Managing political risk : corporate social responsibility as a risk mitigation tool. A focus on the Niger Delta, southern Nigeria

[摘要] ENGLISH ABSTRACT: The petroleum industry concern itself with natural resource extracting activities which are highlysensitive for contributing to environmental degradation by oil spills or gas flaring. A largeproportion of the world's oil and gas reserves is located in developing countries where thepresence of multinational oil corporations (MNOCs) is high as host countries often lack theinfrastructure needed or are financially unable to conduct extracting operations on their own. TheNiger Delta in southern Nigeria has one of the largest oil reserves in Africa and is one of theworld's leading oil exporters. MNOCs like Shell, Chevron, Total, ExxonMobil and Statoil aresome of the firms present in the Niger Delta region. The oil-rich area in the developing countryposes high levels of political risk for the MNOCs. Local grievances, paired with environmentaldegradation and human rights violations by the oil companies, have led to a tense relationshipbetween the local stakeholders and the MNOCs, with so-called petro-violence at the center of theoil conflict. Frequently, oil installations are sabotaged and crude oil is stolen, causing majorfinancial losses for the firms, and armed attacks on oil facilities and kidnapping of MNOCs' staffconstitute the majority of political risks facing MNOCs operating in the Niger Delta.This study investigates how MNOCs can successfully manage such political risks, providing abusiness advantage in a challenging business environment. By addressing the companys' ownbehaviour, the research analyses if social engagement through corporate social responsibility(CSR) can mitigate political risk in the Niger Delta. The study looks at two different MNOCsoperating in the Niger delta, Shell and Statoil, and scrutinises their methods of implementation oftheir CSR initiatives. The difference in approaches to CSR is elucidated where Shell claims ithas repositioned its approach from a top-down angle during the first years of conducting CSRprojects, to a more stakeholder-oriented approach. Yet, their approach is still found to carryelements of the previous top-down approach, and has not resulted in satisfactory performance inrelation to stated goals. Statoil undertakes a stakeholder-oriented bottom-up approach, executedwith a high level of commitment. The stated CSR goals have to a great extent been met. Byassessing the two companies' CSR strategies in relation to the frequency of political risksexperienced by each MNOC, the study finds that CSR has the potential to mitigate political riskdepending on the approach to implementation, and could serve as a political risk managementstrategy.

[发布机构] Stellenbosch University