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Shell Case

Case Study: Shell in Nigeria
September 2006

Question 1

What specific political risk problems does Shell face in Nigeria? What are the underlying reasons for these problems?

The political risk problems in Nigeria stemmed from one of the main critical issues related to the social imbalance, inequality and discriminations of the minorities among the huge diversity of ethnic backgrounds in Nigeria. The severe intense ethnic conflict situation and circumstances in Nigeria was as such that it was highly challenging and extremely difficult to unite 250 different ethnic and linguistic groups in the country.

As Shell announced the mega oil and gas investment in Ogoniland, exploitation of the environment devastated by pollution caused by Shell's oil spills and gas flaring in the region subsequently led to extensive water pollution, acid rain, significant greenhouse gas emission and respiratory problems. This caused anger and protest by the Ogonis that resulted in violence and political unrest in the community. It was obvious that the Ogonis, who depended on farming and fishing, were robbed of their livelihood through the operations of Shell. Shell maintained close relationship with the military government, managed by Sir Phillip Watts for the political benefits in the quest to exploit the riches from the land (Centre for Constitutional Rights). The military rule demanded huge amounts of royalty payment from the oil company for ‘protection'. Much of the instability in Nigeria stemmed from the economic effects of the severe civil wars, corruption and brutal dictatorship by military governments and economic exploitation. Shell increased violence in the Niger Delta through their reliance on Nigerian security forces, corruption by company's employees and environmental damage.

Environmental activist Kenule Saro-Wiwa who formed the Movement for the Survival of People, MOSOP, had extensively campaigned for political self determination of the great share of...