CHAPTER ONE INTRODUCTION 1.1 Background to the Study

Oil production, exploration and exploitation in Nigeria started as far back as 1937. However, it was not until January 16, 1956 that oil was found in commercial quantity at Oloibiri in former old Rivers State now Bayelsa State at a depth of 12,008 ft. (Mabogunje1975:2). This discovery at Oloibiri led to subsequent discoveries at Afam in November 1956, Bomu, Imo River and Ebubu 1958-1959. Shell, a major player in the oil industry with an initial investment of £20million and a production of about 4000 barrels per day shipped her first cargo of Nigerian crude from Port-Harcourt in February 1958. After shell came other new entrants in the industry. This resulted in sporadic increase in the volume of exploration, especially seismic survey tests drilling (Mabogunje 1975).

Since the discovery and production of oil in commercial quantity, the sustained activities of these multinational corporations have continued to impinge on the natural environment and social setting of the oil producing communities, whose aspirations sharply differ from the objectives of the foreign investors. These processes of oil prospecting and production have drastically changed the economic landscape of the areas they occur.Oil today serves as the main source of national income, provides employment and also displaced agriculture as the main foreign exchange earner.

The profit centered Multinational Corporations (MNCs)on one hand and the poverty stricken rural populace on the other provided a polarized situation evidenced in protestations, hostilities between management and host communities.The situation appears more harrowing as it sometimes degenerates into full-blown crises. When such crises occur, the host communities suffer irreparable losses just as the oil companies suffer loss of huge revenue through disruption of operations. This situation raises agitations in the public minds. It is suspected that there exist conflict of interest between the oil companies and the host communities. The unanswered question therefore is whose interest is protected?__ the oil company or the rural host communities. It could be safe to say that the connecting life-wire for the conflict situations is the development quagmire which persistently points to the existence of possible rural problems for the oil companies to address. As Bankole (1997) puts it, it is believed that management isolation of themselves from the problems of the rural people can aptly be described as one of social conflict. The foregoing points clearly to the fact that environmental variables play a crucial role in the oil company and oil producing areas configuration.

The oil bearing communities therefore expect a complete and total change of behavior on the part of the oil companies and government and that the prevailing decadent and defective social-economic conditions fully and adequately addressed. Presumably they expect to be touched by the modernity that is so evident in the estates and offices of the oil companies. The people’s lives should change with the availability of such facilities like electricity, potable water, good roads, improved health-care and other good things of life. This should be a joint responsibility between the oil companies and the government.

However, some people hold the contrary view that ordinarily these facilities should be provided primarily by the government of the people. This sheer irresponsibility by the oil companies and it partner (government) as left the economic life of the oil producing areas distorted and their future oblique as long as oil continue to flow from their land. The contemporary experience therefore is that oil producing areas have been paralyzed economically.

Considering the sudden upheaval of rural people’s protestations and demands in recent times for community development supports, it is feared that there is more to the problem of abject poverty in the oil producing communities than meet the eye. It is the existence, precariousness and intensity of these problems of economic development that informs and underscore the need for this research.

1.2 Statement of the Problem

The continued oil exploration and exploitation has subjected the people to “natural alienation” and absolute poverty. Environmental degradation caused by oil pollution, lack or poor corporate social responsibility of the oil companies and the actions or inactions of certain influential elites and political actors all contribute to the poverty in the rural areas in particular and the state in general.

The contemporary experience and overwhelming public opinion is that, the activities of the multinational oil firms constitute a menace to public life in the rural areas. The oil producing areas are economically paralyzed and socioculturally bastardized. The oil companies are accused of being negligent to the social costs of their oil activities in the host communities. This was pointed out by Nwankwo (1987) when he noted that oil pollution has caused the uneasy relationship existing between oil producing communities and the oil firms operating in these rural areas.

The apparent economic underdevelopment of the state inspite of the proliferation of oil production activities and its consequent adverse effects on the host communities engendered the urge to undertake this study. How the interactional processes of oil production activities have positively or negatively impacted the people and the ameliorative measures taken so far by the oil companies and the government.

1.3 Objectives of the Study

The objective of this study is to investigate and ascertain how the prevalent oil production activities in the state has affected its economic development. Also to identify those (palliative) measures taken by the oil firms and government, and management’s sensitivity to corporate social responsibility and social conscience.

Specifically;

1. To evaluate the impact of oil production on land use, agricultural production and the environment in the oil producing areas of Rivers State.
2. To assess the nature of relationship between the oil companies and their host communities in Rivers State.
3. To ascertain the level of corporate social responsibility of the oil companies to their host communities in Rivers State

The outcome of this study is expected to create a directional volte-face and enhanced the working relationship between the oil company and their host communities.

1.4 Research Questions

The following research questions will be adopted to operationalize the objectives of this study. These are:

1. What is the impact of oil production on land use, agricultural production and the environment in the oil producing areas of Rivers State.
2. What is the nature of relationship between the oil companies and their host communities in Rivers State.
3. What is the level of corporate social responsibility of the oil companies to their host communities in Rivers State.
4. What is the impact of oil production on infrastructural development in the Rivers State.
5. What is the impact of oil production on employment, income and poverty level in Rivers State.
6. What is the impact of oil production on human capital development and social life in Rivers State.

1.5 Significance of Study:

Several attempts by different scholars at addressing this subject have been recorded. However,this study aims at spotlighting the present and prevailing decadent, degenerated, exploited and impoverished conditions of Rivers people as a consequence of oil production. The unwarranted suffering of the people in the midst of plenty and the calamities imposed on them by oil companies informed the choice of this research.

More importantly, it is expected that the result of this study will contribute to the existing body of knowledge and be of immense benefit to policy and decision makers in the state.

1.6 Scope of the Study:

By scope, the study covers the entire Rivers State by using ten (10) randomly selected oil producing communities in the state for the study. Inspite of the numerous impacts of oil production, the study will focus on the economic development if Rivers State vis-à-vis oil production activities in the state. Also the research diligently seek to know the impacts of oil production on the physical, ecological environment and the socio-economic life of the people of Rivers State. Furthermore, the scope of obtaining relevant data/information required for this research was limited to the oil producing companies and residents of the state alike

1.7 Limitations of the Study:

The study is limited by the definition of the subject-matter, which is oil production and economic development in Rivers State. Also the characteristic unwillingness of some respondents not to release vital information necessary for the research posed a serious problem. The difficult terrain especially the riverine areas of the state also constituted transportation problem. Moreso, time and fund were major constraints.

1.8 Definition of Terms

The multi-national corporation (MNCs) or trans-national corporations (TNCs) are the foreign “big business investors that operate across national boundaries.

Organizational social responsibility:

This is the obligation of an organization to seek actions that project and improve the welfare of society along with its own economic interests.

Land operations:

Means shell activities on dry cultivable land areas as distinct from activities in the riverine swamp areas of the Rivers State.

Concession areas:

To search for oil in Nigeria, the Federal; government grants prospecting license to oil companies to operate within geographically delineated areas called “concession areas”. Numbered as oil mining lease zones.

Oil mining lease(OML):

This is a permit granted by the Federal Government to the oil company to mine in a particular area. Its duration is usually  20 years, subject to renewal.

Oil pipeline license (OPL):

Is an authority granted by the federal government to oil company to construct oil/gas delivery lines and trunk lines. The duration of OPL ranges from 20-99 years. The OPL warrants the company to store, take, lay pipe and carry oil under or over the surface of the said lands, the petroleum and the products thereof and dispose of the same.

Corporate social responsibility:

A term used interchangeably with the concept of organizational social responsibility as applied to business organization.