The Price of Oil


By Ayodele Embry, Jennifer Otitigbe, Celeste Thomas




The development of the petroleum industry in the 1960's and 1970's transformed Nigeria from an agricultural based economy into one that is primarily dependant on oil revenues. Behind this transition lies a complicated web of political, social, commercial and environmental issues.  One implication of the oil industry has been the neglect of the agricultural sector. This has lead to a rapid decline of local self-sufficiency and a heavy dependence on foreign imports. Another implication is the use of the oil revenues to support the military regime.  And further, there has been a rapid deterioration of the socio-cultural fabric in many oil rich areas.  Sadly, this nation which is wealthy in mineral and natural resources is among one of the poorest countries in the world.  Since independence from British rule, Nigeria has been mired in political and social turmoil.  The polarized economy further agitates the masses who have no access to the wealth of their land.  In this report we will examine the true political, economic, environmental and socio-cultural price of oil.  Additionally, several recommendations will be given regarding what actions can be taken to break the chain of oil related abuses.



Chapter 1:   Oil, Politics & Ethics

by Jennifer Otitigbe


MNCs in General

Large MNC's have become increasingly powerful as a result of the expansion of global markets over the past few decades.  Some critics describe the MNC's as having superseded the nation states in the running of global affairs (Halcrow, p.7). However, while governments accept that their essential role is to protect and provide for their people, and have for the most part signed documents such as the Universal Declaration of Human Rights, large corporations have no such obligation (Adler, p. 20) . Their committment to such matters is left to the good will and somewhat vague arena of codes-of-conduct  (Banfield, p.1). More dangerous is the situation where the government in question is not stable and non-democratic.  It is in this case that the law of the land may compromise "universal laws of ethics".  From examining the history of abuses that promulgated in this situation, it is ever more apparent that MNCs must answer to ethical issues above and beyond governmental laws. In spite of many regulatory measures, instances of companies dumping waste, indsutrial goods or neglecting environmental and human rights issues are significant.  When this issue is pinned up against a region where a non-democratic government exists, the affected communities have no mean to effectively protest such actions.


Nigerian History & Politics

Nigeria was colonized by the United Kingdom in the later part of the 19th century.  In 1947 the United Kingdom introduced a new Nigerian constitution, establishing a federal system of government. The new system was based on three regions and ethnicities, Northern (Hausa-Fulani), Western (Yuroba) and Eastern (Igbo) based primarily on the ethnic distinctions of the country.  In 1954 the Nigerian federation became self-governing and each of the three regions operated with a significant measure of autonomy.  1958 marked the beginning of a constitutional convention and in 1960, Nigeria became an independent nation.  Between 1960 and 1970 the military's ethnic composition began to reflect the growing ethnic tensions in Nigeria.  This period of time was characterized by a coup, in which the Igbo groups came to dominate the federal government.  Furthermore, efforts to centralize the nation were ensued. A proposal was developed to abolish the regions in Nigeria and replace that system with 12 states.  There were some divisions regarding the distribution of the Eastern oil revenues and growing hostility towards the Igbo in the Northern region (McCaskie, p 798).  In 1966 the mainly Igbo Eastern region attempted to form an independent Igbo state and the Biafra civil war ensued.  The late 1970 saw a number of changes in the political structure of the country.  The 12 state structure was adopted under military rule.  Plans for holding civilian elections were suspended and a number of contested leadership transtitions occurred.  From 1979 to 1983 there was a brief period of civilian rule brought on with the assistance of Lt.-General Olusegun Obasanjo.  During the 1980's intense party politics and unrest in the milirary prompted a coup on the civilian government.  Since that time there were a number of proposed and attempted elections. The most notable happening in 1993 when Moshood K.O. Abiola was believed to have won the election (McCaskie, p 799).  During that period in the transition program, the military leadership changed once again.  At that time, civilian leader Chief Earnest Shonekan surrendered leadership of the government to Maj.- General Sani Abacha. Abacha subsequently, suspended all political activities and halted the transition program.  It was around this period of time that the international community started to become aware of the human rights abuses and the environmental abuses occurring in the Niger delta region. 



MNC Involvement in Nigeria

Multinational corporations (MNCs) involvement in Nigeria often came at a high price. As military rule overcame the country, large multi-national corporations sought to maintain holdings on the vast mineral resources in several regions. Corporations such as Shell, Chevron, Mobil and Elf Antiquane had to deal with formidable challenges in order to do business in the region (EIA p. 12).  The constantly changing national leadership made formulating contractual agreements difficult because most of the oil dealings came through the state owned Nigerian National Petroleum Corporation (NNPC).  Furthermore, all oil in Nigeria was deemed to be the property of the state, hence the state petroleum corporation involvement.  The MNCs joined the NNPC in joint venture agreements. Often each side had an investment obligation to each new oil project.  Traditionally, the ventures were 60% NNPC and 40% MNC owned.  


The state had in place many thorough environmental and commercial laws to which the MNCs were expected to abide by. The trouble was that rarely were these laws enforced.  If there was an environmental issue, the state left it up to the MNC to complete an assessment and to assume responsibility for any damages (Jukwey, p.1).  MNCs were also expected to deal with the local communities in providing adequate compensation for land use or abuse. In most Niger Delta areas, land ownership was communal.  Prior to the oil industry involvement, most many individuals in one community would share the use of land to produce foodstuffs.  As a result, it was not always clear who owned the land.  Often, the oil companies would deal with one community leader in gaining use of some lands.  That compensation was occasionally a contractual agreement and on occasion that was a bribe.  Any attempts at developing the local communities were usually very shabby and ill planned (River State Report, p. 11).  The majority of the individuals in the community did not see any benefit from the presence of the oil company.



Human Rights Abuses

Human Rights abuses in Nigeria were primarily attached to conflicts over politics and oil.  During the rule of several military officials, basic human rights were often infringed upon.  Political parties were not allowed to form (Nwosu, p.1).  Many civilian officials were replaced by military officers.  Individuals who were vocal against military rule were often jailed, tortured or executed.  Labor union activities were heavily monitored. Journalists and other activists were perceived to be a threat to the government were also jailed or forced into exile (Human Rights Watch Report).  In addition to this, any group or individual that threatened the government's major source of revenue was detained or punished by the national police force. 


