The energy sector is crucial for the development of the Bangladesh’s economy. Natural gas has numerous socio-economic benefits such as the generation of power for industrial use and household consumption. Bangladesh is endowed with numerous natural resource reserves that have been exploited by the Niko Resources Limited, a Canadian company that is based in Calgary, Alberta. It has established numerous subsidiaries in overseas countries such as Bangladesh.
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In 2003, the Niko Resource Limited signed an agreement with the BAPEX Company to explore various gas reserves in Feni and Chattack. While the exploration activities in the country have improved the economic status of the local communities, various studies have indicated that there have been recurrent gas blowouts in areas such as Feri.
The rampant blowouts in Bangladesh have lately affected the lives of the people adversely. This report critically examines the conflicts that prevail due to gas blowouts in Bangladesh. It also provides various recommendations on the best possible measures that can help prevent future gas blowouts in the country.
Gas blowouts refer to an unexpected and unrestrained release of natural gas. As the drilling process reaches the gas zone, it builds up excessive pressure thereby forcing it into the drill string. Upon reaching the near superficial earth’s surface, it hits the floor violently thereby causing an overflow (M Farhad, Md. Mehedi, Saiful, Fazle Mohammad Mohi, & Chowdhury, 2013). Gas blowouts can be categorised into surface, subsea, and underground gas flows.
Surface blowouts occur on the earth’s surface where it forcefully ejects the drill out of the gas well. It can be lethal as it can damage the drill in addition to throwing other materials such as mud, water, oil, and gas to the earth’s surface.
The situation can worsen when blowouts happen in villages whose populations are enormous. It can get worse when the gas blowouts are started by the ignition sources thereby causing flames. This situation can result in unrecoverable damages and loss of lives to both the drillers and other people confronted with the incidents.
Other blowouts occur in the subsea gas wells when the pressure mounts on the handling equipment (M Farhad et al., 2013). The fluid from the high-pressure zones only flows to low pressure zones without causing any spill over on the surface. The case study presents a surface gas blowout. These occurrences can be attributed to either human error or the failure of the drilling machinery. Regardless of the cause, gas blowouts can be detrimental.
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Identification of Stakeholders in the Blowouts Case Study
- Niko Resources Limited
- Local Communities
- Advocacy Groups
The Niko Resources Limited
In this case study, I give the Niko Resources Limited the abovementioned status because the case warranting negotiation resulted from its error. It is the cause plaintiff in this case. On January 8, 2005, tens of thousands villagers in Tengratila were subjected to major panic when the activities of the Niko Resources Limited resulted in a major explosion near their homes.
The panic-stricken villagers were forced to abandon their homes and run for safety after a drilling well exploded causing scary flames that were viewed as far as 30 kilometres away from the Tengratila gas field. As a primary stakeholder in the negotiation process, the Niko Resources Limited owes the villagers an explanation of what caused the alteration of the normal life of thousands of residents amongst other effects.
The local communities bear the direct consequences of the gas blowouts. They suffered from the disruption of their normal life, panic, displacement, destruction home structures, and development of unusable land due to gas leaks among other effects. For this reason, I label the local communities as the major stakeholders in the negotiation process. They form the group that bears the adverse effects of the blowouts caused by the plaintiff. This situation compels them to seek compensation.
I give the government of Bangladesh a major stakeholder status since it was involved in the awarding of the Niko Resources Limited the gas-drilling contract.
It also checks the conduct of various foreign companies with a view of ensuring that they conduct their business in an ethical and beneficial manner without causing harm and/or suffering to the citizens. The government also checks the activities of the investors to prevent any practices that can lead to environmental degradation.
Advocacy Groups (Minor Stakeholder)
In the context of this paper, I affirm that various advocacy groups such as the Action Aid that represent environmental awareness, conservation groups, and minor stakeholders are not actively involved in the negotiation process. Instead, they play a passive role.
Problems Faced by the Stakeholders
The primary ingredient of the negotiation process is a particular problem that affects the involved stakeholders. Three major stakeholders namely the gas-drilling company (Niko Resources Limited), local communities, and the government are presented in the case study. The problem confronting the local communities is that the gas blowouts affect their lives negatively since they lead to human displacement and damage to their farmlands.
The company’s worry is the costs it incurs whilst compensating the villagers for the devastating effects of the gas blowouts. The local communities continue to demand more money even when the gas leaks seem to have stopped.
The government’s major problem is that it awarded the foreign company the contract to conduct activities that were changing the lives of the people adversely. Additionally, the company is amplifying the gross environmental destruction. The government plays a role in the regulation of activities that affect the environment in its territory adversely.
