CHAPTER ONE
1.0 Background to the Study
The Nigerian oil and gas industry dates back to 1958 when oil was first discovered by Shell D’Arcy at Oloibiri field in the Eastern Niger Delta Basin in the present day Bayelsa State. However, oil prospecting activities go back to 50 years prior to that following exploration operation of a German Company, the Nigerian Bitumen Corporation (NBC), in the Araromi area of the present day Ondo State. The operation, based on the Mineral Survey of Southern Nigeria, resulted in the drilling of 16 shallow boreholes (4.9 metres) on a line of oil seepage now known as the Tarsand Belt, (NNPC Corporate Profile, 2010).
The report had indicated the occurrence of tarry sand (oil sands) in parts of Okitipupa structure (Eastern Dahomey) Benin Basin. This encouraged NBC to drill 15 wells along the onshore area of the basin between 1908 and 1914 following the striking of crystalline basement at relatively shallow depths, which established the presence of several horizons of oil sands, setting the stage for subsequent oil exploration operation in Nigeria.
Shell Oversees Exploration Company, in collaboration with Shell D’Arcy Exploration Company, continued exploration activities between the two World war periods, with geological and reconnaissance and geographical surveys in selected areas across the country in 1937. In 1938, Shell D’Arcy was granted oil exploration license (OEL) by the Colonial administration to carry out exploration activities throughout the country. Between 1951 and 1959, the company, in partnership with Shell BP, had drilled six wells in the Benin Basins.
The first deep test in 1951 (Iho-1 NW) of Owerri into Cretaceous sands on the Northern fringes of the Niger Delta Basin was not successful. By 1955, some 15 dry holes were drilled into Cretaceous prospects with no real oil finds.
However, encouraged by the first oil show in the tertiary Niger Delta Basin (Akata-1 well) drilled in 1953, Shell intensified its search in the basin, and in 1956 made the breakthrough that has come to represent its pioneering success story in oil exploration in Nigeria. The significant find in Oloibiri focused the search on the Niger Delta Basin, setting the trend in oil exploration in the country. Nigeria’s first oil shipment of 5,000 barrels to the international market was in 1958.
In 1959, Shell BP relinquished portions of its onshore license, allowing a number of other oil majors to be granted similar licenses to undertake oil exploration in Nigeria. The Benin Basin was further explored in the 1960 and 1970s due to the surface evidence presented by the oil sands and heavy oil.
Those granted the initial license in 1961 to explore for oil in Nigeria included Shell BP, Gulf Oil, Mobil and Texaco. The first offshore production began in 1965 with the discovery of oil in Okan field by Gulf Oil Company, which confirmed Niger Delta Basin as having significant prospects as a world-class hydrocarbon province. Since then, more than 500 oil and gas fields have been discovered, with more than half currently producing at onshore locations.
Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971, and in 1977 established the Nigerian National Petroleum Company (NNPC), a state owned and controlled company, which is a major player in both the upstream and downstream sectors. By the late seventies, Nigeria had attained a production level of over 2 million barrels of crude oil a day. Although production figures dropped in the eighties due to economic slump, 2004 saw a total rejuvenation of oil production to a record level of 2.5 million barrels per day. Current development strategies are aimed at increasing production to 4 million barrels per day in the near future. The dominant role of petroleum production and export in Nigeria’s economy has had a very profound impact on National Economic Development through the decades. (NNPC Corporate Profile, 2010)
In view of this development in the oil and gas sector, a virile and pro-active Public Relations practice is a necessity for industry players to achieve positive image and reputation for smooth operations and meaningful growth. For this reason, since the establishment of Kaduna Refining and Petrochemical Company (KRPC) Limited, a Subsidiary of the Nigerian National Petroleum Corporation (NNPC) in 1977, a professional Public Relations Department was created to assist the company's management in building and sustaining a positive image and supporting the promotion of its business objectives both nationally and internationally.
It is noteworthy to say that over the years, public relations practice has come to be accepted as a profession that needs to be given serious attention. To this end, it is pertinent to mention that one of the most welcome developments in the 20th century is the recognition of public relations as a management function that is essential for the success and survival of organisations. This follows the realisation by the management of organisations about the importance of mutual understanding between them and their relevant publics.
Black (1971:8) says: “The corporate image of an organization depends on the company's behavior and financial performance, its marketing and policies, the quality of its products, standard of its personal relation and its design management”.
The oil and gas industry has realised the need for public relation activities in order to create and maintain good public image that will provide a conducive and peaceful work environment.
Public Relation is a discipline that attracted various definitions. The major convergence point of all the definitions is that public relations involves creating mutual understanding between organisations and their publics.
The British institute of public relations (IPR) cited in Jethwaney and Sarkar (2009) define Public Relations as "the deliberate, planned and sustained effort to establish and maintain mutual understanding between the organization and its various publics".
