Impact Of The Energy Industry On The Oil And Gas Industry

Good Essays

NNPC was founded in 1977 to manage Nigeria’s interests in the oil and gas industry. Prior to this, the oil industry was run by the international oil companies (IOCs), restricting the state’s involvement to collection of production leases, exploration license fees and regulation. In 1971, Nigeria joined the OPEC, whose major requirement was that the oil industries in the member states were to be nationalized. On the heels of that came a nationalization program which required the Nigerian government to own 60% equity of all investments made in the economy. In line with this, the NNOC (Nigerian National Oil Company), a progenitor of the NNPC, was established to handle the country’s major stake in the oil industry with respect
…show more content…
If properly managed, exploitation of these resources can yield huge revenue streams that would alleviate poverty and encourage growth. Weak or bad governance however, would escalate crime, corruption, increase poverty and ultimately erode human rights. This however, is no excuse for oil and gas companies operating in such an environment to shirk their responsibility in respecting human rights. This then makes it all the more challenging. Managers therefore, should be conversant with the elements within their environment that wield power, and can impose their desires on the organization. Power and urgency should as a matter of high importance, be dealt with for managers to deliver the legal and moral interests of all legitimate stakeholders (Mitchel, et al., 1997).

In managing this paradox, there must be trust existing within all concerned parties i.e. the JV partners (NNPC and CNL) and all relevant stakeholders, and that the parties concerned trust that the partners will conduct themselves in a societally responsible manner, up to denying itself profits (De Wit, 2014). CNL for example, is known to operate by an ethical policy which states; Do it safely or not at all. There’s always time to do it right (Chevron, 2015); and this cuts across all its intents from crossing the pedestrian walkway to its deep drilling operations. This has been distilled into the organizational culture and many
Get Access