In the oil producing regions, most of the human rights abuses occurred as the state and private oil security forces attempted to deal with the growing protests against oil company negligence. Although Oil revenues accounted for 95% of the hard currency earnings and 80% of the government revenues the average civilian had not seen any benefit to that money (Human Rights Watch Report).  Land owners and communities who were not duly compensated for the use or abuse of their land were often threatened.  When many oil spills occurred, the companies tried to pin the blame on the local communities claiming sabotage.  Rarely were aggressive clean up efforts ensued.  The land owners who wanted to obtain compensation for their damaged farmlands and polluted waters were turned away by both the governemnt and the oil corporations.  Initially, groups tried to combat this issue with peaceful protests however they were detained and threatened by both the state and the corporate security forces.  The growing youth often resorted to protesting on the corporate properties and on the drilling sites. In the 1990's the protests gained international attention mostly due to the organization of the Movement for the Survival of the Ogoni People lead by Ken Saro-Wiwa.  In a report by the Human Rights Watch organization it was noted that "MOSOP's  protests provoked a violent and repressive response from the federal governemet, for which a threat to oil production is a threat to the entire existing political system. " (Human Rights Watch, Ogoni Report). Hundreds of Ogoni protestors were executed and thousands were beaten and detained. Even while the international community began to see the abuses in Nigeria, the MNC's claimed to have no knowledge of the events.


Supporting the Military Junta

 Companies such as Mobil, Shell and Chevron supported the ruling military Junta by signing into strategically important joint ventures with the state oil company and related security contracts with the state police force. In most cases the terms of the security contracts between the MNCs and the government were not made public.   In 1996, it was discovered that Shell was quietly helping the Nigerian police to supress environmental advocates.  The International Press Service (IPS) obtained documents which implicated Shell in the import of handguns and ammunition to the Nigerian police through a company called Humanitex Nigeria ( Chatterjee, P.1).  Chevron officials had authorized Nigerian Troops and hired armed security forces to fly by helecopter to Chevron's off shore oil field where demonstrations were taking place on a drilling platform.  The protestors were demanding that Chevron contribute to the development of the impovrished region that they were extracting from (Knight, p. 1). Two protestors were killed and many more were wounded as a result of these actions. Incidentally, the Center for Constitutional Rights is in the process of suing Chevron for complicity in the shooting deaths (Shareholders Annual Report.


Undermining the Democracy Movement

When the Nigerian military annulled the 1993 civilian governement elections, the Nigerian Oil Workers Union initiated a strike against the arrest of the winner of the 1993 vote, Moshood K.O. Abiola.  Production was slowed as a result of the strike and Chevron as well as Mobil brought in strikebreakers from Europe (Fleshman, p2). When Nigerian Oil Workers Union leaders lead a strike to protest the military government, they were imprisoned with out a trial.  None of the oil companies protested the activities of the government (Corporate Watch Report). 




Failure to Monitor Security Activities

Several oil companies have been directly responsible for failure to monitor security abuses.  While there is nothing wrong with having security for their operations, the MNC's failed to monitor their actions.  In 1990, a Shell manager made a "written explicit request" for protection from the Mobile Police, a brutal security force.  As a result, 80 unarmed civilians and many local homes were destroyed (Nwosu, p. 2).Abacha indicated that he would contest the presidential election in 1998. In March of 1998, the government's political and commercial supporters increased pressure for Abacha to be re-elected as a civilian president.



Passivity on Human Rights Abuses

By remaining passive about the human rights and environmental abuses, the MNCs share in the blame for the atrocities against the Delta region protestors. In spite of the overwhelming evidence of human rights violations and the instability of the military political system, these companies continued to conduct business as usual.  Many of the MNCs felt that they were operating ethically if they were following the directions of the governemnt.  When any human-rights issues came to light, they absolved themselves by claiming to not be involved in the politics of the nation. This conclusion was highly flawed because by joining forces with the government to do business, they were by default involved in the politics of the government. During the 1990's the Shell Petrolium Development Corporation, a joint venture between Shell and the Nigerian government, was implicated in the systematic suppression of local communities by the Nigerian security forces.  This occurred in the Ogoni land region of Nigeria. A land mass from which 30 billion dollars worth of oil has been extracted (Davis, p2). The community still suffers from environmental degradation and economic neglect (Human Rights Watch Interview). None of the money has been returned to the communituy. Even after the execution of writer and environmenmtal activist  Ken Saro-Wiwa, Shell continued to deal with the NNPC by developing a large liquefied gas project contract within weeks of the Saro-Wiwa execution.



International Responce

The response from the international community has been varied, but more recently there have been attempts to put pressure on the government and to corporations to stop these abuses.   In February 1997, Nigeria was suspected by the UN Human Rights Commission of gross human rights abuses.  A special investigator was appointed to Nigeria in March of that same year (McCaskie, p 804).  Some foreign governments such as Canada suspended their diplomatic representation in the country (Ibid, p. 801). The International Labor Organization found Nigeria to be in violation of international labor standards after the repression of the Nigerian Oil Workers Union (Corporate Watch). Other foreign governments responded by imposing sanctions on Nigerian imports. 


The position of the United States regarding Nigeria had been mostly one of self interest. As a whole, the US market  acquires more that 50% of all Nigeria's oil exports. Two US companies,  Mobil and Chevron,  produce more than half of Nigeria's oil.  For Shell, the United States is it's largest market (EIA, Nigeria).  Sanctions against Nigeria were rejected on the ground that other companies would enter the Nigerian market and take over the position of the large oil producers. Additionally, US based companies claimed to be the only companies with the capital base to maintain the production in Nigeria. No human rights groups or environmental activists were involved in the analysis behind the sanction debate (Davis, p.6).