At its convention in Mexico City, the International Public Relations Association (1978) sees public Relations as: ”the art and social science of analyzing trends, predicting their consequences, counseling organization leaders, and implementing planned programmes of action which will serve both the organization's and the public interest”.
Deutsches Public Relations Gassell Scharft of the Federal Republic of Germany sees Public Relations “as the conscious and legitimate effort to achieve understanding and the establishment and maintenance of trust among the public on the basis of systematic research”.
Dansk Public Relations Club of Denmark: “Public Relations is the sustained and systematic managerial effort through which private and public organisation seek to establish understanding, sympathy and support in those public circles with whom they have or expect to obtain contact”.
Neil Richardson & Lucy Laville (2012): “In its simplest form, Public Relations is about developing and managing relations with stakeholders.”
Grunig and Hunt, cited in Stacks (2002): “Public Relations is the management of communication between an organisation and its publics.”
L’Etang and Pieczka (2006), while quoting Warren Seymour say “Public relations is, simply put, good performance publicly appreciated...It is the two-way process of presenting an organisation in its true colours to the public; and representing to that organisation the public’s opinion about it as a factor to be considered in the framing of its policy.”
The International Public Relations Association, IPRA (1978) or Mexico Statement: “Public relations is the art and social science of analyzing trends, predicting their consequences, counseling organizational leaders and implementing planned programmes of action which serves both the organisation and the public interest.”
Frank Jefkins (1988): “Public Relations consists of all forms of planned communication, outwards and inwards between an organisation and its publics for the purpose of achieving specific objectives concerning mutual understanding.”
Lattimore, Baskin, Heiman and Toth (2012) define public relations as “a leadership and management function that helps achieve organizational objectives, define philosophy and facilitate organizational change”.
Along this line, they identify the following roles of Public Relations Practitioners:
In practice, public relations communication must be a two-way form because misunderstanding can spring from lack of misinformation. As such, one of the aims and objectives of using effective public relations strategies is to improve the existing channel of communication. In other words any organization that fails to communicate well with its public cannot retain their trust and confidence.
This contention was shared by Wechen in Offonry (1985) where he stated: Real communication with all interested Parties is essential, if business is to live securely in an increasingly demanding world.
We then say that it is public relations that provide all the specialized techniques, tools, training and know-how required for the maintenance of such communications in an effective manner.
Host communities are one of the most important parts of organisation's publics. For every organization to enjoy a peaceful atmosphere for its operations, there is the need for positive mutual relationship. This brings to the fore, the need for effective community relations.
According to Center, Jackson, Smith and Stansberry (2008): “Community relations, as a public relations function, is an institution's planned, active and continuing participation within a community to maintain and enhance its environment to the benefit of both the institution and the community”
This implies that whatever programme of action an organization will take will serve both their interest and that of their immediate organization.
Therefore for every corporate organization to be accountable to all its stakeholders in all its operation and activities with the aim of achieving sustainable development not only in the economical dimension but also in the social and environmental dimensions, it has to be socially responsible.
Although there is no globally acceptable definition of Corporate Social Responsibility (CSR), the European Commission's Green paper on CSR cited in Center, Jackson, Smith and Stansberry (2008) describes it as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntan,' basis as they are increasingly aware that responsible behaviour leads to sustainable business success. CSR is also about managing change at company level in a socially responsible manner." (Commission of the European Communities2002:13).
In order to maintain good relationship and also manage host communities hostilities, organization makes use of various strategies.
According to oxford dictionary, Strategy simply refers to "a plan that is intended to achieve a particular purpose".
Consequent upon that, this research work intends to explore various community relations strategies used by organsations in addressing host community hostilities with specific reference to Kaduna Refining and Petrochemical Company (KRPC) Limited.
1.1 Statement of the Problem
According to the NNPC Corporate Profile (2012), the petroleum sector is strategic in the Nigerian Economy that accounts for 90% of the country's foreign exchange earnings, 85% of government revenue and 28°/o of Gross Domestic Products (GDP) as well as sizeable employment opportunities for both citizens and expatriates.
In view of the important position occupied by the oil sector in the nation's economy, the upstream, midstream and downstream oil and gas industry players are faced with numerous challenges associated with community hostilities.
The Movement for the Survival of the Ogoni People (MOSOP) which was formed in 1990 issued a citation to oil companies operating in its region that they must pay royalties to the local communities for the oil being explored as well as pay for the devastation of its land. The oil companies were to either pay up or quit the area. Shell initially ignored the demands of MOSOP, continued its operations and relied on the Nigerian government to take care of the demands of the people. As a result, the youths in the local communities began attacking Shell‘s offices, kidnapping its employees and demanding payments in exchange for the release of these employees. After many kidnappings and payments to gain release of employees, Shell deemed its exploration business in the region to be very costly. The company also feared that its reputation with consumers and the general public was being tarnished by these activities and decided to partially withdraw from the region in 1993 (Holzer, 2007).
