Shell Nigeria Problem

In context of this first phase of the Final Project for the Module 'Being Leader' it is important to briefly understand the background of Oil Spill in Nigeria is association with role of Shell Nigeria.

Background

Royal Dutch/Shell, a multinational oil corporation based in Europe with her marked presence in over 90 countries with workforce of over 93,000, has been engaged in Nigeria in producing oil and gas from land and swamps in the Niger Delta and from deep-water reserves some 120 kilometers off the coast. A local operating company, Shell Petroleum Development Company of Nigeria (SPDC) is the largest private-sector Oil and Gas Company in Nigeria established in 1956 as a result of a joint venture between the government-owned Nigerian National Petroleum Corporation - NNPC (55%), Shell (30%), Elf Petroleum Nigeria Limited - a subsidiary of Total (10%), and AGIP (5%).

SPDC's operations in the Niger Delta are spread over 30,000 square kilometers. SPDC has more than 6,000 kilometers of pipelines and flow lines, 87 flow stations, 8 gas plants and more than 1,000 producing wells. SPDC employs more than 4,500 people directly of whom 95 per cent are Nigerians. Some 66 per cent of the Nigerian staff members are from the Niger Delta.

Shell Nigeria Exploration & Production Company (SNEPCo) operates and has a 55% interest in the offshore Bonga field, Nigeria's first deep-water project. Shell also has a 26% interest in Nigeria Liquefied Natural Gas (NLNG), which exports LNG around the world.

Vision Statement to be the operator of first choice in Nigeria through its commitment to strong economic performance and to every aspect of sustainable development.

Economic Contribution

 $31 billion: revenues from SPDC to Nigerian government from 2006 to 2010.

 $3.5 billion: Shell share of royalties and taxes paid to the Nigerian government in 2010.

 95%: share of revenue after costs that go to the Nigerian Government from each barrel of oil SPDC produces.

 $947 million: value of SPDC and SNEPCo contracts awarded to Nigerian companies in 2010.

 6,000/35,000: estimated direct/indirect jobs created by SPDC and SNEPCo in Nigeria.

 90%: proportion of employees that are Nigerian.

 $161.1 million: SPDC and SNEPCo funds to the Niger Delta Development Commission in 2010 (Shell share $59.8 million).

 $71.4 million: 2010 contribution from SPDC and SNEPCo to community development projects (Shell share $22.9 million).

Fast facts for sustainable development

 $2.1 billion spent on developing alternative energies, carbon capture and storage, and on CO2 R&D over the past five years.

 $13 billion spent on goods and services in 2010 from companies in countries with lower incomes.

 Over $121 million spent on voluntary social investments in 2010.

Figure-1 & Figure-2 are self-explanatory of dedicated efforts of the company in contributing responsibly to sustainable community development programs with environment friendly approach as well as maintaining integrity with its core business values - honesty, integrity and respect for people.

Key Issues of the situation

Kew and Phillips (2007) analysis of unfair advantage gained by the oil companies with adequate support from the then Nigerian government's disinterest in enacting regulatory requirements for oil companies multi-folded the grievances of Ogoni community located on the Niger Delta Rivers blaming for ruthless environmental damages causing severe health care, sanitation and agricultural issues thereby adding woes for the community already suffering from poverty due to government's negligence.

Negligence by the oil companies for demands made by The Movement for the Survival of the Ogoni People (MOSOP') for royalty compensation exposed SPDC's employees to aggravated and bullied attitude causing kidnaps and ransom demands for employees creating psychological barriers for employees' performance.

Strenuous law and order situation could have prohibited new entrants for partnerships and thus created lost-revenue opportunities for the government.

Oil spill by various other oil companies including SPDC, tarnished their global repute allowing governments, environmental agencies involvement in out speaking the issue requiring private companies spearheading their strategy focused to act socially responsible (Rondinelli, 2007) thus shaping-up new challenges for creating opportunities for social investments by convincing varied nature of investors.

Implications of Stakeholder Theory

The business structure, operating style, governance and sustainability model of the SPDC, translated into facts and figures, provide thorough resemblance with "normative approach" of Stakeholder Model as highlighted by Donaldson, T. & Preston, L. E. (1995), where relationships among stakeholders or partners are at equilibrium. This approach categorically defines the Do's and Don'ts rules for moral guidelines for company's operating and management fundamentals empowering each stakeholder facilitating in company's foreseeable path where each stakeholder is classified by their vested interests and basic values and recognized by authenticity of the contractual obligations and the influence a stakeholder can make. Therefore, company may distinct between stakeholders with no influence and non-stakeholder with substantial influence to determine appropriate course of action for influencers and stakeholders.

Theorizing notion of this approach also sustain company's response to social and ethical values governed through corporate decisions reflection of which not only enhances transparency of information but provide symbolic advantage of being a 'value-added' organization.

Leadership Theories

Within the meaning of the situation discussed earlier, this section demonstrates various leadership theories which may allow robust understanding with lead and leadership parameters. Due to extensive research on leadership theories, including the earlier demonstrated contingency and situational theory, only prominent