What is the role of transnational companies in Nigeria?
What is the role of transnational companies in Nigeria’s oil business?
The Niger Delta region, an important wetland and coastal ecosystems, is home to Nigeria’s oil and gas industry. Nigeria’s oil boom took off during the 1970s. It relied on the expertise of large transnational corporations, including:
- Total (France)
- Exxon-Mobil (USA)
- Royal Dutch Shell (UK & Netherlands)
- Chevron (USA)
- Agip (Italy)
These multinational companies constructed oil and gas drilling platforms around the Niger Delta. Pipelines around the Gulf of Guinea, linked to these platforms, transport oil to large tankers that ship the oil to Europe and the USA where it is refined to produce petrol and other oil-based products. Transnational companies make far higher profits from refined oil.
In an attempt to keep more profits from oil within the country, the Nigerian government has set up the Nigerian National Petroleum Corporation (NNPC) to form joint ventures with TNCs.
What is the environmental impact of oil in Nigeria?
The Niger Delta region has experienced a range of environmental damage caused by the oil industry. Farmland has been damaged by leaking oil pipes meaning crops no longer grow in some areas.
Oil pollution from tankers and damage pipelines kills fish in the sea and the delta. When gas is burned off from the oil greenhouse gases are released, contributing to climate change. The process also causes respiratory problems for local people.
According to the Guardian, 40 million litres of oil are spilt in the Niger Delta each year compared to 4m in the US.
In the Niger Delta, the contamination of fish and crops has destroyed livelihoods, destroyed local employment opportunities and pushed many into militancy. Life expectancy in the Niger Delta is ten years below the national average.
The government has established laws for the protection of the environment from oil exploration. However, for these to be effective, responsible agencies must effectively implement, enforce and monitor them.
Below is a video exploring the impact of exploiting fossil fuels in the Niger Delta.
What are the advantages and disadvantages of TNCs?
Advantages of TNCs include:
- international links that provide access to markets around the world
- bringing financial investment into the host country’s economy
- providing jobs and training to local people
- higher wage levels
- introducing new technology that might otherwise not be available
Disadvantages of TNCs include:
- profits leave the country and benefit shareholders, often in HICs
- paid wages tend to be lower than the home country of the TNC
- causing significant environmental damage, without taking responsibility for cleaning up
- being able to withdraw from a country if circumstances change
- powerful TNCs can exert pressure on governments
- raw materials are exported before being refined which reduces profits in LICs and NEEs
Use the images below to explore related GeoTopics.