**6. CSR in the global production network of oil**

To understand the global production network of the oil sector to which the approaches to CSR in the Niger Delta are connected, it is important to reflect on two significant aspects. There is on the one hand the oil complex, and on the other the petro-state—the national organization of the oil producing states. The structure and dynamics of these two aspects of the oil sector provides the frame within which the politics of oil can best be comprehended [33]. They are examined as follows in detail.

#### **6.1 The oil complex**

What is regarded as the oil complex is very much interwoven with the global production network of oil. Its roots is to be located in events that took place as far back as the 1930s, especially the radical changes that occurred in the oil industry. The nationalism of the 1930s which culminated in the formation of OPEC in 1960 combined with the oil boom of the 1970s to bring remarkable changes upon the oil industry. There was a radical shift from the 'Great Cartel' system dominated by three trans-Atlantic companies, to 'limited flow' arrangements of the post 1970s [34, 35]. By way of definition, the oil complex can be said to be a configuration of socio-political and economic forces peculiar to developing oil producing countries [33].

Two key elements are central to this complex. The first is the economization of security, otherwise the control of oil as an explicit part of security policy. This gives rise to a close alignment between oil, finance and weapons of war, and de facto to a close connection between oil security as a strategic concern and various forms of conflict. The second is the United States' global oil acquisition strategy. This confers on the petro-state a central significance within the international political economy of oil, which the US dominates through her global acquisition strategy [33]. In fact, in a post 9/11 discourse shaped, until the election of Barack Obama in late 2008, by the US-led war on terror, weak states in Africa especially petro-states, have been framed as latent threats to the security of the US and the rest of the West [36]. It is therefore important to follow states such as Nigeria, Angola, etc. [37] to ensure that they take charge of the oil reservoirs in their territory and assist in delivering sufficient oil to the US and their allies. Such a state will surely keep a peculiar outlook as will be demonstrated as follows.

Watts [33] delineates the operations of the oil complex as follows. First, there is compulsory partnership between transnational and state-owned oil companies accompanying the rise of Third World nationalism. The state-owned company is typically under the direct control of the presidency and a colossal black box of malfeasance and corruption. Secondly, powerful oil Supermajors emerge and operate in complex global networks that incorporate a configuration of oil, arms, construction, and global illicit economy [33].

Thirdly, there is the profundity of construing oil supply as a national security issue, especially as part of the US hegemony [37–39]. The fourth point concerns the development of special diplomatic and military relationships between key oil producing states and the West alongside oil importing advanced capitalist East Asian states. Fifth, there is a necessity for oil companies to operate in postcolonial states that are undemocratic, repressive and weak.

Finally, the profundity of the oil, conflict, violence and war nexus implies that business operations take place in settings, where human rights violation and oil acquisition are interwoven. Seen in this way, the oil complex is a political and economic calculation that overlaps with the notion of the petro-state, without being identical to the latter. What then is the petro-state?

#### **6.2 The petro-state**

The petro-state is a state which has taken a peculiar organizational structure following its oil wealth. Five key institutional elements stand at the heart of this state [33, 39, 40]. First, there is a statutory monopoly over mineral exploitation within its territory. The first point made about the operations of the oil complex that stateowned oil companies are typically under the control of the presidency and a black box of malfeasance and corruption, adds extra meaning to this. Secondly, there is the petro-state oil company—a nationalized company that operates through joint ventures with the oil Supermajors. The latter are granted territorial concessions known as oil blocks.

The third institutional element of the petro-state are security apparatuses that ensure that expensive investments are secured. These apparatuses often work in conjunction with or in complementary fashion with the private security forces of the oil companies. The fourth petro-state institutional element consists of the communities within whose customary jurisdiction are located oil fields and wells. Finally, there is a political mechanism by which oil revenues are distributed.