Current Human Rights Situation

Although international pressure and the succession of General Abdulsalami Abubakar to the head of state have helped to reduce the repression in the Delta region, there are still strong reactions against those who protest the oil production. On December 30, 1998 seven youth  protestors were shot and killed by solders in Bayelsa State.  Several more were detained and beaten in days following the incident (HRW, p.8).  In one particularly serious incident on January 4, soldiers using a Chevron helicopter and Chevron boats attacked villagers in two small communities in Delta State, Opia and Ikenyan, killing at least four people and burning most of the villages to the ground. More than fifty people are still missing. Chevron has alleged to a committee of survivors of the attack that this was a "counterattack" resulting from a confrontation between local youths and soldiers posted to a Chevron drilling rig. Community members deny that any such confrontation took place. In any event, the soldiers' response was clearly disproportionate and excessive (Nwosu, p.1). On Febuary 9, 1999 three youths were shot dead while trying to tell Agrip officials to leave the Delta (Reuters).




Ethical Considerations of MNC political Involvement

MNCs have a responsibility to conduct business in an ethical manner and in a consistent nature in all of their operating areas. It is no longer acceptable for compnies to have different modes of operation in different lands. Advances in information technology, information distribution and the proliferation of NGOs  have made it difficult for companies to mask their breeches of corporate responsibility (Davis, M. p.2).   Many NGOs such as Corporate Watch, Human Rights Watch and Amnesty International perform regular inquiries into abuses otherwise neglected by the popular press. Corporations can no longer hide their activities or deny knowledge of such abuses.  Additionally, many consumers do care about what corporations are doing to the environment and to the communities in which they operate.  While pressure from external groups is important in keeping corporate entities operating ethically, the ultimate responsibility lies in the hands of the corporation leadership and investors.


 In areas where there is a sustained pattern of human rights abuses, MNCs have a responsibility of taking action to address those issues. It was improper for the MNCs in Nigeria to continue making deals with an illegal governmantal entity.  Instead of seeking to use their influence to address the issues and concerns of their operating areas, the MNCs in Nigeria largely kept quiet.  Furthermore, they were complicent in the supression of groups and individuals who tried to protest aginst many of the commercial and political injustices.  While not all MNCs took the same course of action, the major MNCs in Nigeria did.  After the annullment of the 1993 elections, Volkswagon suspended their vehicle assembly operations in Nigeria conditional on the transition to civilian rule (Adler, p.2).  Had the oil industry followed suit, there may have been a large impact on the illegal military governnment.



More and more, companies in Africa as well as in other countries are realizing the importance of altering their traditional business patterns. It is important that companies realize that there can not be a dichotemy between their financial interests and those of the local communities from which they extract the wealth.  The International Labor Organization Agreement, 169 requires oil companies to negociate with local land owners and communities for access permission even when they have already received permission from the central governments. Honneywell, Inc. has developed a global-reaching yet regionally-specific code of ethics and the corporation regurlarly revisits ethics issues.  The global code of ethics was developed jointly with business partners all over the world.  The regional-specific portions seek to address the corporate stand on local ethical issues.  It helps to leave little room for ambiguity.  By publishing a monthly newsletter, each region has a venue of talking about potential ethics violations and how to avoid them. (Davids, M., p. 43)



Nigeria Today & MNC Involvement

As Nigeria progresses toward a new democratization program, it is even more critical for the country leadership to find viable ways of dealing with the "oil problem".  In June of 1998, General San Abacha died suddenly  and Gen. Abdusalami  Abubakar took position as the head of state.  Shortly after he took power, he proceeded to develop a plan for Nigeria's transition to democracy.  On February 26, 1999, Nigeria had a democratic election for the presidency. General Olesegun Obasanjo, who stepped down from power in 1979, was declaired the new democratic leader of Nigeria. His presidential election has not been without controversy.  Claims of vote rigging and inconsistencies were brought to light almost immediately after the election results were posted.  Regardless, the civilian presidency is to begin on May 29, 1999.  The new civilian president has a very difficult task ahead.  Widespread distrust due to years of military rule, self-serving government officials and corruption must be reversed.  The industrial and agricultural state must be revamped.  The educational and health systems of the country are in need to be rebuilt.  The overall quality of life for the Nigerian citizen must be improved.  


Nigeria and Privatization

It is critical for the Nigeria to address the issue of privatization with caution.  Most of the major industries in Nigeria are state owned.  When Abubakar came to power he began privatization initiatives.  On one hand privatization can be a beneficial way for Nigeria to stimulate competition in primarily the oil/energy industry. Areas such as transportation and telecommunications are also ripe for development. The government continues to encourage private-sector competition by breaking up it's stronghold on the telecommunications and power industries. On the other hand, if privatization is not handled effectively, it will result in massive foreign ownership and control of Nigeria's industries.  Companies such as Shell, Chevron, Mobil, Texaco, Elf Aquitanie and Agrip have benefitted since 1996 when the National government started to divest of some of it's shares in various joint venture agreements.  Because of the large capital investments it has been difficult for smaller local companies to benefit from privatization. The notion of foreign entities owning Nigerian oil continues to be a major source of unrest in oil-producing regions of Nigeria  (Mabogunje, p.813). The myth that privatization leads to the development of efficient services, technology transfer and skills transfer is negated by the impact of the developments in the oil industry.  After more than two decades of  having the oil production managed by foreign multinationals, Nigeria is essentially, less capable of producing oil itself than it was in the 1970's. 


What Can Be Done


By the Nigerian Government

·         Develop a code of ethics to combat corruption in the civilian government  and in the military leadership.

·         Establish a process to take control of monitoring and preventing human rights abuses.

·         Develop programs to train military and police forces to prevent human rights abuses.

·         Establish a process to monitor, control and prevent environmental abuses. This group should bear the capability to take immediate action to deal with clean up issues and prosecute organizations which do not take responsibility for their environmental damage. 

·         Appoint an independent council to deal with local community oil and land compensation issues.

·         Initiate the development of a special committee to investigate the implications of privatization.

·         Begin to identify opportunities to foster domestic ownership of various industries.

·         Begin aggressive development of industry, trade and agricultural policy.

By Multinational Corporations

·         Develop a global operations code of ethics. Localize that code jointly with the regional representatives or partners.

·         Address all environmental issues resulting from your product regardless of it was initiated by internal or external forces.

·         Senior management and investors must take responsibility for monitoring corporate ethics, especially in developing nations.  The must also be committed to taking decisive action when human rights, environmental or social abuses are occurring as a result of, in close proximity to and directly because of their operations or products.

