NGO and Development Partnerships

In recent years, onshore oil and gas projects have often found that they are expected to play an increased role in providing basic infrastructure for local communities and other neighbors. From the Amazon Basin to West Africa to Kazakhstan and Sakhalin, companies have been asked to run schools and health care programs, build village water systems, oversee microcredit 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.

So far, results have been mixed. With notable exceptions, many projects fail for a variety of reasons. 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 businesses. In many places, companies quickly find themselves caught in a downward spiral, providing more and more benefits as community resentment grows.

These issues are new to oil and gas companies, but they have become familiar to development experts over the past 30 years. Rather than build their own internal “agencies,” as some companies have tried to do, it often makes more sense to build 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 UNDP), 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 operators cannot match.

Several obstacles 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. Initial discussions about cooperation and co-funding may start well, but often go nowhere.

Because of our unique background, the 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 &mdash a role which falls outside their core competences &mdash 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.

TG has conducted partnership discussions for:

Chevron (Angola, Benin, Ghana Mexico, Nigeria, Togo)

EnCana Corporation (Ecuador)

Occidental Oil and Gas Corporation (Colombia, Ecuador, Peru)