merger of BP and Amoco.” (Michael P. Broadribb, 2006) Throughout their history, there have been a number of accidents that have been caused by negligence and disregard of safety precautions. Unfortunately many lives have been cut short or seriously injured as a result. My research will focus on the 2005 Texas City Oil Refinery Explosion. I will attempt to look into the ethical implications that surrounded this disaster before and after the event and suggest what BP could have done to prevent the incident then and in the future.
Since its discovery back in the year 1858 crude oil has been become one of the most sought after resources on the face of the planet. It is due to this fact that the oil industry has fallen into a rather odd category in the case of globalization and seeking out new markets, new labor and new customers. The reason being that the need for crude oil and fuel is always present therefore the product of oil in its basic sense sells itself and the companies do not have to go out and publicly advertise it in the sense that clothing lines and other commodities do. Oil companies must focus more on the matter of why an individual should buy their oil and along with other alternative fuels over their competitors even though in the end the companies products are the same thing. The company ExxonMobil has been the superior company in the oil industry for quite sometime now, and had plenty of success as individual companies before their merger in 1999. The reason for there success is partially due to the power they wield as the most successful company, leading to many new refineries around the world, making deals with smaller companies to gain access to new markets and are leading the world in alternative fuel research. However these things all come naturally to the biggest oil company in the industry, the real question is how they became the powerhouse they are now. That question can be answered by the way in which the company has not focused in globalizing their product of fuel and oil, but globalizing the image of the company company. This is achieved by focusing on charity in which they donate hundreds of millions of dollars, Foreign Direct Investment in areas in which they wish to expand by attempting to provide these impoverished areas wit...
Pratt, Joseph A. “Exxon and the Control of Oil.” Journal of American History. 99.1 (2012): 145-154. Academic search elite. Web. 26. Jan. 2014.
Risk Management practices by Royal Dutch Shell plc Risk factors considered by Royal Dutch Shell plc Prices of oil, natural gas, oil products and chemicals are affected by supply and demand. Factors that influence these include operational issues, natural disasters, weather, political instability, or conflicts, economic conditions or actions by major oil-exporting countries. Price fluctuations can test our business assumptions, and can affect Shell’s investment decisions, operational performance and financial position. CURRENCY FLUCTUATIONS AND EXCHANGE CONTROLS As a global company, changes in currency values and exchange controls could affect our operational performance and financial position. ECONOMIC AND FINANCIAL MARKET CONDITIONS Shell companies are subject to differing economic and financial market conditions throughout the world. Political or economic instability affect such markets. If such a risk materialises it could affect our operational performance and financial position. TRADING AND TREASURY In the course of normal business activities, shell is subject to trading and treasury risks. These include among others exposure to movements in commodity prices, interest rates, and foreign exchange rates, counter party default and various operational risks Different risk faced by Royal Dutch shell Market risk Market risk is the possibility that changes in interest rates, currency exchange rates or the prices of natural gas, electrical power, crude oil, refined products, chemical feedstocks and environmental products will adversely affect the value of Shell’s assets, liabilities or expected future cash flows. Most of Shell’s debt is raised from central borrowing programmes. Shell has entered into interest rate swaps and currency swaps to effectively convert most centrally-issued debt to floating rate US dollar LIBOR (London Inter-Bank Offer Rate), reflecting its policy to have debt mainly denominated in US dollars and to have largely floating interest rate exposure profile. Consequently Shell is exposed predominantly to US dollar LIBOR interest rate movements. The financing of most subsidiaries is also structured on a floating-rate basis and, except in special cases; further interest rate risk management is discouraged. Based on the Consolidated Balance Sheet at December 31, 2007, the impact on net interest income/expense of a change in interest rates of 1% would not be significant. Foreign exchange risk The functional currency for most upstream companies and for other companies with significant international business is the US dollar, but other companies usually have their local currency as their functional currency. Foreign exchange risk arises when certain transactions are denominated in a currency that is not the entity’s functional currency.
