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Forum: Special Conference on Dangers of Development
Issue: Preventing oil companies from conducting destructive environment
exploitation activity.
Student Officer: Joanna Krysiak
Position: President of Special Conference on Dangers of Development
Introduction:
Emerging economies, also known as "developing countries", "Third World" countries,
"emerging market economies", "emerging market systems" and "emerging markets", hold the
majority of the world’s proved oil reserves, and account for the majority of the world’s
production of crude oil. The exploitation of oil remains a priority for the governments of
emerging economies, as the revenue that comes from subsurface resource exploitation is a
major source of foreign income for emerging economies, of which the majority are among the
poorest countries in the world, and have large foreign debts. The oil industry is also a source
of taxation revenue and employment, and offers the opportunity for the transfer of technology
from developed to developing countries. Oil and gas exploration and production has the
potential to cause severe environmental degradation, not only to the physical environment,
but also to the health, culture, and economic and social structure of local and indigenous
communities. However, environmental laws in emerging economies are often ineffective
because they are substantively inadequate and/or because they are inadequately enforced.
Definition of Key Words:

EMS - Environmental Management Systems - are procedural rules for the organisation
that assist managers in preventing and detecting environmental violations. They assist
managers to comply with existing legal requirements, and to define management
processes to be followed to control the impact of a corporation’s activities on the
environment.

GMOU - Global Memorandum of Understanding process, which is designed around
more active community participation as partners.

CRS - Corporate social responsibility is a corporation's initiatives to assess and take
responsibility for the company's effects on environmental and social wellbeing. The
term generally applies to efforts that go beyond what may be required by regulators or
environmental protection groups.

The Ogoni Kingdom - also known as the Ogonis are one of the many indigenous
peoples in the region of southeast Nigeria.
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 GGFR - The World Bank’s Global Gas Flaring Reduction Partnership - provides a
platform for oil producers, importers and oil companies to promote joint efforts to
increase the use of natural gas associated with oil production and thus reduce flaring
and venting.

UN Global Compact - is a voluntary corporate responsibility initiative which commits
organizations to including those principles in their strategies and decision-making
processes.

EITI - Extractive Industries Transparency Initiative is an international organisation
which maintains a standard, assessing the levels of transparency regarding countries’
oil, gas and mineral resources. This standard is developed and overseen by a multistakeholder Board, consisting of representatives from governments, extractives
companies, civil society organisations, institutional investors and international
organisations. EITI Standard is implemented in 48 countries. It consists of a set of
requirements that governments and companies have to adhere to in order to become
recognised as 'EITI Compliant'.

EIB - The European Investment Bank the long-term lending bank of the European
Union – is involved in European financing in Africa as the ‘investment facility’ of the
European Development Fund, the main instrument for providing EU aid to the African,
Caribbean and Pacific states. The EIB can play a role in addressing environmental
and social impacts of oil production by granting loans for projects that mitigates such
impacts and through the application of socially responsible investment standards to its
lending.
Key issues:

There is a need for increased cooperation and coordination to mitigate negative
impacts of oil industry activity among all stakeholders. Governments, oil companies,
civil society and communities must positively engage and work more closely together.

In oil-producing countries, the main challenges relate to the lack of political will and
capacity to implement and enforce national regulations, highlighting underlying
governance challenges that need to be addressed.
 Many energy companies are new or unacquainted with drilling in sensitive seabed
areas, are unaware of requirements, rules and best practices for operating (drilling,
anchor handling etc.) and have limited environmental knowledge.
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
While oil companies are implementing certain measures to address these impacts,
corporate social responsibility activities largely remain piecemeal and short-term,
community engagement is inadequate and requirements for accountability and
transparency are either insufficient or not enforced.

Negative impacts of the oil industry are a major concern threatening not only the
health of local communities, but also the livelihoods they depend on in countries where
oil exploitation takes place.

Oil pollution caused by spillages from the oil have caused the massive destruction to
farmlands, sources of drinking water, mangrove forest, fishing grounds and declination
of fish, crabs, molluscs, periwinkles and birds. Large areas of mangrove forest have
been destroyed over a wide area affecting terrestrial and marine resources. Some
past spills have necessitated the complete relocation of some communities, loss of
ancestral homes, pollution of fresh water, loss of forest and agricultural land,
destruction of fishing grounds and reduction of fish population.

