Oil spill hazards at the upstream level: A risk management paradigm for a developing country

• Published in: Energy policy 1994, Vol.22 (5), p.393-402
• Main Author: Okogu, Bright Erakpoweri
• Format: Article
• Language: English
• Subjects: Applied sciences; Crude oil, natural gas and petroleum products; Developing countries; Developing country; Economic data; Energy; Energy economics; Environmental impact; Exact sciences and technology; Fossil fuels and derived products; Fuels; General, economic and professional studies; Greenhouse effect; Hazards; International cooperation; International law; LDCs; Marine; Oil; Oil spill; Oil spills; Pollution caused by production, transportation and treatment of oil and oil shales. Water and soil pollution. Treatments. Pollution control; Q1; Risk assessment; Risk management
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/0301-4215(94)90168-6

The international pre-occupation in recent years with Greenhouse gas emissions and climate change has tended to overshadow another environmental problem, namely oil spills. The consequences of an oil spill are more certain, more urgent and, in a sense, more real, especially for developing countries with inadequate capacity to cope with the problem. This paper documents the experience of recent oil spills internationally and in Nigeria and then proposes an appropriate system of risk management in this respect. In the best of circumstances, externality problems are difficult to handle; they are even worse in developing countries with weak socio-political institutions and where transnational companies tend to have lower operating standards. Typically, a company would invest in spill prevention up to the point where the marginal benefit just equals marginal costs. In a situation where spill detection and clean up enforcement are weak, as is the case in many developing countries, investment in prevention will tend to be low. Consequently, an insurance-type oil spill contingency fund, financed through an oil tax, is proposed. We also report briefly on the outcome of field interviews which reveal socioinstitutional difficulties relating to property rights, and which therefore reinforce the need for a spill contingency programme and some role for government.