Underlying Stakeholder Interests
A negotiation process is driven by the underlying interests of the involved parties that can either have antagonistic opinions or feelings that a particular party should bear the responsibility for harming another. Each stakeholder represents various interests that entail the needs, desires, concerns, and/or even fears that force the affected people into conflicts. The case study presents two major stakeholders namely the Niko Resources Limited and local communities affected by the gas blowouts in Bangladesh.
Interests of the Local Communities
From the case study, I can attest that the local communities’ underlying interests include the compensation for the alteration of their normal life owing to the actions of the Canadian gas-drilling company. The blowouts caused the disruption of the activities of various shopkeepers that forced them to close down their businesses completely (Fisher, Ury, & Patton, 2011).
Furthermore, the blowouts affected both farming and tree planting activities as the prevailing conditions in the presence of the gas leaks hampered the growth of both plants and crops. The local communities residing in the areas affected by the gas blowouts expressed anger towards the adverse effects; hence, they demanded compensation. Out of the 95 shops in Tengratila, 92 of them were closed due to the gas leaks. The shopkeepers demanded compensation for the loss that arose from the shutdown of their businesses.
The fact is that the Canadian company deprived them of their business activities. The Niko Resources Limited had reportedly offered more than $625,000 for compensate for activities such as the digging of wells and tree planting. However, the villagers discovered that there were more gas leaks two months later after the company assured them that the menace was in control. This discovery triggered violent protests by the villagers who accused the company of ignorance (Fisher et al., 2011).
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Interests of the Niko Resources Limited
In a personal viewpoint, I attest that the Niko Resources Limited has all reasons to protect its gas exploration interests as a foreign investor in Bangladesh. The company is responsible for the misery suffered by the villagers. Following the blowouts that subjected villagers to socio-economic losses, the company was ready to defend itself. Its agents acknowledged the fact that their actions had caused suffering amongst the local communities besides adversely affecting the environment.
Nevertheless, they also claimed that the company had improved the livelihoods of the complainants greatly. The company provided both direct and indirect employment to more than two hundred people from the affected community. Their positive contributions to the livelihoods of the local communities were observable. Their interest was underpinned by this positive socio-economic impact.
One of the company agents said that the gas blowouts that had affected the company adversely had resulted in improved livelihoods amongst the local people. The underlying concern was to protect the investment of the gas-drilling contract in the country. The Canadian company knew that the valuable natural gas was unavailable in the home country.
Therefore, it was a valued opportunity that it did not underestimate. In addition, the Canadian company knew that maintaining a warm relationship with the local communities was paramount to its success in the foreign country. Ignoring the local people’s rights was an adequate hindrance to the investment activities besides depriving the company of its political capital.
The government of Bangladesh has the responsibility of regulating the industrial activities such the extraction of mineral resources. Its interest in the blowout case was to prevent the chance of carrying the blame for contracting an incapable company that deviated from the required safety standards; hence, resulting in a humanitarian crisis. I can attest that it is the government’s concern to ensure that industrial activities do not impact the environment negatively.
The Niko Resources Limited had been involved in two separate cases of gas blowouts in the same country. The company flouted the rules while the government seemed reluctant to take a legal act against it. The public can perceive the government’s negligence negatively. Due to the failure to get involved in the negotiation situation actively, the government was accused of ignoring its mandate.
Being a major stakeholder in the negotiation process, the government expands the necessary resources to evade the blame. The desire of the government is inevitably deploying various efforts to make the Niko Resources Limited take responsibility for its unchecked actions.
The environmental conservation groups advocate for proactive measures that protect the environment from the potentially destructive industrial activities. They play a critical role in leading the environmental awareness campaigns. They also criticise the government to plays its role in ensuring that all companies including both domestic and foreign remain environmentally-sensitive in a bid to preserve the environment.
The advocacy group’s interest is to force both the government and contracted company to take measures in an attempt to prevent future blowouts that can continue disrupting the natural ecosystems and human lives in Bangladesh. They can also mediate in the negotiation process to provide views on how the company can improve its relationship with the local communities by enhancing accuracy and prowess in their work.
Reasons for the Failure of the Previous Negotiation Attempts
Negotiations are crucial as they try to restore the broken relationships, trust, understanding, and peaceful co-existence among other purposes. Some negotiations can be plainly successful whilst others can fail altogether. Failed negotiation processes lead to negative consequences. For this reason, the stakeholders and mediators should follow simple and mutually understandable strategies that can deliver an agreement or a common goal.
There are numerous reasons for the failure of the negotiations that stem from the embracement of inappropriate approaches. Major reasons include the lack of adequate preparation, trust, rapport, motivation, emotional involvement, and miscommunication of the real issues underpinning the negotiation process. Others include conflicting personalities and failure to leverage the transaction due to unfair deals.
The case involving the Niko Resources Limited and local communities in Bangladesh possibly failed to materialise due to the existence of cross-cultural differences. The international corporate negotiations with diverse cultures ought to be systematically handled owing to the differences in cultural backgrounds that can prevent a common understanding. The first gas blowout was resolved amicably. The company promised to prevent a similar incident from reoccurring.
