Forming Effective Partnerships

Companies operating in developing countries often find that they must play an increased role in providing basic infrastructure for local communities and other neighbors. From the Amazon Basin to West Africa to Kazakhstan to Sakhalin, oil and gas companies have been asked to run school and health care programs, build village water systems, oversee micro-credit projects and carry out other complex tasks that are usually managed by governments or specialized development agencies. They have often hired community development experts to staff and manage these programs.

With notable exceptions, many of these projects fail to meet public expectations. One common problem: local communities tend to see company-sponsored programs as a sort of entitlement (“because it’s our oil”) rather than as a once-in-a-lifetime opportunity to educate their children or start their own business. In many places, companies quickly find themselves caught in a downward spiral, providing more and more benefits as community anger and frustration grow.

These issues are new to oil and gas companies, but they have become familiar to development institutions over the past 30 years. Rather than build their own internal “agencies,” as many companies have tried to do, it often makes more sense to form partnerships with skilled non-profit organizations that already know the terrain and the obstacles. Such organizations include bilateral and multilateral development agencies (for example, USAID and the World Bank), private international foundations, and local NGOs that have emerged in many places around the world. With appropriate company support, these groups can often achieve on-the-ground results that oil and gas companies cannot match.

Several challenges confront companies that want to try this approach. Unlike moderate environmental groups, which have often worked with oil companies on conservation or other projects, development agencies are less familiar with hydrocarbon operations. They frequently question a company’s commitment to social projects. Moreover, even companies with large and highly skilled environmental staffs find that they don’t understand the language, concerns and objectives of development specialists.

Terra Group has successfully bridged this gap and forged “development partnerships” involving major hydrocarbon companies, international agencies and private foundations. One of TG’s senior partners, Dr. Robert Wasserstrom, is a widely published authority on development and has worked extensively with the World Bank, Inter-American Foundation and others to design, manage and evaluate community projects around the world. By identifying the “win-win” opportunity for companies and agencies alike, TG has helped its clients to move from providing social services – a role which falls outside their core competences – to serving as a catalyst for improved living standards. The result: a sustainable community development program that offers long-term benefits to local villagers while minimizing conflict and disappointment.