Over the past years,there has been a shift by oil and gas companies to Corporate Social Responsibility(CSR). CSR is a self regulatory policy whereof businesses monitor and ensure it actively complies with the spirit of the law,ethics and international rules. In the case of oil companies, most have failed to effectively meet its economic,social and environmental responsibilities.
Thus often discrediting the genuineness and reliability of the CSR policy most especially considering the fact that the rule of every game; is ”business” as noted by Milton Friedman: ”… here is one and only one social responsibility of business-to use its resources and engage in activities to increase its profit so long as it stays within the rules of the game… ”Once such a rule takes over the primodial rules of CSR,then the cliche ” a paradox of plenty” justifiably fits to support the positions of other proponents who argue its merely a window dressing. For every business has the capacity to increase or decrease the quality of life by creating profits or negative externalities such as pollution,accidents and oil spills in an oil company stemmed as forms of ineffiency in production.
In as much as businesses must obey the law,in the absence of such law,they ought to act ethically to avoid any damages forming the triple bottom line-economic,social and environmental(Corporate Social Responsibility). The efforts of oil companies are commendable towards leveraging the standards of CSR;that notwithstanding as proven in the preceding oil and gas cases under study; such shifts does not denote a tangible change in its operations as an oil company and its public relation exercise due to setbacks of globalisation influenced by the variation,ineffectiveness and unenforceability of local and international aws and treaties governing oil and gas exploitation within different parts of the world.
Therefore,such cases ring a warning bell, serves a lesson and a challenge to future investors,oil companies and indigenous peoples in the ”new” Arctic on the flaws,amendments and challenges expected in the field once an oil company is issued a licence for exploitation. Besides ascertaining the degree of applicability of the policy of CSR by the oil companies,a number of other pertinent questions arises such as ”Will the melting of the ice cap in the High North pose security threats due to access to oil and gas extraction?
Threats due to oil spills(Environmental risks)? Threats as to ‘self interest’ profit-making and other illegal and unethical practices such as overstating earnings and reserves(Economic risks) and Threats to the indigenous people such as displacement,unemployment and death (Social risks). Moreover, mindful of all the international conventions and national laws that bind and guide mineral(oil and gas) exploitation such as the Stockholm declaration 1972,the Bonn Conventions 1969,the Arhus Convention and the Stockholm Convention 2001 just to name a few,some oil companies still play the window dressing game despite the repercussions.
In the preceding paragraphs,some leading cases that stand the test of time will be closely examined to unravel the creditability and questionable character of oil and gas companies while underpinnning its flaws and also bring to the fore lessons for its stakeholders in the ”new” Arctic. One of the first cases to be analysed is the Exxon Valdez case. It is one of the most disastrous oil incidents that tested the abilities of local, national amd industrial organisations spilling more than eleven million gallons of crude oil off the coast of Laska in US records.
The respondent,Joseph Hazel,captain of Exxon Valdez was convicted of a misdemeanor charge of negligent discharge of oil with a fine of $50. 000 and a sentence of 1000hrs of community service. What is more is the fact that,though not charged on alcohol abuse,Hazelwood has a history of alcohol abuses which makes the oil company liable for his negligent act;for the charges metted do not correspond to the harm caused. For instance it posed a threat to the Alaskan fishing industry and other species like the migratory shore birds,waterfowls,sea lions and varieties of whales.
With the aid of the US Coast Guard and Alyeska, cleaning measures were taken care of promptly. Significantly,this incident necessitated the passing of the Oil Pollution Act 1990. As a contrary, the Piper Alpha Disaster case which occurred in an extremely forgiving corporate climate of the time whereof despite the heavy destruction of the Piper Alpha due to a conflaguration of fire and explosions,provoked a spontaneous popular demand or public interest (Scots) that the State should take action.
Surprisingly, the Lord Advocate,Fraser decided not to penalise Occidental Petroleum for the damages noting that: ”public interest would not be served by prosecution”. Unlike the prevailing cause of this disaster was due to negligence by Occidental Petroleum to act in the interest of its employees, its lack of corporate accountability and influence on the CSR policy. In effect, Mathias Becks notes: ”Occidental,even before the Piper Alpha disaster,was not a company with a pristine safety record.
On the contrary,in 1984 it had narrowly escaped a near disaster that required a mass evacuation of its platform. In 1987,it experienced a fatal incident caused by key factors that were present in the later disaster. The company had to learn from its mistakes even though it was fined on a number of occasions prior to the Piper Alpha explosion. This corroborates the frustration of the Scots based on the judge’s ruling despite the call to preserve the pristine nature. In addition,the Shell -Nigeria case has unravelled charges of human rights violations.
Worthy of note is the fact that,its activities in the mid-1990s,where totally ruthless. According to World bank report,”oil activities have undoubtedly caused significant and extensive environmental degradation in the Niger Delta region. ”Hence posed environmental risks due to oil spills and pollution which affected the crops and food market of the ogoni people. Social risks stemmed from the fact; most of the ogoni people were displaced due to pipeline construction or died as a result of riots that ensued.
