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THE ROLE OF OIL COMPANIES IN RURAL ECONOMIC DEVELOPMENT: A CASE STUDY OF NAOC IN BRASS BAYELSA STATE






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THE ROLE OF OIL COMPANIES IN RURAL ECONOMIC DEVELOPMENT:
A CASE STUDY OF NAOC IN BRASS BAYELSA STATE



 ABSTRACT
This study dealt with “the role of oil companies in Brass, Bayelsa State – A case study of Nigerian Agip Oil Company (NAOC). Both primary and secondary sources of data were used in this study. The major data analysis techniques applied in this study was the chi-square test completed with the use frequency tables, simple percentage methods. We observed from the study that there was a positive and significant relationship between the investments/establishments of oil companies and the attainment of rural economic development. That is that, the magnitude of oil companies’ contributions toward community development significantly assured their success/survival in their host community. That, oil companies have important roles to play in rural economic development. Some suggestions were offered amongst which are: That oil companies should endeavor to play their roles towards improving the lives good roads network, education and other socio-economic developments for the host communities. That the host communities should not be hostile to the oil companies so that the magnitude of the contributions of oil companies towards socio-economic responsibilities will be actualized.











TABLE OF CONTENTS
Title Page                                                                                 i
Certification                                                                             ii
Dedication                                                                               iii
Acknowledgement                                                                    iv
Abstract                                                                                   v
Table of Contents                                                                     vi
                                                                       
CHAPTER ONE: INTRODUCTION
1.1   Background of the study                                                 
1.2   Statement of problem                                                     
1.3   purpose and Objective of the study 
1.4   Research Question                                                          
1.5   Method of study
1.6   Significance of study       
1.7   Scope/Limitation of the Study
1.8   Definition of Terms

CHAPTER TWO:      LITERATURE REVIEW
2.1   Introduction
2.2   Historical Background of Oil Companies in Nigeria
2.3   The Concept of Rural Economic Development in Nigeria
2.4   The Problem of Oil Based Community
2.5   Variable of Rural Underdevelopment
2.6   Social and Economic Conditions in the Oil Producing Communities Today
2.7   Oil Companies and Oil Rural Communities
2.8   Oil Company Relations with Oil Producing Communities
2.9   The Role of Oil Industry in Economic Development
2.10 Empirical Contributions of Oil Industry in Economic Development


CHAPTER THREE:  GEOGRAPHICAL AND COMPANY SETTING OF THE STUDY – NAOC
3.1   Introduction
3.2   The Advent of NAOC Nigeria
3.3   The Key Activities of NAOC and their Impacts
3.4   NAOC Community Development Assistance in Nigeria
3.5   The Impact of NAOC on Social and Economic Conditions in Brass Community

CHAPTER FOUR:    PRESENTATION AND ANALYSIS OF DATA
4.1   Procedure for Data Analysis
4.2   Analysis of the Questionnaire
4.3   Testing of Hypothesis

CHAPTER FIVE:     SUMMARY, RECOMMENDATION AND CONCLUSION
5.1   Summary
5.2   Recommendation
5.3   Conclusion
        Bibliography
        Appendix I
        Appendix II












