Natural Resources and Violent Conflict - WaterWiki.net

attracting reputable companies 321importance of good governance in their country programs. In the longterm, by enhancing governance these activities should improve theoperating environment for business.Finally, relationships between companies and nongovernmentalorganizations remain diverse and complex, with both sides often exhibitinga deep distrust of the other. Nevertheless, in recent years there hasbeen greater interest on both sides in engagement and even partnership.The U.K.-based environmental group Living Earth is an example of anongovernmental organization that has worked with Royal Dutch Shellin Nigeria—with difficulties and benefits on both sides (Heap 2000,pp. 192–213). Many other nongovernmental organizations and pressuregroups continue to argue that any formal relationship with companieswould compromise their independence.Risk Sharing and TransferThe task of the operator is to manage risks as effectively as possibleon the ground, but it is obviously impossible to eliminate risks, and inany case the company may well need external sources of finance. Theoperators typically share or transfer risks to joint venture partners,external lenders, and insurers. Without the involvement of these parties,it may be difficult for the project to go ahead, but their participationraises new costs and demands. On the one hand, they have aninterest in the financial success of the project and therefore wish to minimizecosts and maximize returns. On the other hand, they may havetheir own standards—and face their own external pressures—on issuessuch as social and environmental responsibility. This section discussesthe role of these third parties and the influence that they exercise.Joint Venture PartnershipsPetroleum and mining companies enter joint venture partnerships fora variety of reasons. The first is that, in many jurisdictions, they areobliged to work with the state-owned oil or mining company. In somecases—as in the case of the Shell Petroleum Development Company inNigeria—the state partner has majority ownership. In others, for example,Sudan, the state company may own no more than 5 percent. Ineither case, the participation of the state company enables the hostgovernment to maintain a higher degree of influence or control. Thesecond main reason is that they need to raise finance and to spread therisks. Major operations in developing countries typically have twoor three foreign partners. The operator is responsible for day-to-day