No doubt; after over fourteen years of judicial proceedings on grounds of complicity in human rights violations against the Ogoni and the execution of Ken-Saro-Wiwa,the U. S. Federal court (June 8,2009) under the U. S. Alien Tort Statute and the Torture Victim Protection Act forced Royal Dutch Shell to pay a sum of 15. 5 million out-of-court settlement and the establisment of a 5 million Trust Fund to benefit the Ogoni people. Besides Wiwa v. Shell lawsuit, another law suit: The People of Nigeria v. Royal Dutch Nigeria was filed in the Netherlands Shell’s headquarters with the intervention of Friends of the Earth Netherlands by four Nigerians,fishermen and farmers whose lands and livelihood suffered major damages from oil spills which resulted to the contamination and pollution thus requested clean up of the soil and the purification of its water resources.
Jurisdictionally,the court ruled itself competent to hear the claim against Shell Nigeria due to its connectedness to as Royal Dutch Shell,RDS as parent company and owed the ogani people a duty of care to such environmental breaches caused by its subsidiary. 22]RDS refutes liability on the grounds that it was not present at the time of its occurrence. That notwithstanding,this lawsuit provokes plenty of unanswered questions such as questions as to which plaintiffs have standing,whether or not RDS can be held accountable for acts of Shell Nigeria and also on point and choice of law;for the defendants may wish the court to apply Nigeria law(weak) unlike the plaintiffs will wish the application of Dutch law.
In this regard,the EU Regulation on the Law Applicable to Non-Contractual Obligations fits in this context because it adds a distinctive environmental principle that permits anyone seeking compensation for extraterritorial environmental damage the options to make its claim on the basis of the law of EU Member State wherein the company to be sued is incorporated granted such a member state could be considered as the country where the event giving rise to the damage occurred(the parent company).
Paradoxically,it is not clear whether or not this rule applies in transnational tort cases such as the Dutch Torts law. Thatnotwithstanding, one of the three grounds for tortuous liability could be invoked under international law(hard or soft) based on the legal doctrine of indirect effect : violation of a rule of unwritten duty of care. Besides,should Nigerian law take precedence,the Dutch court could still apply international environmental law by ignoring rules of foreign states if it violates international law.
In sum,”soft law such as codes of conduct might be relevant to support constructing the violation of the duty of care. Given contemporary calls for the corporate sustainability,many companies have either volunteered to adhere to codes of conduct and /or have their own ones in place …. through interpretation of a rule of unwritten duty of care with reference to such codes of conduct,they might be uplifted from a merely public relations effort to a useful purpose in transnational tort law. ”
Based on the two cases cited,a defence counsel for Royal Dutch Shell objects that ” U. S and international law do not allow corporate liability for alleged offences…the Post-World War Two Nuremberg tribunals covered prosecutions for individuals,not corporations”. These points of law showcases the paradoxes associated with oil and gas exploitation. Furthermore,British Petroleum,BP is considered a champion and a driving force for the shift to CSR because its success is its CSR vision which amongst other is geared at doing positive actions for the global environment,efficient use of natural gas and cement the connection between responsibility and profitability.
Unfortunately,BP was the first company to elicit a lapse in environmental CSR,the 2006 Alaskan Oil spill disaster to the tune of about 5000 barrels of oil due to its internal corporate culture which is ”dominated by pressure to keep costs down” whereof ”budgeting often took precedence over routine maintenance and… safety. ”Coupled with the 2005 explosion in BP’s Texas refinery due to poor maintenance and safety measures by TAPS; led to the death of 15 and injured 180 workers forcing its CEO John Browne to resign.
The Deepwater Horizon incident occurred in the Gulf of Mexico spilling about 4. 1m barrels of oil over 87 days making it the biggest unintentional offshore oil spill in the history of the petroleum industry which stemmed from a sea-floor oil gusher due to an explosion of the Deepwater Horizon, which drilled on the BP-operated Macondo Project which killed some workers and injured others. 35]A relief to cap the gushing well head was only effected in July 2010 and completed in September 2010 with the Federal government styling it ”effectively dead”The damages caused by the spill were extensive to marine and wildlife habitats,the Gulf fishing and tourism industries despite measures taken and dispersants used to protect the beaches,wetlands and estuariesl.
Conditions worsen as scientific reports indicate the presence of immense invisible underwater plumes of dissolved oil Worst of, in January 2011,it reported that tar balls continue to wash up, wetlands marsh grass remains fouled and dying, and crude oil lies offshore in deep water. A research team found oil on the bottom of the seafloor in late February 2011 that did not seem to be degrading. In October 2011, report stated that dolphins and whales continue to die at twice the normal rate.
Just as the case of Alaskan case,BP was liable on grounds of a series of cost-cutting and the lack of better safety measures offshore. Thus concluded that the spill was not an isolated incident caused by “rogue industry or government officials”, rather “The root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur”. BP admitted the claim which led to the set up of a $20 billion fund to compensate victims of the oil spill.
To July 2011, the fund has paid $4. billion to 198,475 claimants. In a final investigative report,it was stated that the main cause was the defective cement job, and Halliburton, BP and Transocean were liable in different ways. No doubt,on Wednesday 22nd February 2012, a judge of the federal court ruled BP and its partner liable for civil penalties under the Clean Water Act unlike some hold BP’s partners are only liable per-barrel civil penalties for oil discharged from the well though full trial is scheduled for 27th February.