Two years later, a major blowout happened that forced more than 98 percent of the shopkeepers to close down their businesses. This situation triggered angry outbursts and sparked protests across the village (M Farhad et al., 2013). With the reoccurrence of the gas leaks in Tengratila, it was difficult for the company to initiate any negotiation process.
Advising my Client, the Niko Resources Limited
My client has had embarrassing confrontations with the villagers due to the numerous incidences of gas blowouts. In this section, I present the appropriate strategies that suit the case in a bid to help resolve the conflicts amicably by reaching a lasting mutual agreement. The Niko Resources Limited is involved in a continuous relationship that it does not wish to terminate. In this regard, I will suggest the best approaches that can be adopted by the Niko Resources Limited to resolve the conflict (Lewicki, Barry, Saunders, & Minton, 2007).
I recommend my client to hold negotiation with the local communities more carefully by adopting verbal, written, and material conversations that cannot appear as bullying, insulting, or manipulative in any manner.
The fact that the company intends to continue drilling gas in Bangladesh, it is imperative that it considers offering not only compensations but also goodwill that is not worth the net profit gained from the business (M Farhad et al., 2013). This phenomenon will rebuild its trust among the government and local communities to a point where there will be an understanding of the stakeholders even when the blowouts occur in the near future (Yang, Singhal, & Xu, 2012).
Factors to Consider in the Negotiation Process
My client will need to consider the following important points before launching the negotiation process with the stakeholders involved.
The Overall Goal
The Niko Resources Limited needs to begin with focusing on the big picture that underpins all the other processes. Stating the goals of the Canadian company will provide a framework for its negotiation process. This approach will entail the driving objectives of basing its operations in Bangladesh.
This factor is important as it develops the reasons for engaging the other stakeholders appropriately. The understanding of the company goals helps negotiators to put the other aspects of the negotiation into consideration. It also needs to know the driving issue of the negotiation, which is the gas blowout.
Considering the other Parties
The issue stated should be analysed in terms of how it impacts the other stakeholders. The Niko Resources Limited needs to gauge the level of importance of the issue by considering both sides of the negotiation. It should also seek an understanding of how it can affect the relationship if it is not addressed appropriately.
In addition, the company ought to understand the requirements of a successful negotiation process. Other aspects such as the local communities’ resistance point and target outcome should also be taken into account. A balance between the negotiated agreement and company targets must be calculated to make the correct decisions.
The Niko Resources Limited needs to know any restricted deadlines given by the villagers and measures that they intend to take in case of failure (Yang et al., 2012). It should also try to identify which specific groups of the affected people seem impatient. This synthesis will help the Niko Resources Limited to adjust their time schedule to address them.
The company negotiators need to establish the nature of questions that the other parties are likely to ask. They should also find answers to such questions in advance. My client will also need to identify the topics that should be avoided to prevent revealing too much confidential or important information to the public.
There are several negotiation strategies that apply to different situations. The selection of a particular strategy is contingent on the relationship between the negotiators and outcomes of the conciliation process. They include accommodating, competitive, avoiding, and collaborative strategies. In the event where a high priority for both the relationship and outcome prevails, the collaborative strategy should be adopted to take care of the negotiators’ interests.
The Niko Resources Limited and local communities of Tengritila village have a mutual relationship. The company benefits from exploiting the natural gas whilst the people gain from the creation of jobs and compensations among other financial services. Therefore, this phenomenon is a win-win scenario; hence, my client needs a strategy that prioritises both the relationship and outcome. I recommend the Niko Resources Limited to search ways that benefit both parties.
It is a cooperative strategy whereby both parties are concerned about retaining their relationships due to the foreseeable benefits (Yang et al., 2012). Therefore, a high degree of trust, transparency, and cooperation are important for the collaborative strategy to succeed. I propose that both parties use the collaborative strategy to reach an amicable solution.
Fisher, R., Ury, W., & Patton, B. (2011). Getting to yes: Negotiating agreement without giving in. New York, NY: Penguin Books.
Lewicki, R., Barry, B., Saunders, D., & Minton, J. (2007). Negotiation: Readings, exercises, and cases. Burr Ridge, IL: McGraw-Hill Education.
M Farhad, H., Md. Mehedi, H., Saiful, I., Fazle Mohammad Mohi, S., & Chowdhury, Q. (2013). Gas Blowout Impacts on Ground Water Environs around the Tengratila Gas Field, Chattak, Bangladesh. Journal of Water Resource and Protection, 1(2), 164.
Yang, Y., Singhal, S., & Xu, Y. (2012). Alternate Strategies for a Win-Win Seeking Agent in Agent-Human Negotiations. Journal of Management Information Systems, 29(3), 223-256.