·         Consult with local communities to provide compensation for the use and abuse of their land regardless of the legal ownership. 

·         Create a dialogue between the local communities in which they operate as a means to understand their true impact on the community and to make the best possible decisions regarding the quality of life of those communities in which they operate.

·         Appoint an independent organization such as an NGO to monitor their activities. Make all records of fees and payments to the NGO public information.


By the International Community

·         Put pressure on governments that engage in human rights abuses.

·         Develop policy to prohibit the development of business ties with illegal or oppressive governments regardless of the economic implications on your country.

·         Utilize NGOs to help uncover human right and environmental abuses faster.

·         Develop policy for monitoring activities of MNCs based in your home country.




An anonymous policy maker was quoted as saying that "While in most cases ethical behavior implies respect for the law, not all ethical behavior is reflected in the law" (Adler, p.20). The first responsibility for resolving the injustices surrounding oil lies with the Nigerian government. However, multinational oil companies operating in Nigeria cannot avoid their own share of responsibility. It is not enough simply to say that the political environment in Nigeria is as difficult for the oil companies as it is for anyone else, and that the oil industry does not have the power to alter government policy towards the oil regions. The oil companies contribute towards the discontent in the delta and to conflict within and between communities that results in repressive government responses. The oil companies have an ethical and corporate responsibility to ensure that oil production does not continue at the cost of communities in which they operate simply because of the threat or actual use of force against those who protest their activities. If no action is taken to deal with the heart of the discontent in the Niger Delta region, and in Nigeria as a whole, it may become far more dangerous for oil companies to conduct business in the region.



Chapter 2: Environmental Destruction

by Celeste Thomas




Nigeria is a beautiful country blessed with many natural resources.  The exploitation of oil in Nigeria is causing serious environmental problems.  This section of our report will explore the impacts of oil exploitation on the environment.  We will also provide suggestions of methods Nigeria can take to prevent future environmental degradation.


The Ecology

The majority of the oil in Nigeria is in the Niger Delta.  The Niger Delta is one of the world’s largest wetlands.  It is an expansive floodplain produced by centuries of sediments and silt from the Niger and Benue Rivers.  The Delta is composed of four main ecological zones including mangroves, fresh water swamp forests, coastal barrier islands, and lowland rainforests.  The mangrove forest is Nigeria is the third largest in the world and the largest in Africa.  The freshwater swamp forests of the delta region are the vastest in West Africa.  The Niger Delta has extremely high biodiversity with unique plant and animal species.


Oil Spills

In recent years the international community has been preoccupied with greenhouse gas emissions and global warming.  This focus on gas emissions has overshadowed another gas related environmental problem, namely oil spills.  The consequences of oil spills are more certain and more urgent for developing countries like Nigeria than global warming.


Oil spillage constitutes a very serious danger to the security of life in affected areas.  Statistics from the Department of Petroleum Resources (DPR) indicate that between 1976 and 1996 a total of 4,835 oil spills occurred releasing 2.5 million barrels (over 100 millions gallons) of oil into the environment.  Reports estimate that only 23% of the spilled oil were recovered.  The largest spill in Nigeria is the Forcados terminal spill in July of 1979 was 570,000 barrels were spilled (Ikporukpo, 1984: 199).  Another large spill occurred in January of 1980.  More than 400,000 barrels of oil, according to the DPR, spewed into the Atlantic Ocean from a Texaco facility  (HRW).


In 1998, two serious spills occurred.  On January 12, 1998 a major spill of more than 40,000 barrels of crude oil leaked from the pipeline linking Mobil’s Idoho platform with its Qua Iboe onshore terminal.  In March of 1998, a further spill of 20,000 barrels took place from Shell’s Jones Creek flow station, in the brackish water of the mangrove forest killing enormous numbers of fish.


Causes of Oil Spills

There are several causes of oil spills in Nigeria; the most common one is equipment failure.  A lot of the equipment that multinational corporations like Shell and Chevron use in Nigeria is old equipment that should have been replaced years ago.  Shell identified the cause of the spill in 1998 as “pipeline failure”.  If the pipelines are being used beyond their lifetime, they will fail.  Many pipelines and flowlines are old and subject to corrosion.  Fifteen years is the estimated safe lifespan of a pipeline, but in numerous places in the delta pipelines aged twenty-five years can be found (HRW).


Some of the literature states that the second largest cause of oil spills is sabotage (Ayodele, 1983: 299).  Members of the community are angry and frustrated with the oil companies.  When they try to do peaceful demonstrations, police arrest them.  Some of  them may decide then to make a statement by destroying a pipeline.  I question, however, if sabotage is the second largest cause of oil spills.  The communities concerned dispute claims of sabotage.  Community leaders point at that there is nothing or little (if compensation is paid) to gain from polluting their own drinking water and destroying their own crops.  The DPR indicates that only 4% of all spills in Nigeria were caused by sabotage during the period 1976-1990.


Human-error also accounts for some oil spills.  An employee may make an error somewhere down the operation line or may be impatient when loading oil tankers.  Nevertheless, the overwhelming cause of oil spills in Nigeria is equipment failure.


Effects of Oil Spills

Oil spills have considerable impact on the natural resources of the Niger Delta upon which the people of the area depend.  One immediate result of a spill is the widespread pollution of rivers, creeks, ponds, and wells, which are the usual sources of water for drinking and general domestic u se in the rural Niger Delta.  Crude oil contains thousands of different chemicals; many of them are toxic and known to be carcinogenic.  A lot of them have no determined safe threshold for human exposure.  Following the major Texaco spill of 1980, it was reported that 180 people died in one community as a result of pollution.  In January of 1998, Nigerian opposition radio reported that about 100 villagers from communities affected by a major Mobil spill had been hospitalized as a result of drinking contaminated water.  Oil companies are also blamed for the deaths of children caused by drinking polluted water.