In the Niger Delta, CSR has been a matter of trial and error: early efforts by oil
companies to achieve positive impacts were found to create greater divisions and
inequalities in and between communities, creating conflict over ownership and
compensation. Projects were often poorly designed and unsustainable, and the main
beneficiaries tended to be local elites rather than the most vulnerable.

Oil pollution has impacted on the Ogoni community in several ways. These are
grouped into three interrelated impacts; Socio-Economic Impacts, Physico-health
impacts and Adverse impacts on Biodiversity.

The damage from oil and gas operations is chronic and cumulative, and has acted
synergistically with other sources of environmental stress to result in a severely
impaired coastal ecosystem and compromised livelihoods and health of the region’s
impoverished residents.
 Disagreements over the causes and extent of oil spills are in part due to the fact
that companies may track and report pipeline losses, but these figures do not
necessarily correlate to the quantity of oil spilt due to a burgeoning industry in oil
theft. While impact on the environment and livelihoods is the same regardless of
cause of the spillage.
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
Most fishing in Angola’s northern province Cabinda is artisanal and has been going
on for three generations or more, without any commercial value chains attached.
The whole of the sea space around Cabinda province is negatively affected by oil
production. There is little physical space for fishing already and oil production
further constrains this.

The Niger Delta is a low-lying area, where oil spills can spread rapidly through the
fresh water swamps, mangrove swamps, lagoon marshes and tidal channels and
the complex water flows can make controlling and cleaning spills more difficult. The
water-saturated soil enables spilt oil to sink into aquifers . As a result, local
communities have to deal the effects of Oil Companies’ activities on the
environment, health and development in Africa with polluted drinking water.

Governments and companies do not necessarily report all spills and there are
examples where spillages were only reported by chance a month later. This is in
part due to the policy of the Ministry of Environment of only discussing spills over a
certain volume with the oil majors. Spills below this threshold are at risk of being
hushed up. The source of the oil spills is also at times unclear.

The impact on marine organisms and ecosystems already begins with the
geological and geophysical investigations of the seabed, where the objective is to
determine its oil and gas-bearing capabilities. Offshore seismic surveying is based
on the generation of seismic waves which are reflected off the bottom of the sea.
Major Countries and Organizations Involved:
Nigeria
United Kingdom
Russian Federation
American Petroleum Institute - The largest U.S trade association for the oil and natural
gas industry. It claims to represent about 400 corporations involved
in production, refinement, distribution, and many other aspects of the petroleum industry.
Australian Petroleum Production and Exploration Association - is an
Australian industry association representing companies which explore and produce oil
and gas in Australia. APPEA is a non-profit organisation.
The United States of America
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Angola
Royal
Dutch
Shell
commonly
known
as Shell,
is
an Anglo–
Dutch multinational oil and gas company headquartered in the Netherlands and
incorporated in the United Kingdom.[2] Created by the merger of Royal Dutch Petroleum
and UK-based Shell Transport & Trading, it is the fourth largest company in the world as
of 2014, in terms of revenue,[1] and one of the six oil and gas "supermajors”.
China
Norway
Cameroon
Chad
EIB
Gabon
Republic of Congo
Timeline of Events:
1859 - Colonel Drake drilled a 70 feet well in Titusville, Pennsylvania and discovered oil.
1957 - Oil was discovered in the Ogoni territory Shell found oil in the Ogoni community
1990 - Up until this date the social movements of the growth of militancy thereafter,
companies did not regard community matters as their responsibility.
2003 - Chevron re-evaluated its community relations management approach which led to the
launch of the Global Memorandum of Understanding.
2004 – Since this year fishermen have repeatedly reported that trawl catches decrease when
a seismic ship is operating in the area. The potential impact by pollution and sedimentation
due to drilling operations is high because of their stationary habits.
1993- 2007 - In Ogoni, there has been a recorded 35 incidences of oil spills.
2010 - Africa accounted for 13% of global oil production, of which sub-Saharan Africa (the
focus of this study) contributed 7.25%
Evaluation and Previous Attempts:
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1990 - Government Pension Fund – Europe’s largest pension fund worth over $500 billion –
and the associated Council on Ethics. The pension fund is financed through the surplus
wealth generated by Norwegian petroleum income.
2001-2010 - the EIB invested just over €5 billion in Africa, 85% of which went to individual
countries while the remainder included loans to African regions or the continent. Nigeria was
the largest country recipient during that decade with around €470 million, including a €240
million loan, the largest EIB loan in Africa to date, provided to three Nigerian banks (Firs
tBank of Nigeria, Guaranty Trust Bank and Stanbic IBTC) to facilitate private and public
private partnership infrastructure. Other lending included small and medium-scale health and
education projects and a cement factory. None of the projects were specifically linked to the
oil sector.
2000 - the federal government established the Niger Delta Development Commission
(NDDC) amidst opposition from activists in the region that the commission would not be
accountable to the communities, and would suffer from mismanagement and corruption.
2002 - The GGFR was launched. It is a public-private partnership designed to bring together
representatives from all the stakeholders affected by gas flaring. Partners include
government representatives from oil producers
2005 - The Norwegian Agency for Development Cooperation’s Oil for Development
programme assists developing countries in managing their petroleum resources. The
programme has co-operated in seven core countries in the long-term, and, in a limited
capacity, in a further 13 states.
2005 - Petroleum Governance Initiative is a bilateral collaboration between the Government
of Norway and the World Bank. It is looking to develop petroleum governance policy as well
as supporting developing countries to implement appropriate petroleum governance
frameworks.
2010 - the EU adopted another regulation to address illegal timber imports – the ‘EU timber
regulation.
2010 - One of the most important recent regulatory developments to increase transparency of
the oil industry which was signed into law by US President Obama. The Act demands all US
listed/registered extractive industry companies to disclose payments to governments in SEC
filings starting in 2012/13. This new law is a success for the PWYP coalition after a five year
effort. The legislation will cover around 90 percent of internationally operating oil companies –
US and foreign.
2011 - in the EU, European Council President Van Rompuy and European Commission
President Barroso in a joint statement outlining priorities for the G8 summit in Deauville,
announced that the Commission would table legislative proposals in October that include the
obligation for companies to publish information about their activities in support of the EITI.
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Possible Solutions:

Regulations in oil-producing and importing countries, community engagement, and
international standards and initiatives. Regarding regulations in oil-producing
countries, many feel that implementation and enforcement are the main constraints
rather than the regulations themselves.

Multiplicity of standards, guidelines and practices, and to establish standardised
performance indicators and reporting formats in the international oil industry, is to
develop a self-regulatory code of conduct for the international oil industry. Such a code
could be based on the mechanics of the worldwide chemical industry’s Responsible
Care program, which is the most sophisticated self-regulatory environmental, health
and safety code in existence.
.
National and regional institutions could be strengthened to provide protection against
human rights abuses and ensure corporate accountability. The strengthening of these
institutions and the promotion of a rights-based approach to environmental justice
therefore deserves concentrated attention and efforts by all actors in the industry.


The European Union and European companies could promote the development and
diffusion of cost-effective, locally usable technologies.

Promote technology solutions, target EU development assistance, enhance
transparency of oil operations, strengthen producer country measures, and build
partnerships between the stakeholders.

Promote greater revenue transparency are an important step that needs to go hand in
hand with a push for revenue management and a greater emphasis on preventing
trade in oil sourced illegally or from conflict areas.

Oil-producing countries could increase revenue transparency, more equitable and
effective revenue sharing and use, a better balance of power between ministries, and
greater citizens’ participation.

Nobody has the ability to respond to and effectively contain or clean up major oil spills in
the Arctic. Encouraging governments and industry can help to support research into risklowering technologies, and adopt higher standards for spill prevention and clean up
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Bibliography:
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“Environmental Impacts of Oil Exploration and Exploitation in the Niger
Delta of Nigeria” Global Journals.org
<https://globaljournals.org/GJSFR_Volume12/2-Environmental-Impactsof-Oil-Exploration.pdf>
“INTERNATIONAL ENVIRONMENTAL STANDARDS IN THE OIL
INDUSTRY” Ugenda and Petroleum
<http://ugandapetroleum.com/linked/international_environmental_standar
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“Environmental risks when extracting and exporting oil and gas.” Balleona
<http://bellona.no/assets/fil_Chapter_3._Environmental_risks_when_extra
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ENVIRONMENT, HEALTH AND DEVELOPMENT IN SUB-SAHARAN
AFRICA“ European Parliament
<https://www.chathamhouse.org/sites/files/chathamhouse/0811ep_report
_0.pdf>
“Drilling in sensitive areas” DNV.GL
<http://www.dnv.com/binaries/Drilling_in_sensitive_areas_DNVGL_tcm4533625.pdf>