Social Responsibility and the Sustainable Economic Development of Oil and Gas Producing Communities in Nigeria.

Abstract

Abstract In the this century, the social responsibility of oil and gas companies will include not just health, safety and environment, but also the sustainable economic development of host communities. Today, in most host communities around the world, local community organizations protesting environmental pollution and economic underdevelopment are making it impossible for oil and gas companies to operate without engaging in social engineering or economic development activities. In Nigeria, the local community struggles have interrupted operations on numerous occasions leading to declarations of force majeure. In the last five years, these interruptions have become widespread, better organized, and more violent. Company workers have been kidnapped for ransom, hostages taken, flowstations and other surface facilities occupied and access roads to plants and offices blocked. This paper examines the struggles of local grassroot organizations for sustainable economic development and environmental conservation in the oil and gas producing areas of the Niger Delta of Nigeria. The impact of oil and gas operations on the environment and the development of the communities are also examined. The linkages between environmental conditions and sustainable economic development are highlighted. The relationship amongst the host communities, oil companies and Federal Government of Nigeria is analyzed in detail. A project economics model that captures the cost and benefits of investments in sustainable economic development is developed. The paper concludes that the social responsibilities of oil companies should encompass the sustainable economic development of host communities. An economic evaluation model that captures profitability from the perspertives of the oil companies, the host communities, the Nigerian government and the shareholder is recommended. This approach encourages the cost-effective participation of the inhabitants of the host communities, the oil companies, the shaeholders and the Nigerian government in the economic development process. A balanced growth strategy is proposed for the sustainable economic development of host communities in the Niger Delta of Nigeria.