The pollution of water also prevents natural aeration of the sea and many marine organisms are killed.  Dead fish are often visible floating on the surface of water or washed up on beaches.  If fish are not killed then they ingest the oil.  Often, local residents complain that fish taste of kerosene, indicating hydrocarbon contamination.  In many villages near oil installations, even where there is no recent spill, an oily sheen is visible on the water.  This same water is used for drinking, bathing and general domestic use daily.  The long term effects of this are unknown and have not been studied, but people are drinking toxic carcinogens everyday.  A sample taken in April 1997 from Luawii in Ogoni, where there had been no oil production for four years had 18 ppm hydrocarbons in the water.  This level is 360 times the level allowed in drinking water in the United States and European Union.  A sample from Ukpeleide, Ikwerre, contained 34 ppm, 680 times US standards.


Soils are also affected.  The degree to damage to soils depends on the level of contamination.  Where the pollution is serious, soils become less fertile because nutrients essential to plant growth become scarce, while those that are more toxic to plants become more available.  This effect on soil microorganisms may persist for several years.  A geographer based at Uyo University in Akwa Ibom State described to Human Rights Watch how soils in communities near the Qua Iboe area where Mobil has its stank farm had very high hydrocarbon content.  Local fauna and flora, including periwinkles - a major food source for local people - had died out.


The overall effect of oil spills on the delta is unknown.  One zoologist said, “the bottom line is that oil companies have never tried to find out what the effect of oil spills is” (HRW).  Whatever the long-term impact on the environment, in a region where the traditional economy is dependent on natural resources, the destructive effects of oil spills destroys the livelihood of families dependent of farming and fishing.  Even a small leak can wipe out a year’s food supply for a family, with it wiping out income from products sold for cash.  The consequences of such loss of livelihood can range from children missing school because parents are unable to afford the fees, to virtual destitution.  In order to make ends meet; people have changed their occupations so that they are not directly dependent on the physical environment, or taken on supporting occupations (Ikporukpo).  Some fisherman have abandoned fishing altogether.  In spite of the problems, many fisherman and farmers have not been able o change occupations because the opportunities open to them are restricted.  Even if the land recovers for the following year, the spill has consequences over a much longer period for the families directly affected.



Department of Petroleum Resources regulations require the body responsible for a spill to clean the site and restore it to its original state so far as possible.  Soil at a spill site on land must contain no more than 30 ppm of oil after six months.  In many cases it is clear that land affected by spills is not properly or promptly rehabilitated.  At Kolo Creek flow station spill that Shell alleged was caused by sabotage occurred in July 1997 and was cleaned by putting contaminated soil into pits.  One year later, during flood season, the community believed that a new spill had taken place when this oil was released back into the water (HRW).


The Oil Pipelines Act provides that compensation is due “to any person suffering damage (other than on account of his own default or an account of the malicious act of a third person) as a consequence of any breakage or leakage from the pipeline or an ancillary installation, for any such damage not otherwise made good”.  The Act also provides for valuation to take into account damage to crops, “economic trees” (economically valuable trees) and loss in value of land (HRW). 


The oil companies pay compensation at uniform rates for spills, where they are not attributed to sabotage.  Shell argues that 60% of land spills are due to sabotage, the DPR disagrees.  The fact that Shell is not required to pay compensation for spills attributed to sabotage may encourage the company to say that spills that were actually caused by equipment failure were sabotage attacks.  Even when compensation is agreed in principle at oil company rates, compensation payments rarely reflect the true value of loss to the local communities (HRW).  Communities claim that the compensation they receive is nothing compared to the loss they suffer.  They also dislike the uniform rates because it allows oil companies to refuse to take into account the particular circumstances of each case.  An any case, one-time payments cannot compensate for the continuing loss of income and livelihood that would normally be supplied for the natural resources destroyed by the oil.


Environmental Laws

The various laws dealing with oil pollution of natural resources in Nigeria may be divided into two groups - those that deal specifically with oil and those that are less specific.  The most fundamental of the first group is the Petroleum Decree of 1969.  This decree contains a Drilling and Production Regulation that states:


“The licensee or leasee shall adopt all practical precautions to prevent the pollution of inland waters, rivers’ water resources, the territorial waters of Nigeria, or the high seas by oil mud, or other fluids or substances which might cause harm or destruction of fresh water or animal life, and where any such pollution occurs or had occurred, shall take prompt steps to control and, if possible, end it.”


There have been several laws of the second type dealing with the protection of resources, especially water, from various pollutants (Ikporukpo, 1984, 202).  In this case, pollution is not restricted to oil, and some of the laws existed before the first attempts at oil exploration.  For example the Water Ordinance of 1913 forbids the fouling of water meant for water works.  A more recent law has provisions against the pollution of water for human and even animal consumption - the Federal Public Health Ordinance of 1958.  The Federal Environmental Protection Agency Act of 1988 vested the authority to issue standards for water, air, and land quality in a Federal Environmental Protection Agency (FEPA).  Regulations made by FEPA govern the environmental standards in the oil and other industries.  In 1992, the Environmental Impact Assessment Act was passed.  It requires an environmental impact assessment (EIA) to be carried out  “where the extent, nature, or location of a proposed project or activity is such that it is likely to significantly affect the environment.”


Unfortunately, in practice there is little enforcement of the requirements to carry out EIA’s, either by FEPA or by the DPR’s regulations.  One study concluded that “Most state and local government institutions involved in environmental resource management lack funding, trained staff, technical expertise, adequate information, analytical capability and other pre-requisites for implementing comprehensive policies and programs” (HRW).


Conclusions and Recommendations

Multi-national corporations in Nigeria are destroying the environment and for the most part this destruction is going unchecked by the Nigerian government and the international community.  FEPA and DPR have been ineffective at managing oil pollution.  The laws are not enforced and are therefore, ignored.  Nigeria is a beautiful country being exploited for its natural resources; oil is only one of several.  Inhabitants of these oil areas, who are frequently being exposed to carcinogenic and toxic chemicals and whose livelihoods are being destroyed are not being compensated and are not being heard by the government.  Hopefully, the democratization process discussed in the earlier section will work and Nigeria can begin to manage the situation effectively.


The new Nigerian government should consider the following policy measures for improvement:


Enforce Existing Regulations

A legal framework for preventive and remedial actions against oil spills already exists.  This framework made it mandatory for oil companies to adopt “Standard Oil Industry Practices” (Ayodele, 1983: 295).  The implementation of this requirement would mean the use of blow-out preventers, cathodic protection of pipelines, periodic testing and replacement of pipes and tanks and other preventive measures.  Given that the greatest number of oil spills is caused by equipment failures, it is more than evident that this provision has not been strictly followed.  Nigeria should begin enforcing its environmental laws.