Oil pollution has been a major environmental concern since commercial scale oil extraction began in the Niger Delta in the 1950s and it will be for as long as oil extraction continues. Since the 1950s because of the increasing demand for crude oil and the existence of large oil reserves, the Niger Delta has experienced what can be called an environmental disaster from oil pollution, which resulted in major consequences for the environment and for the indigenous people who depended on the region for their livelihood. A study on Ogoniland, located in the Rivers State of the Niger Delta, revealed that the soil, groundwater, vegetation, surface water and even the air had been contaminated by petroleum hydrocarbons, devastating aquatic and agricultural communities and causing serious health issues for many residents (Environmental Assessment 2011). Many historians, environmentalists, political theorists, and other parties have discussed and explored this disaster, leading to disagreement about who is to be blamed. Two general positions have emerged as a result: the first position, suggests the Nigerian State made the country ripe for such a disaster and that although multinational oil companies (MNOCs) like Shell might have played some role, the state that is primarily responsible for the environmental disaster in the Niger Delta because it is in control of rules, regulations, policies, and revenue. The second position argues that MNOCs themselves, with Shell being used as an example, are primarily responsible for the environmental disaster in the Niger Delta because they are in direct contact with the oil, equipment, and local people. Ultimately, the examination of popular and secondary research and of both positions outlined above l...
oil in Nigeria. Nigeria’s large supply of high quality crude oil helped Shell climb to the top,
Omeje, K.. (2006). Oil Conflict and Accumulation Politics in Nigeria. Environmental Change and Security Program Report,(12), 44-49. Retrieved September 22, 2011, from ProQuest Science Journals. (Document ID: 1889169951).
" Oil is the life blood of our modern industrial society. It fuels the machines and lubricates the wheels of the world’s production. But when that vital resource is out of control, it can destroy marine life and devastate the environment and economy of an entire region…. The plain facts are that the technology of oil-- its extraction, its transport, its refinery and use-- has outpaced laws to control that technology and prevent oil from polluting the environment…" (Max, 1969). Oil in its many forms has become one of the necessities of modern industrial life. Under control, and serving its intended purpose, oil is efficient, versatile, and productive. On the other hand, when oil becomes out of control, it can be one of the most devastating substances in the environment. When spilled in water, it spreads for miles around leaving a black memory behind (Stanley, 1969).
The nature of the problem is the increase in the amount of pollution that companies such as Chevron cause with their multimillion companies worldwide as it only increases every year as they sought new resources and by this it requires drilling into the earth and damaging the environment. Chevron refineries have caused water pollution with their oil leakages and air pollution with their power plant and energy stations. The ethical problem that need to be addressed is how Chevron as many other companies, as they contribute to global
The largest petroleum-producing nation in Africa is Nigeria. The petroleum company is the main contributing factor of the GDP in the West African nation, which is also the continents, most noticeable and populous reserves. Since Nigeria was under British control it has suffered socio-economic and political adversities for decades. Corrupt domestic militias and complicity of multinational corporations have rid the nation of its natural resources. The same corporations that are ridding the land and exploring the resources have hypocritically identified Nigeria as a major concern with regard to human rights and environmental degradation. The petroleum business in Nigeria dynamically impacts its economy so much that “oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue, as well as generating more than 40% of its GDP.” Just to be reminiscent on this fact, the petroleum business accounts for almost the entire exporting business of a country so it raises the question of, where is the income going and how is it bring redistributed?
This is partially the detrimental threats to the environment of day to day operations from the industrial process of construction, exploration, production, transportation and all the way to refining. Oil producing companies are also more vulnerable to civil society pressures because environmental destruction particularly in regard with oil leakage and international brand reputations. When everyone has camera on smartphone and access to worldwide internet service, it is only a matter of time that business wrongdoing even a minor oil leakage will be on media outlets. Besides growth in social reporting, code of conduct multinational oil corporations such as Royal Dutch Shell and BP have embraced major international CSR initiatives such as Kofi Annan’s Global Compact and the Global Reporting Initiative established by the Coalition for Environmentally Responsible