WSSD Report FINAL! - OGP

THE OIL AND GAS INDUSTRY FROM RIO TO JOHANNESBURG AND BEYOND
Globally, it is easy to count the number of
barrels of oil and gas equivalent produced. In
2001 the figure was 40 billion. But how do you
determine the social and economic impact of
producing and using that energy?
Employment is one gauge. Millions of people
worldwide rely directly on the oil and gas
industry for their livelihoods. According to the
International Labour Organization (ILO):
“ … each job in production or refining generates from one to
four indirect jobs in industries that supply the needed inputs
and that benefit from the value added by oil/gas activities. In
the sense that the overall economy requires suitable and
reliable energy supplies, the employment effects of these sectors
are even greater and extend throughout the economy.”
In other words, it is hard to imagine any
industry or sector that does not depend in some
way or another on oil or gas products or derivatives
for fuel, transport or raw materials.
Another way to determine impact is revenue
management. In Brazil, for instance, oil and gas
revenues are mandated by law to be shared with
local communities. In Campos, revenues
received by the city are used to construct hospitals
and clinics, provide paved roads and modern
sewer systems, and place street children in
schools, not only to provide an education but to
help save them from a life of child labour.
Similarly, in Alaska, a substantial proportion of
government revenues from the North Slope oil
production goes to native communities.
In all producing countries the oil and gas
industry generates royalties and revenue sharing
funds. In many consuming regions, the use of
fuels provides the taxation framework on which
governments rely.
Does this mean that the social and economic
impacts of oil and gas are invariably favourable?
Unfortunately not. There are some nations,
regions and communities that have not gained
as they should or could have done from the
development of their oil and gas reserves.This is
sometimes referred to as the ‘paradox of plenty,’
when the potential benefits of oil riches are
squandered through inefficient investments,
government waste and corruption.
The question to ask is why have some countries
benefited from oil and
gas resources while others
have not? Economists, political
scientists and others have
offered a number of possible
reasons. While there is no
consensus on the answer,
the dilemma is clear. So it is
imperative that industry,
governments and other
stakeholders dispassionately
examine and understand the mistakes made in
the recent past and work to take inspiration and
guidance from the decade’s successes.
There is no shortage of those successes.
People who, as a result of our activities, now
enjoy access to clean water for the first time in
their lives, whose children are being inoculated
and protected from disease, and who are
benefiting from industry-supported HIV/AIDS
programmes are probably the best qualified to
determine the positive impact of oil and gas
development on their own lives.
They are among the most important beneficiaries
of a wider industry focus, a greater sense
of responsibility to society at large that has
marked our industry’s activities in the past
decade.Today, this drive towards a wider corporate
social responsibility is gaining momentum.
That being said, there are still disconnects
between the industry’s perception of our
responsibilities and what others (a number of
communities, governments, NGOs and even
employees) think should be our responsibilities.
This is an issue that can only be addressed
collectively through mutual understanding and
shared action. We are committed to finding
ways to bridge the apparent gap.
Lasting benefits
Technology development, transfer and capacity
building form an integral part of the oil and gas
business and are a major area in which the
industry contributes to economic development
and generates wealth for society at large.
Technologies introduced to host countries
include a myriad of industrial production and
manufacturing processes along with the infrastructure
needed to distribute energy products
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