A mix of several forces lay over the petro-state [33, 39]. The first relates to military and other security forces which form part of the local oil complex, given the geostrategic interest in oil. The second comprises local and global civil society. These become part of the oil complex through the transnational advocacy groups concerned with human rights questions and the transparency of the oil sector. They can also enter the oil complex through disputes raised by local social movements and NGOs over the consequences of the oil industry and over accountability of the petro-state. The third force is the transnational oil business. This includes the Supermajors, the independents—oil marketing companies that are not counted among the Supermajors and the oil service industry that are actively involved in the process of local development. Their involvement can be through community development, CSR or stakeholder inclusion.

Another force is that of struggle over oil wealth, which inserts other local political forces including ethnic militias, paramilitary forces and separatist movements. The struggle is often about who owns and controls oil and who has rights over it. It is also about how the wealth is to be deployed. A fifth force is posed by the multilateral development agencies such as the IMF and the International Bank for Reconstruction and Development (IBRD), as well as by financial corporations such as export credit agencies. These appear as key brokers in the construction and expansion of the energy sectors in oil producing states. Lately however, they have got involved in enforcing transparency among petro-governments and oil companies. A sixth final force relates to the connection between oil and the shady world of drugs, oil bunkering, mercenaries and the black economy [33, 39].

#### *Responding Creatively to Faulty Corporate Social Responsibility Practices: The Case of Nigeria's… DOI: http://dx.doi.org/10.5772/intechopen.106249*

A short history of the Nigeria petro-state will help comprehension of the issues raised by Watts here. Petroleum in commercially explorable quantity was first discovered in 1956. The first oil field was at Oloibiri in the present Bayelsa state of Niger Delta. Four years after the discovery and two years after the first shipment of oil across its shores, Nigeria gained her independence from Britain. Nigeria at independence, was politically structured as a multi-ethnic regional federalist state [41]. Politicians at the time paid no more than lip-service to the ideal of national unity [42]. They were busy forging alliances to facilitate control of the central government, which gained 50 percent of the revenue from the resources generated in each region [43]. Ruling Nigeria for these politicians was not nation-building but controlling federal power and the resources of the nation [42].

Nwaorgu [44] has observed that Nigeria's federal arrangement, hardly took any significant rules of federalism into account. One of which is that no federating unit should be predominant in any federal arrangement. But, the Northern Region of Nigeria was bigger in size and population than both the Western and Eastern Regions put together [45]. This created an imbalance in the polity in such a way that the North was using its numbers to dominate political decisions. The Northern region merely used its dominance to prevent any further domination by either the Eastern Region or any other group in the South of Nigeria. In fact, in order to reduce the imbalance, the Northern Region started taking a disproportionate share of the federal revenue, despite the fact that most of the revenue was generated in the other Regions [46].

This way of demonstrating political dominance, at a time the significance of oil resources to the national economy was becoming glaring [47, 48], only polarized the young Nigerian state along regional lines. The petroleum sector, from the 1960s onwards, assumed a leading role in the growth of national economy [49]. By the mid-1960s, petroleum export was more than two hundred thousand barrels per day [49, 50]. Regions, with their eyes on the lion's share of the national resources, were working to outdo one another in the political game, manipulating and tampering with both census figures and election results [51]. The refusal of some Yoruba groups in the West to accept the result of the elections of 1965, which returned an Igbo as a Regional head, resulted in the formation of a parallel government in the Western Region [49]. The political crisis that erupted as a result became too bloody for the central government to handle.

Eventually, in January 1966, the military struck with a coup, killing many Northern politicians, before they were halted. The coup was led by soldiers who were Igbo speaking, though a few soldiers from the other Regions were involved as well. It was initially successful but was stopped half-way through by two other Igbo speaking soldiers, Aguiyi Ironsi in Lagos and Odumegwu Ojukwu in Kano. The dissident soldiers were rounded up and detained. Aguiyi Ironsi, the soldier who halted the coup in Lagos, would later assume the role of the Head of State.

