ROYAL DUTCH SHELL – CASE STUDY PAPER 1
The company is a major global player in the energy sector. Indeed in the development of the ‘global company’, the oil and gas sector by virtue of the need to search for reserves worldwide, has probably led the way. Shell now operates in 135 countries and therefore has a massive effect on the economies of many of these countries.
This case study highlights two events which happened in different parts of the world in the mid nineteen-ninety’s, involving two of the subsidiaries of the Royal Dutch Shell Group. In the minds of some of the stakeholder groups these events represented a trend in the management of the company sufficiently worrying that a series of high profile campaigns were mounted against it, the eventual effect of which was to mark a sea-change in the way the company reported its activities, and if we accept the reports, in how it carries out its business. In this case study we will examine these two events to try and understand what motivates companies to alter long held approaches to business practice, and what strategies are employed by them to regain lost confidence.
1. The Case of SPDC in Nigeria
The Niger River Delta, a 70 000 square kilometer region on the south western coast of Nigeria, West Africa is an important life sustaining natural resource. It contains Africa’s largest wetland and one of the Africa’s largest coastal mangrove forests. Nigerians has cultivated its rich soil producing rice, sugar cane, cassava, palm oil, yams and beans to feed families and communities for decades. It has more varieties of fresh water fish species than anywhere in West Africa.
The Niger Delta also contains estimated proven oil reserves of 22.5 billion barrels of the world’s best quality crude oil and an estimated 124 trillion cubic feet of natural gas, making it the worlds 9th largest source.
Shell (under the guise of the Shell Petroleum Development Company) obtained an exploration license in Nigeria in late 1939, after two years of geological surveys. The first oilfield was established in 1956 and a steady build up of production facilities has seen production rise from 6.000 barrels of crude per day in 1958, to around 1,000,000 barrels per day, today.
Clearly, the removal of a million barrels of oil per day requires a massive industrial infrastructure in terms of land use for drilling, pipelines, storage facilities, transport, chemical use, and the like ( and bear in mind that Shell are only one of a cartel of companies involving the likes of Mobil, Agip, and Elf)[footnoteRef:1]. [1: Today, oil sales account for more than 40 percent of GDP, 80 percent of the government's budgetary revenue, and more than 95 percent of exports. With an average production of approximately 2 million barrels per day, Nigeria is one of the world's largest oil producers. ]
Throughout the 1970’s and 1980’s there was increasing concern being expressed by the peoples of the Niger delta that despite increasing oil production...