Establish Oil Relief Fund

Experiences in Nigeria have shown that relief materials were never readily made available to victims of oil disasters.  The country should form a special fund for this purpose.  All oil companies operating in the country should pay an annual fee, which could be made proportional to their oil production levels.  This fund could be made available for relief operations whenever there is any oil mishap.  In addition to this will be enforcement of the compensation regulations that already exist for the company causing any spillage or pollution.


Control All Oil Activities

Sizable proportions of the employees of the oil industry in Nigeria are indigenous.  Nonetheless, they are not in positions of control in the industry.  As long as aliens control the technology of oil production, equipment, etc., Nigerian’s environmental problems will remain.  Unfortunately, leaders in the multi-national corporations have negligible feeling for people who are not of the same nationality as themselves.  Therefore, this new Nigerian democratic government must expedite technology acquisition so Nigeria can control its own resources.  We’re sure that if Nigerians are able to control their own industry there would be a tendency to consider the immediate environment and the long term impacts of oil exploitation. 



Chapter 3: Socio-Cultural Impact

by Ayodele Embry



Nigeria came into being in the late 19th century when British colonialism arrived in West Africa.  In 1960 Nigeria was given its independence and since that time, it has been ruled by a succession of military rulers with several brief periods of democracy.  Nigeria’s 100 million citizens make it the largest population in Africa and critical to the development of the entire continent.  Political and economic instability have marred the nation and prevented it from reach its full potential. Since the mid-1900s when oil was first discovered in Nigeria, much has changed in the socio-cultural landscape of the country.  The advent of the petroleum industry has caused numerous changes in the quality of life, including declining health care and educational systems, a lack of employment opportunities and a loss of culture for the people of Nigeria, especially in the Niger Delta.  Recent democratic elections give hope for improvements by the new government when the transfer of power takes place in May of 1999.   The social issues facing Nigerian citizens must be addressed so that the nation can take its place in the world economy.


The Petroleum Era: Curse or Blessing

Nigeria is ecologically blessed with not only rich land but also an excellent climate (Umoren, 127). Because of Nigeria’s distinct climatic zones and abundance of natural resources, Britain was able to exploit several crops on Nigerian soil during colonialism. Groundnuts were grown in the north, cocoa in the southwest and palm oil in the southeast (Wright, 2).  These agricultural products were totally earmarked for Britain, beginning the nation’s dependence on foreign, not domestic consumption for economic stability.

At independence, agriculture accounted for more than half of all exports and two-thirds of the gross domestic product (GDP) in Nigeria (Wright, 3). During this period, each region of the nation contributed substantially towards the national economy (Umoren, 127). The expansion of the petroleum industry in late 1960s and early 1970s radically transformed Nigeria’s agricultural based economy and the entire societal fabric. Oil exploration began in 1938 and Shell-BP Petroleum Development Company was the only player until 1954 when American owned Mobil Exploration (Nig) Limited joined followed by several other multinational corporations including Exxon, Royal Dutch Shell, Gulf, Mobil, and Standard Oil (Nwankwo, 2).   However, it was not until 1958 that the government took active interest in oil industry and in 1971, the Federal Government set up the Nigerian National Oil Company to work, produce, transport, store, and market petroleum (Abali, 5).

By the mid-1970s, petroleum dominated the Nigerian economy.  Nigeria moved from an agricultural economy based on the export of palm oil, cocoa, and groundnuts to a petroleum economy based on crude oil extraction (Umoren, 127).   The oil boom of the mid to late 1970s provided a huge influx of wealth into the country.  However, while petroleum became the mainstay of the economy in terms of both export revenues and attracting foreign investments, it has never been influential in terms of employment for the Nigerian people (Wright, 103). 

As the Nigerian government focused its attention on the petroleum industry, the agricultural industry was neglected.   Under-investment, a steady drift away from the land to urban centers, increased consumer preference for imported foodstuffs (particularly rice and wheat) and outdated farming techniques continued to keep the level of food production well behind the rate of population growth (Van Buren, 811). The country of 100 million people was forced to import food at high Western prices to feed its people, even domestic staples such as rice and beans (Nwankwo, 11).  However, at the same time the Western countries encouraged Nigeria, like other Third World countries, to sell to them at low prices, leading to a further decline in the agricultural industry (Nwankwo, 4).

Not only has the agricultural sector in Nigeria been ignored, but so has the industrial sector.  Unlike many developing countries where the agricultural based economy is replaced by a labor intensive manufacturing industry, there were few industrial jobs to take the place of the disappearing agricultural development (Nwankwo, 59).    Even in 1995, manufacturing only accounted for only 5% of the GDP (Van Buren, 814).  The contraction of agriculture and manufacturing has led to high unemployment and an increased sense of frustration (Ambitious Economic Programme).

The oil boom had a crucial impact on domestic politics as revenues accrued to the federal government. The growth of oil revenues combined with and reinforced a trend towards the centralization of power by the military government (Wright, 108).  Because of the lack of other industries, state governments became dependent on the national government for funds, contributing heavily to the contraction of social services in recent years.  The influx of wealth also contributed to rampant corruption, making Nigeria one of the most corrupt governments in the world (Wright, 3).  Corrupt officials have easy access to government funds and since the oil boom first began, millionaire generals have become common.  There has been an estimated $176 billion of unaccounted oil revenues during the 1980-1992 period (Wright, 109).  The masses have become impoverished while handfuls of millionaires consume and spend (Nwankwo, 45).