But, the assumption of power by Ironsi, an Igbo, as the Head of state, was considered by the rest of Nigerians, especially the northerners, as an attempt by the Igbo to impose their dominance on the rest of Nigeria through the military [51]. They justified that claim by pointing to Ironsi's introduction of a unitary government that abrogated the regional system. Thus a few months later, towards the middle of 1966, another coup, this time led by the Northern soldiers, was carried out, killing the Igbo officers, and indeed every other Igbo in sight in the North and in the West of Nigeria. This forced all the Igbo, who were residing outside of the southeast, to return to the southeast.

The mass return of the Igbo tripled the population in the southeast, making it difficult to govern. The regional government solicited support from the federal government. This was not forthcoming, forcing the governor of the region to order the oil companies in the region to divert all rents and royalties to the region [52, 53]. The federal government quickly reacted to this by dismembering the regions, to create 12 new states out of the existing four regions [54, 55]. The minority groups in the Niger Delta, who always wanted self-determination of some sort, jumped at this opportunity [41]. Rivers State was then carved out of the Eastern Region. It is within this Rivers State that the largest oil reserves are located. It was in the midst of this tension over who controls what, that Biafra declared independence leading to the war [45, 46, 51]. The federal government of Nigeria decided to deploy police action to force the secessionists back into Nigeria. The Biafra secessionists resisted this move, returning fire for fire.

Nonetheless, the Nigeria-Biafra war helped the victorious soldiers and state officials to arrive at certain conclusions. First, they became convinced that if the state is invoked, any measure taken to gain control and dominance over the oil resources in the Niger Delta can be justified. Secondly, with the crushing of the Biafran 'rebellion', another tribal mobilization against the state that will involve the use of arms was unlikely to occur. Third, measures were to be taken in the meantime, to consolidate the victory and foreclose the emergence from any part of the country of the kind of unified opposition seen from the Biafran rebels. Structural reforms—maintained up until today—coupled with new policies and legislations, were the results of this conclusion. These reforms are too complex to all find a place in this text, but one could read the influence of the oil complex thereof. The mineral and land use laws vest the ownership of all land as well as the control of all mineral resources and water courses in Nigeria's land on the state and federal governments respectively. This is the oil complex manifesting in style.

Nonetheless, CSR in the Niger Delta is practically guided by the forces governing the global production network of oil. CSR must adapt its approaches to the operations of the oil complex and the petro-state which must maintain a monopoly over mineral exploitation within its territory, to add meaningful and concrete value to the operations of the oil complex. Recall that the economization of security coupled with US global oil acquisition strategy gave rise to a complex that strictly recommends a compulsory partnership between transnational oil companies and state-owned oil companies which must be placed under the control of the presidency and a colossal black box of malfeasance and corruption. Nothing must endanger this monopoly over oil and the attendant control by the presidency. To give local communities more participatory role in the process of deciding how CSR is approached could be read as a potential danger to this operation of the oil complex. Reflecting on the rationale behind the policies vesting all lands and minerals under state control, Ako says:

*If ownership of land had remained vested in the local communities, they would have maintained some influence over oil exploration and production activities. Therefore, they would have been in a position to dictate the mode and size of operations within their territory as well as the socioeconomic and political benefits that must accrue to them. This would have enhanced their political and economic power substantially within a federation that relies extensively on oil revenues to sustain the national economy [56].*

I would like to add that any expansion of local participation in the CSR approach might be an inadvertent admission of the injustice subsumed in the state policies

*Responding Creatively to Faulty Corporate Social Responsibility Practices: The Case of Nigeria's… DOI: http://dx.doi.org/10.5772/intechopen.106249*

vesting the monopoly of oil exploitation in Nigeria on the presidency. Such an expansion may not happen at all. The only reprieve for the local communities in this regard is the 'peak oil' predicted to hit the world from 2023 through 2035 [57], which would shift energy dependence away from oil to other sources of energy especially renewable energy. The implication is that oil complex will collapse to make way for other complexes which will affect local communities and CSR in ways different from what is known today.