Although the Ogoni people blame Shell for devastating their land and for the under development of the communities, a closer look at the situation shows that corruption, poor governance, and lack of accountability on the part of the Nigerian government is to blame for many of the issues faced by the people in the Niger Delta region. Kew and Phillips (2007) conclude that the oil companies took advantage of a bad situation and made it worse. Nigerian military and civilian government officials turned deaf ears on the demands of the local communities. Government officials also failed to enforce rules and regulations that required oil companies to clean up oil spills and work to prevent environmental degradation.
The Shell-Ogoni issue is one of many similar issues in the oil and gas industry. In spite of various community developmental efforts and public relations activities targeted at various publics, the industry is still saddled with issues bothering on host community hostilities.
Recently, there was disruption of operation at KRPC plant in Kaduna due to community unrest caused by water pollution. The KRPC's Public Affairs Department managed to bring the situation under control after series of meetings with the community leaders.
In line with the foregoing, this study intends to examine the applications of community relations strategies in addressing host community hostility with a specific reference to Rido Village, a host community of KRPC.
1.2 Aims and Objectives of the Study
The objective of this study is to look at the applications of community relations strategies of the KRPC in order to understand their effectiveness in addressing host community hostility, current challenges and identify ways of improvement. Specifically, the study intends to do the following:
1.3 Research Questions
1.4 Significance of the Study
This study will improve understanding of Public Relations practice in organizations with specific reference to Community Relations and help practitioners improve professional practice.
The study will also be of tremendous benefit to policy makers. At least it will enable them understand PR issues much clearer as it relates to addressing host community hostility.
Also, the study will be of assistance to students who want to carry out further study in the area. It will serve as an eye-opener.
Finally, it will add to the total body of knowledge and provide additional literature for future researchers.
1.5 Scope of the Study
This work is designed to study community relations strategies used by KRPC in addressing host community hostility in Rido Village, Chikun Local Government Area of Kaduna State from 2006 to 2012.
The study is also designed to review available literature on the subject matter, find out the causes and consequences of host community hostilities and proffer solutions.
1.6 Limitation of the Study
The study is limited by fear and uncooperative attitude of some respondents to divulge some information to the researcher.
1.7 Brief about Kaduna Refining and Petrochemical Company Limited (KRPC)
The Nigerian National Petroleum Corporation which was established in 1977 under the instrument decree 33 of the same year is charged with the statutory responsibility of managing all government's interests in the oil and gas sector.
In addition to its exploration activities, the Corporation was given powers and operational interests in refining, petrochemicals and products transportation as well as marketing. Between 1978 and 1989, NNPC constructed refineries in Warri. Kaduna and Port Harcourt and took over the 35,000-barrel Shell Refinery established in Port Harcourt in 1965.
Kaduna Refining and Petrochemical Company Ltd (KRPC) was commissioned in 1980 with an initial capacity of 100,000 barrels par day as the third refinery in the country in "order to cope with the tremendous and growing demand for petroleum products". It is one of the ten (10) Strategic Business Units (SBUs) of the Nigerian National Petroleum Corporation (NNPC). In December 1986, the design capacity of the fuels plants of the Refinery was successfully increased from 50,000 BPD to 60,000 BPD, bringing the total refinery installed capacity to 110,000 BPD.
In March 1988, the 30,000 metric tones per year linear Alkyl Benzene plant under the then Petrochemical Sector of NNPC was commissioned. The Plant was designed to derive its entire raw materials including utility supplies from the Refinery. In the wake of the recent commercialization exercise, it was decided that the two plants should merge into a single subsidiary company of NNPC in view of their interdependence, common goal and proximity.
The emerging company is the Kaduna Refining and Petrochemical Company Limited (KRPC). The Refinery was designed to refine both Nigerian crude and paraffin based crude from Venezuela, Kuwait and Saudi Arabia to produce Liquefied Petroleum Gas (LPG), Premium Motor Spirit (PMS), Automotive Gas Oil (AGO) or Diesel, Kerosine, Fuel Oil and Sulphur and those from the lubricating oils complex are base oils, asphalt and waxes. Currently, Engr Bolanle Ayodele is the Managing Director of the refinery which produces a total capacity of 110, 000 barrels per day of petroleum products.
1.8 Operational Definition of Terms
Sustainable Community Development SCD: This refers to organisations efforts at ensuring that community development projects remain functional through routine maintenance.
Host Communities: This refers to immediate neighboring communities within which an organisation is located. Rido Village is a host community of KRPC.
Subsidiary Business Unit (SBU): This refers to the auxiliary companies of the Nigeria National Petroleum Corporation (NNPC) among is the Kaduna Refining and Petroleum Corporation (KRPC).
Barrels Per Day (BPD): this refers to measurement of crude oil produced or consumed in a day
Premium Motor Spirit (PMS): This is popularly called “Petrol”.
Liquefied Petroleum Gas (LPG): simply refers to “Cooking Gas”.
Automotive Gas Oil (AGO): popularly called “Diesel”
Dual purpose Kerosene (DPK): Popularly called “Kerosene”
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