Today, petroleum accounts for more than 90 percent of export revenues and 80 percent of government revenues (Wright, 103).   Nigeria’s oil reserves are concentrated in seven states of the federation:  Abia, Akwa Ibom, Delta, Edo, Imo, Ondo and  Rivers (Abali, 7).  All of the oil producing states are located in southern Nigeria with Delta State producing 38.6 percent of the nation’s crude oil.  This  makes the Niger Delta region stability crucial to the national economy (Oil Wars; Abali, 8).   However, the abundance of petroleum resources has brought little profit to those who live beside them.  Instead it has brought widespread environmental devastation and forty years of oil production directed by the military government has left the Delta peoples poorer, sicker, less nourished, and less educated than the rest of the country.  The northern generals who have ruled the country since independence have kept it starkly developed, without roads, bridges, electricity or running water.  Oil spills have damaged fishing grounds and farmland, leading ethnic groups to campaign for a share of oil wealth and power, severely disrupting the output of the petroleum industry, relations with corporations, and  the economic welfare of Nigeria (Rupert).

The phenomenal growth of oil revenues in the 1970s and early 1980s also contributed to “skewed” economic and industrial development in Nigeria (Wright, 107).  Funds were plentiful, resulting massive increases in public spending and  an ambitious industrialization program  (Wright, 109).  It has also encouraged the tendency of oil producing nations give aid like advanced industrial countries, at the expense of internal economic development (Nwankwo, 37).  Many of the programs were import intensive and, as a result,  substantially increased Nigeria’s dependence on foreign countries and weakened domestic trade. When the economic crisis hit Nigeria in the 1980’s many of the projects were left unfinished.

Despite its considerable agricultural and mineral resources, Nigeria is ranked by the World Bank as a low-income country, and is among the 20 poorest countries in the world on the basis of per-capita income (Van Buren, 810).  Nigeria has literacy rates among lowest in world (Wright, 103; Umoren, 133-34).  Interestingly, literacy rates were actually higher during colonialism.   Some would say that Nigeria was better off before self-government.  Then, they had year round schools, food to eat, predictable government, families with self worth, and a country respected abroad (Umoren, 1).  Today, the nation is embroiled in political instability, a crumbling economy, serious social woes and a dearth of public services.


Oil: Tearing the fabric of society

There is a Marxian dictum that states that changes in the economic base of a society produces corresponding changes in the entire social system and this can be seen vividly in the case of Nigeria (Anikpo, 6).   The emerging petroleum economy had a direct and disturbing affect on the Nigerian people. During the 1970s and early 1980s, oil revenues and general economic strength and confidence provided for the development of a burgeoning middle class and rising salaries. However, the dominance of a single export product has also made Nigeria especially susceptible to the global market forces.  These market forces led to the collapse of the economy in the 1980s as the international price of oil plummeted. The middle class has been devastated by inflation, unemployment and deteriorating public services (Lewis, 319). Millions of well-educated Nigerians who once formed an ambitious middle class have fled the country in frustration, in search of employment opportunities and political stability while avoiding the human rights violations so prevalent in Nigeria today (White).

The government has used revenue allocation which discriminates against oil-producing states and further strains state class relations (Anikpo, 7).  Government policies have helped to deprive rural peasants of the full benefits of oil production despite their direct absorption of all of the negative impacts of the enterprise. These policies have ensured a conducive environment for oil exploration, but been detrimental to the people (Wright, 103).  Multinational oil companies have been allowed to cause environmental degradation and done little to improve quality of life for those closest to oil operations (Wright, 109).

Most communities in the Niger Delta have been similarly affected by the influx of colonialism and petroleum.  The Igbo town of Izombe, made of up 19 small villages, is one example.  Like many  of southern Nigeria’s inhabitants, the Igbos had lived under democratic rule long before colonialism.   They believed strongly in the unseen presence at all times of ancestors and the superior wisdom and sanctity of elders.   They felt that it was the freedom of the individual to achieve self-actualization through good deeds and hard work.  The people of Izombe had no tradition of a paramount chieftaincy and ruled largely by consensus.  They had an open social mobility system and stressed community ownership of land.  Individuals simply held plots on behalf of the community and had no outright ownership (Anikpo, 13).

The entire social and political superstructure was altered due first to the colonial encounter and then to the oil encounter.  These people who worshiped their own Gods and ruled democratically had fundamental changes in their culture forced upon them by colonialism.  Christian religion and schools destroyed the value base in Izombe religious cosmology.  Furthermore, the introduction of the warrant chief system to facilitate British indirect rule subordinated the traditional lineage headship (the elder) and diminished rule by consensus (Anikpo, 14).  

When oil came to the Delta, it was an image blessing, giving rise to a new social consciousness and providing political weight to historically less powerful states (Anikpo, 11).  However, the initial blessing of oil revenue and power was short lived. The pollution of water sources and farmlands through crude spillage continue to increase.  This combined with the neglect by government of the traditional agricultural sector led to the breakdown of agriculture in the southern region (Anikpo, 21).

Peasant lands in the Delta region were predominantly held collectively in family, kinship, clan or communal units.  This often caused conflict between companies and landowners when trying to purchase land (Onyige, land use, 98).  To ease the process for the oil multinationals, the Land Use Act vested the ownership of all lands to state governments and left it up to the governments to properly reimburse landowners. This commodification of land led to the displacement of many farmers and intense disputes, especially since much of the land ownership was not publicly recorded (owing to the culture of community ownership) (Anikpo, 22). This was detrimental to many small farmers who often were not paid for their land (Onyige, land use, 98). Men were forced to travel between sites for up to 6 months to haggle for oil claims on lands confiscated by the government.   Others spent months following oil officials, with hopes of becoming contractors, claim agents or laborers (Onyige, Direct, 45).   However, little employment has been available.

Those who found work in the oil industry did not fare much better.  Oil workers are often viewed as easily bought and corrupt and receive a tremendous amount of resentment from their communities.  However, much of the situation is beyond their immediate control.  There is frequent use of police presence to control workers and harsh policies are often written into their contracts.  Furthermore, the government officials in work education programs talk of consequences and instill fear in workers while good wages further keep them in line (Ihonvbere, 92).  This climate of intimidation has discouraged oil company workers from speaking out against their employers.

The conditions of the new oil-based economy changed the role of women as well.  In precolonial agriculture, male labor carried more status and provided the bulk of the workers while women were relegated to more traditional roles (Wright, 58).  Advanced, capitalist production has provided timesaving substitutes for trade goods and services normally done by hand and further destroyed the rural economy (Anikpo, 24).  Female economic roles in craft industries such as weaving and pottery were wiped out by foreign competition.    In recent years, male input into agriculture has drastically decreased while relative female input has increased (Onyige, Direct, 51).

