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Shell Oil in Nigeria

In: Business and Management

Submitted By hannah00hannah
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In 1890, Aeilko Jans Zijlker located oil in the Dutch East Indies and found Royal Dutch. The company partnered with Shell 17 years later, keeping 60%. Shell took care of the transportation and storage while Royal Dutch processed and refined the oil. The companies became world leaders in the oil industry after WWII. Shell partnered with British Petroleum and unwillingly, with the Nigerian government that ended up owning up to 35% of the partnership. Nigeria was Africa’s most highly populated nation. The Nigerian National Petroleum Corp owned 55 percent of the Shell Petroleum Development co of Nigeria Limited joint venture. They settled similar deals with other oil companies like Chevron, Texaco, and Mobil.

In the late 90s, oil counted for about 90% of the country’s foreign exchange profits and placed it among the top 10 oil producers and distributers in the world. In the Niger Delta, which most oil was extracted from, 20 tribes could be found. The Nigerian government had promised to invest to help these tribes but the organization in charge of the project claimed to have never received funding from the government. On the other hand, Shell had spent about $22M in community development projects to appease the tribes near the Niger Delta. Around that area, because of oil extraction, refining, storing, and transportation, the environment had been severely damaged. The people provoked oil spills in response to the environmental damage and with the intention of generating spill-cleaning employment opportunities.

Ogoni is one of the 20 tribes in the Niger Delta. The Ogoni Bill of Rights was published and blamed the government for various injustices. Ken Saro-Wiva emerged as a leading spokesperson and peaceful protestant for the tribe. Shell was asked for 10 billion dollars to repair damages and this caused tension. Saro-Wiva was controversially arrested and trialed. The media was in favor of the Ogoni tribe and partnering with human rights groups, pressured Shell to fight for the cause. While no other company did major efforts to help, the managing director of the joint venture, Brian Anderson, publicly stated in favor of the tribe’s rights and privately pointed the issues out to the government.

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