Synopsis
In November 1999, ExxonMobil and its CEO Lee Raymond had to
determine what course of action to take after two major partners, Royal
Dutch/Shell and France’s TotalFinaElf, withdrew from the Chad-Cameroon Oil and
Pipeline Project. The project was enormously complex, involving billions of
dollars in potential revenue, with a wide variety of stakeholders, an array of
critics, and a potentially volatile political and social environment. The
situation was further complicated by the history of oil extraction in
developing countries and the unbridled corruption that had inevitable ensued.
Shell’s and Elf’s pullout threatened to sideline the whole operation and seemed
to give credence to those critics who thought that the environmental and human
costs of oil exploration and extraction in the extremely poor countries of Chad
and Cameroon were too great. Raymond and ExxonMobil had to decide whether to
proceed with the project.
Questions
1. How should managers think about the environment as part
of their decision-making? How much should it matter and how should it be
incorporated?
2. If ExxonMobil is truly committed to the environment, is
this the last place they should be drilling or exactly where they belong? For
those who say they should leave, where else is it OK to drill for oil? For
those who say stay, is there anywhere that ExxonMobil should not drill for oil?
3. What about this case and its appeal for ExxonMobil? What
are the biggest opportunities and risks for the company?
4. Strategically, what is at stake for the firm and its
future operations? How important is it for them to earn recognition for being
environmentally responsible?
5. How much does it matter that someone else is likely to
partner with the Chad government and develop this oil to your decision here?
Especially if they are likely to do a worse job on the environmental issues,
does that impact your thinking – and if so, how much?
6. What about the Chad government? Do you ‘own the ethics’
of your business partners? Will ExxonMobil end up suffering for being
associated with this government and be seen as supporting its activities? Are
they the kind of business partner ExxonMobil wants to do business with?
7. Make the case: vote to stay and invest or leave and make
the best arguments for your side.
