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Royal Dutch Shell in Nigeria: Operating in a Fragile State

1) Analyze the challenges facing the merger of the Royal Dutch Petroleum Company and Shell Transport and Trading, and provide recommendations how these should be confronted.

2) Discuss what has made Shell's operations in Nigeria more at risk and simultaneously more valuable.

3) Examine the implications of the economic system found in Nigeria and explain the political risks that Shell faces in this country.

4) Explain how the role of government can influence Shell's Nigerian investments, operations, and future stake in the oil industry.

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1) Analyze the challenges facing the merger of the Royal Dutch Petroleum Company and Shell Transport and Trading, and provide recommendations how these should be confronted.

Challenges as a result of the merger of the Royal Dutch Petroleum Company and Shell Transport and Trading include a difference in corporate governance structures. Royal Dutch Shell utilized a "more traditional single -board structure with one chairman and one chief executive" (Litvak, 2006) rather than the previously used dual board arrangements. In addition, Royal Dutch Shell Group had a recent leadership change, after determining the group had been overstating its oil and natural gas reserves. Furthermore, there was problems and accusations being made in regards to the organizations involvement in the "political quagmire of violence and abuses around Warri in the oil rich Niger Delta" (Litvak, 2006). In order to confront these challenges, the organization must evaluate its structure and operations. The company must establish best practices within the region, including how to install transparency in its payments to the government regardless of the government's policies. In addition, the company must determine best practices for the environment and local tribes. There may be a need to establish a third party oversight to validate its efforts. The organization must develop up front procedures from managing employees to reporting figures, and must be above reproach should it intend to prosper worldwide.

2) Discuss what has made Shell's ...

Solution Summary

This detailed solution discusses the challenges facing the merger between Royal Dutch Petroleum Company and Shell Transport and Trading, and provides recommendations how these should be confronted. It also discusses what has made Shell's operations in Nigeria more at risk and simultaneously more valuable, and examines the implications of the economic system found in Nigeria and explains the political risks that Shell faces in this country. Finally, it explains how the role of government can influence Shell's Nigerian investments, operations, and future stake in the oil industry. APA formatted references are included.

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