The arrival of the petroleum industry has had other negative affects on Nigerian society and culture.  The rising population of traders, mainly male oil company workers without families, has led to the proliferation of good stores and beer parlors.  Scandalous promiscuousness living between oil company men and young women has  increased and prostitution has become a major industry in small oil villages. There has also been an increased security risk and growing crime rates as a result of the rapidly expanding nightlife in restaurants and beer parlors. The influx of people employed in the well-paid energy sector has caused the cost of living to increase substantially, exacerbating poverty. Port Harcourt and the other urban areas of the region are among the most expensive in Nigeria (Human Rights Watch).  Oil workers prefer not to buy through traditional means of haggling and are willing to pay higher prices, causing inflation.  However the oil sector employs only a small percentage of the workforce and  not enough to absorb the impact of inflation (Anikpo, 23). The region is left with a labor aristocracy of high wages surrounded by a great mass of un- or under-employed citizens (Human Rights Watch).

As a result of environmental devastation, many of the people in the Niger Delta are in poor health.  Hypertension has been on the increase, more miscarriages have taken place, respiratory diseases are becoming more common and the overall temperature has increased due to a proliferation of gas flare points.  Because of the increased poverty in the region in recent years, there is virtually no hospital equipment, drugs, or medical programs available (Anikpo, 23).  For example, state programs for immunization of children have declined drastically.  In Rivers State 85 percent of children were immunized in 1989, dropping to 15 percent in 1991 while in Delta State 80 percent of children were immunized in 1990, dropping to 40 percent in 1993.  The situation has grown steadily worse in the past decade and future decades will see increased health problems as children born to these conditions become adults (Human Rights Watch).

Education levels in the Niger Delta are below the national average, which is already low.  Approximately three quarters of Nigerian children are believed to attend primary school, and national adult illiteracy is estimated at 43 percent, but in parts of the Delta, attendance at primary school drops to less than a third and illiteracy is presumably correspondingly higher.  This is in contrast to the position at independence, when the Delta still benefited from education as a result of  its previous contact with European missionaries (Human Rights Watch).  The university system is also in complete disarray because of  a lack of government support and harsh military reaction to human rights protests on campuses.

The problems seen in Izombe have been replicated across the Niger Delta, leading to general a lack of education, employment and self-empowerment, intense poverty, poor health,  and a culture of despair. The deep poverty of the delta – alongside the luxurious homes and lives of the military rulers, political allies and the US and European oil firms who are their partners  – has left people desperate, frustrated, and bitter.   The people have gone to the oil companies with demands for scholarships and agro-based industry to provide an alternative food source for those dispossessed of farmlands (Anikpo, 19).  But, the corporations pass the blame to the government who in turn, passes the blame back to the corporations, while the people live in squalor.  In recent years, this sense of poverty and despair has led many Delta youth to attempt to reclaim their region’s splendor through armed confrontation with the military and multinational oil corporations.  Nigeria has lost an estimated N8.3 billion in oil sales owing to the raging war between youths in the oil-producing states of Delta, Rivers, Bayelsa, and Akwa Ibom and multinational oil companies operating in Niger Delta (Oil Wars).  It is a sad fact of life that the Nigerian military serves as a hired gun for transnational oil companies although most companies officially deny this fact until they are exposed.  Human rights violations have persist throughout the country.  Armed bands of disillusioned youth that would be better served with employment or educational opportunities are instead waging guerilla-style warfare. Thousands have lost their lives and yet the government,  multinational oil corporations and Western democratic powers continue to look the other way.


Conclusion/ Recommendations

Oil in Nigeria has been a mixed blessing.  It has pumped billions of dollars into economy that could not absorb it.   The oil industry has damaged the fabric of Nigerian society by destroying the economic base of self-sufficiency (Anikpo, 24).  As one Nigerian said, “we used to work with our hands, then we went to school and discovered oil” (Umoren, 132).  The petroleum economy is producing affluence for few while causing severe impoverishment of many.  It is no coincidence that the most severe poverty is in same areas of oil extraction.  Because there has been no deliberate government or oil company program for agricultural reinvestment, poverty has increased substantially throughout the 1990s (Onyige, Direct, 45).  Multinational oil companies and the government are equally responsible for much of the environmental and economic anguish in the Niger Delta.   However, ultimately, it will be up to the Nigerian people to force their government to provide for their needs and cease corrupt practices that have become a way of life.

On February 27, 1999, the Nigerian people voted for a President, culminating months of democratic elections for local, state, and national political leaders.  Although observers viewed some irregularities in the balloting, it seems as though the first national election since the overturned election in 1993 may be successful.  However, it will take more than just the democratic election of a president to turn Nigeria around. 

As we reflect on the recent historic vote for a national democratic government in Nigeria, there is a need for the government and multinational corporations to take responsibly for their past and current abuses and help the Nigerian people to reclaim their pride and culture. The national leadership must be committed to democratic governance for the people, not the military.  The government and multinational corporations must work together to clean up the environment. The people must have the opportunity to have potable water, soil free of contaminants, and electricity so that they can become more self-sufficient.  Corruption must cease so that the nation’s wealth can be broadly distributed to all Nigerians.  The educational system must be returned to its former glory and the government must encourage citizens to take up fields relating to agriculture, technology, and the environment so that they can help to fix the environmental problems, rebuild the nation’s agricultural economy, and lure back the middle class.  But, it is not enough to just bring back the middle class. Nigeria has had a history of foreign investment in financial institutions such as banks and the oil industry, but it has yet to attract investments, which can provide substantial employment for its people.  The Nigerian government must encourage Nigerian citizens to invest in their homeland and provide employment through technology, agriculture, refineries and manufacturing because money alone is not enough.

Many doubt the success of the democratization of Nigeria.  Many are just waiting to see what happens.  For better or for worse, the people of Nigeria have spoken.  They have the right to live their lives free of human rights abuses and corruption.   Now that they have spoken, it is up to the people of Nigeria, the international community, and the multinational corporations to ensure that Nigeria makes a successful transformation.




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