CHAPTER ONE
INTRODUCTION
1.1      BACKGROUND OF THE STUDY
The importance of oil companies in the development of the Nigerian economy especially in the rural communities of which Brass Community in Bayelsa State cannot be overemphasized. This is because the investment/establishment of oil companies would not only earn the country foreign exchange but also enhances the development of rural communities through the provision of employment opportunities, social and infrastructural facilities, etc. There is no doubt that effective implementation of social responsibility by oil companies would assure the achievement of rural economic development and hence the entire economy at large.
The oil industry is one of the largest industries in the world. Through its wide areas of operation, the industry affects almost every country of which Nigeria and the various states and communities are not excluded. The industry has bestowed great financial power on oil producers. Some of which thrive in the third world. This financial power is now a challenge to the third world oil producers to evolve and execute development strategies for the various states and communities.
Nigeria’s oil industry has earned foreign exchange through crude oil exports and had generated funds for expanding investment in the economy. The discovery of oil in commercial quantity and its subsequent “oil boom” of the 1970s carried along with it evidences of structural transformation that brought about rapid source of revenue, has enabled the Nigerian government to embark on ambitious targeted development projects. The industry has been very instrumental in the admission of the nation as a member of the Organization of Petroleum Export Countries (OPEC) IN 1971. The oil industry has also gone a long way in improving industrial productivity in various communities. This explains the reasons why Nigerian leaders both the past and present recognize the dominant role of oil companies in the Nigerian economy.
However, it should be noted in spite of the dominant role played by oil companies, people in the rural enclaves now are apprehensive of its negative effects on the oil producing communities. They are aware of the fact that the activities of oil companies render farmers and fishermen inactive without alternative sources of livelihood. Other effects include oil spillage, pollution, environmental degradation, etc. Although oil companies often pay compensation to it affected victims, such compensation is seen by community dwellers as too inadequate. This has prompted the oil companies to embark on development projects in terms of providing social amenities such as good roads, electricity, pip-borne water educational scholarship and employment opportunities to their youths as a means of ameliorating the problems.
Rural economic development is the main aim of the rural dwellers, including the petroleum producing companies. The rural people see it as a means for improving their standard of living. It is therefore evident that anything-long term and short-term capital projects would assure rural economic development. Thus the involvement in rural economic development by the Nigerian Agip Oil Company (NAOC) is crucial for ensuring rural economic development in Brass.
The Brass community is an island by sea. Obviously, the Brass community is experiencing environmental hazards with its attendant environmental degradation and pollution, oil spillage and other related factors. This is as a result of oil companies operations. The most serious problem is how to ensure and guarantee of rural economic development through direct participation of oil companies. The concern here is the transformation of the living conditions of the people on a permanently improved basis through the process of rural economic development strategies.
It is in line with the above issue that this research study is designed to examine the role of oil companies in rural economic development with a particular emphasis on NAOC in Brass community in Bayelsa State.
1.2      STATEMENT OF THE PROBLEM
It is true that oil companies do participate in promoting rural economic development but the magnitude of such contributions shows more evidence of failure rather than achievement and as such has been ignored by most communities in the areas where these oil companies operate. Perhaps, this could be attributed to the fact that most people due to little awareness merely think or see the existence of these communities purely as a prospect for and produce crude oil.
Based on this premise, it is fair to conclude that oil companies have created little or no impact in the host communities. The reliability of this statement holds with respect to the under-developed nature of most oil-based communities. That is, there is hardly much effort by the oil companies in improving the welfare of these local communities. As a result of this, these communities still lack good drinking water, roads, transportation systems, electricity and other infrastructures.
It is against this background that it becomes pertinent to appreciate the scope of the contributions of oil companies in rural economic development.
1.3      PURPOSE AND OBJECTIVES OF THE STUDY
The main purpose of this study is to examine the role of oil companies in rural economic development using Nigeria Agip Oil Company (NAOC) in Brass community in Bayelsa State as a case study.
Specifically, the study seeks to address the following objectives:
i.            To examine the role of oil companies in rural economic development
ii.          To ascertain the magnitude of oil companies contributions towards community development.
iii.        To know whether oil companies in Nigeria carryout effective social responsibilities in the various host communities in terms of reducing crisis/conflicts
iv.         To highlight the problem encountered by oil companies as a result of inadequate cooperation with community request.
v.           To identify the problems faced by rural communities as a result of ineffective social responsibility of oil companies.
1.4      RESEARCH QUESTIONS
In the course of conducting this research study, the following research questions were raised.
