Oil and its associated by-products in the Arab world has played a pivotal role in shaping not just the economies of the various nation states in the region, but it has also influenced the establishment of social development programs and social activities among the member states. The research paper endeavors to explore the role of oil companies in the Arab region in providing models for society. In addition, oil companies all over the world have been instrumental in building government capacities.
In this regard, the research paper explores the extent to which the oil companies in the Arab world have been involved in building government capacities. The sectoral associations dealing with the natural resources in the Arab world shall also be examined, whether private or state-owned. Moreover, the paper shall endeavor to determine how Arab oil companies deal with society and the kind of programmes that they develop in order to improve society.
OAPEC (organization of the Arab petroleum exporting countries) was established by Saudi Arabia, Kuwait and Libya in 1968. In an effort to increase its membership, OAPEC, whose headquarters are in Kuwait, now includes such other countries as Egypt, Qatar, Bahrain, Algeria, the UAE (United Arab Emirates), Iraq, and Syria.
Oman and Tunisia are the only two countries in the region who are not members of OAPEC. The main goal of the organization is to ensure cooperation amongst its members in the different economic activities within the petroleum industry (Mallakh 401).
In addition, the organization also aims at helping the members to realize closer ties in the petroleum sector, and to safeguard the individual and collective interests of the members. Besides, the body hopes to also unify the members against possible eruption of conflict in the region, such as the 1967 Middle East conflict.
Building Government Capacities
Capacity building in governments enables the handling of social transformations, economic and environmental problems. When a government’s capacity has been developed, this leads to better governance and as a result, democracy and sustainable development can be achieved (Boex and Yilmaz para. 4).
Capacity building provides the government with the tools needed to realize its responsibilities. Some of the responsibilities of the individual governments of the oil producing countries in the Arab world include the ability to collect revenue, budget, promote civil engagement, create and implement laws, fight corruption, and be accountable and transparent (Boex and Yilmaz para. 5).
The achievement of all these objectives calls for the establishment of solid governance structures and this requires economic resources. Since oil is the major economic activity in the Arab world, oil companies in the region have been instrumental in assisting the various governments with their capacity building activities.
Oil companies in the Arab world are not just concerned with making profits. A large number of them have established various social activities with the communities in the areas of their operations as the main beneficiaries. These oil companies are actively involved in the growth and development of the communities in the various economic, educational, and social sectors.
For example in the UAE, the Abu Dhabi National Oil Company (ADNOC) sponsors various events that benefit the different community groups. Some of the other annual events sponsored by ADNOC include athletics and cultural clubs, camel race, the ministry of labor, and educational organizations (ADNOC para. 3).
Social development programs
Oil companies in the Arab world dedicate a portion of their profits to various social development programs in the food, health and education, housing, technology and education sectors. Some of this money is also dedicated to the national development fund of the individual countries. This body in turn allocates the money to such national projects as energy and transport infrastructure, housing, medicine, and technology.
In Saudi Arabia for example, the national oil company, Saudi Aramco is owned by the government. As one of the most valuable companies in the world, Saudi Aramco is also the main source of revenue for the Saudi government. In this regard, the Saudi government has earmarked a portion of the revenues from the oil sector and more specifically, from Saudi Aramco, as the source of funds for its long-term projects.
For example, a five-year program for the building of new schools, hospitals and roads in the rural areas is estimated to cost $ 50 billion. Another $ 14 billion has been set aside for the expansion of the production capacity of Saudi Aramco (Business Week para. 11).
In Qatar, ExxonMobil and Royal Dutch are the two leading international oil companies with operations in the country (Mason para. 2). Over the years, the two companies have donated money to the Qatar government in aid of the country’s health care system and the education sector. Such donations are often made under the companies’ corporate social responsibility programs.
BP is one of the leading oil producers in the UAE. BP’s history in the UAE dates as far back as 1909, when the Anglo-Persian Oil Company was founded. Over the years, BP has invested in the community in which it operates in an effort to make a difference to the people.
For example, BP has been actively involved in the creation of job opportunities for the locals, and in supporting development projects (BP para. 3). In addition, the company also tries to engage the local suppliers for some of its raw materials. The BP Young Adventurers Program in the Gulf region is a major beneficiary from BP.
The programme aims to educate teenagers of between 14 and 16 years in the region whereby they are sponsored for a weekend of adventure and learning in an effort to develop their leadership skills and self-awareness, and also to create environmental awareness and safety-conscious in them. The Abu Dhabi Petroleum Institute has also benefited enormously from funding by BP.
The institute enables practicing professionals and students alike to improve their knowledge and understanding of gas and oil technology. The Emirates Foundation, an organization that seeks to deliver sustainable development and learning solutions not just in the United Arab Emirates alone, but in the Gulf region as a whole, is also another beneficiary of BP’s corporate social responsibility program.
In conclusion, oil companies in the Arab worlds are not just concerned with raking in huge profits year after year; they have gone out of their way to assist the communities in which they operate. For example, besides offering job opportunities to the locals, the oil companies also give back to the society through various corporate social responsibility programs.
This is mainly in the areas of health and education. Oil companies in the Arab world have also assisted the governments in their capacity building activities, mainly by giving donations that are in turn used to establish institutions that allow these governments to handle the social transformation, economic and environmental problems that face their citizens.
Abu Dhabi National Oil Company (ADNOC). Corporate Social Responsibility. 2011. 16 June, 2011.
Boex, Jamie and Yilmaz Serdar. An Analytical Framework for Assessing Decentralized Local Governance and the local Public Sector. Urban Institute Center on International Development and Governance. December 2010.
BP. BP in the United Arab Emirates. 2011. 16 June, 2011.
Business Week. The New Middle East Oil Bonanza. March 2006. 16 June, 2011.
Mallakh, Ragaei. The Organization of the Arab Petroleum Exporting Countries: Objectives and Potential. Annual Review of Energy, 2(1997): 399-415.
Mason, Rowena. Wikileaks: Qatar asked Shell and ExxonMobil for donations. The Telegraph 22 Mar 2011. 16 June, 2011.