i.            What are the roles of oil companies in rural economic development?
ii.          To what extent does the magnitude of oil companies’ contributions enhance community development?
iii.        Are the rural development projects provided by oil companies adequate to offer improvement in the living standard of rural communities?
iv.         How effective is the implementation of social responsibility by oil companies in their host communities?
v.           What are the problems encountered by oil companies in their host communities?
vi.         What are the problems faced by community dwellers as a result of ineffective social responsibilities of oil company?
1.4.1               RESEARCH HYPOTHESIS
Ho1: There is no positive and significant relationship between the investments/establishment of oil companies and the attainment of rural economic development.
Ho2: The magnitude of oil companies’ contributions towards community development does not significantly assure their success survival in their host community.
1.5      METHOD OF STUDY
This study combined both primary and secondary information – questionnaire was designed (structural and unstructured) and administered to the respondents. Personal interviews are also conducted. The administration of questionnaire enables the respondents to contribute their own opinion regarding the issues under study.
In addition, the secondary data were obtained from textbooks, newspapers, journals and seminar papers.
1.5.1               INSTRUMENT OF DATA COLLECTION AND ANALYSIS
The administration and collection of questionnaire for the purpose of this study is as follows: A total number of eight questionnaires were administered to the two sets of respondents i.e. forty to each set – Management/Senior staff and junior staff of Nigerian Aip Oil Company in Brass, Bayelsa State.
Out of the total number of the 80 questionnaire distributed only sixty-nine (69) were collected back. This represents about 86.25 percent of the total number of the sampled population.
After the collection of the administered questionnaire, it was imperative that the questionnaire be edited. Thereafter, it was found out that the questionnaire that could be used for the analysis were sixty-two (62) in number, that is thirty-one (31) questionnaire were chosen was from each of the groups. The equal number of questionnaire chosen was necessary because of the demand chi-square (X2) statistical tool of analysis.
The statistical tool used to test our hypothesis is the Chi-Square (X2) instrument. The chi-square (X2) statistical tool is a non-parametric test, which can be used for one or more variables
The purpose of this this to determine how well an observed set of data fits an expected set by chance.
The Chi-Square (X2) has the formula:
        X2     =      ∑(0 - E)
                              E
Where X2 =       Chi Square
           0 =                Observed/actual frequency
           E =        Expected/Theoretical frequency
SPECIFICATION OF THE DECISION RULE
The decision rule for this test statistics is to accept the null hypothesis (Ho) if the critical (tabulated) value of chi-square (X2) is greater than the computed (calculated) value of chi-square. Otherwise, we reject the null hypothesis (Ho) and accept the alternate hypothesis (HA).
1.6      SIGNIFICANCE OF THE STUDY
This study is important because it will critically assess the reasons why some oil based communities in AGIP area or operation still lack basic infrastructural facilities needed to improve their welfare.
Hopefully, the entire work will be of immense usefulness not only to researchers who intend to carry out further research on this topic, but also to the generality of the people who may be interested in knowing Nigeria Agip Oil Company’s (NAOC) contribution toward rural economic development in Bayelsa State.
As well, as the study would be of benefit to managers in oil companies as it would highlight clearly the obligations of oil companies to the hos communities.
Finally, the findings from this study would be of significance to academicians, as it would add to the existing stock of knowledge in this area of study.
1.7      SCOPE/LIMITATION OF THE STUDY
Since no research is exhaustible, therefore this study is no exception; hence, the study has been limited in terms of scope to Nigerian Agip Oil Company in Brass Local Government Area in Bayelsa State.
However, the limitations to this study include:
i.            TIME: The time given to the researcher was too inadequate as the researcher had to combine all other academic activities with the researcher’s work.
ii.          FINANCIAL CONSTRAINT: The finance on the disposal of the research work. Certain cost such as transportation, photocopy, typing and binding also constitute financial constraint.
iii.        SARCITY OF DATA: Certain relevant secondary data which dealt on the subject matter where not readily available in the close libraries visited by the researcher, hence the researcher had to travel far in search for these data
iv.         POOR ATTITUDE OF RESPONDENTS: Some of the respondents to this study discriminate the researcher while some of others were reluctant in filling the administered questionnaire, notwithstanding the fact that confidentially in treating their responses is the researcher’s watchword.
1.8      DEFINITION OF TERMS
The following terms, which are operational used, are defined for the purpose of clarification:
i.            Oil Companies: These are companies, whose activities involve oil exploration, exploitation, refining production and marketing.
ii.          Community Development: Community development is the process by which the efforts of the people themselves are united with those of the government and companies to improve the economic, social and cultural conditions of the people living in the area.
iii.        Social Responsibility: This is that obligation the oil companies owe the people living in the area where they carry out the operations. These include the provision of good road, electricity, drinking water, employment opportunity etc.




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