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Corporate Social Responsibility or CSR in Oil Business: Lukoil CSR Overview

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“… to quote the famous economist, Maynard Keynes, who on being accused of inconsistency replied: ‘When I have new information, I change my conclusions. What do you do? Sir’” (Campbell, 1997).

This Paper will examine the possible relationships, if any, that exists between the media or the Press and corporations such as Lukoil.

As the largest oil company of Russia, it is expected that with all the revenues at its disposal with or without Public Relations, Lukoil while maintaining high corporate social responsibility or CSR, the Press will pick up such Lukoil activities.

Whether fair or not, favorable publicity rather than a disparaging one is more highly preferred even to large companies such as Lukoil.

Review of Literature

International Overview of Oil plus the Politics of Oil

To really benefit from this study, sufficeth that it cites sources for the data which provides the world’s overview of oil. This Paper will not quote any more, any data which would otherwise contribute more to present and future misconceptions or misperceptions of the world’s oil (Capital, 2004; Fuel Focus, 2007; MBendi, 2001; Winter, 1996).

However, for emphasis, quoted here is that series of very important and related equations of:

“Produced + Reserves = Discovered

Reserves + Yet-to-Find = Yet-to-Produce

Produced + Yet-to-Produce = Ultimate” (Campbell, 1997).

even where the definition of reserves depends on which oil player will be using it (Capital, 2004; Fuel Focus, 2007; MBendi, 2001; Winter, 1996).

It is because any Organization of Petroleum Exporting Countries or OPEC member jacks up his reserves to allow him to increase his present and available production more. However, there is no way to verify the actual availability of country-to-country reserves (Capital, 2004; Fuel Focus, 2007; MBendi, 2001; Winter, 1996).

By backtracking, this condition historically paved the way, in order to counterbalance the OPEC, by the other countries setting up the Organization for Economic Co-operation and Development, OECD, which tried as much as possible to negate the adverse effects of the OPEC oil cartel (Capital, 2004; Fuel Focus, 2007; MBendi, 2001; Winter, 1996).

But the most important issues here for the world’s oil are these three facts.

First fact is that based on the Hubbert’s Peak or a lucky scientific prediction, the United States domestic production of oil has already peaked in 1975. By that time, the United States if it continues, as it should inevitably continue to produce more oil will only further deplete its ultimate supply. Hence, the United States’ increasing reliance for its oil from anywhere in the world sends mixed signals to every one of every dire imaginable implications and consequences (Deffeyes, 2001; MBendi, 2001).

Second fact is everyone’s guessing when the world’s oil peak would be reached. Very reliable and very conservative estimates peg it sometime near 2010. After that time, experts claim that even if “major” finds are found, supply time can only come still after 10 years yet (Deffeyes, 2001; MBendi, 2001).

Third fact is governments with the help of media are in concert not playing this “doomsday” scenario up. Worse, alternative sources not really very seriously implemented at all. Aggravation is added in that uninformed, ill-informed, or misinformed individuals all over the world nonchalantly go about their usual business, oblivious to serious backlash of sudden skyrocketing oil prices due to ever decreasing supply (Deffeyes, 2001).

Overview of Russian Oil

Russia, very well knowing the situation above, gears itself up to become a major player of sorts to provide the much needed shortfall of world’s oil, in exchange for hard currencies plus , for example, political muscle-flexing in the entire European landscape. A few years back as Russia did make its importance felt by its withholding energy supplies to Europe, the European Union, EU, then was taken aback and finally took notice of Russia’s inevitable growing international energy clout (Corporation, 2006; FindArticles, 1998; Killen, 2007).

If that surprises you, then think again about these facts:

President Vladimir Putin’ claim for Russia’s ambition is to become the world’s leader in the energy sector is anything but empty. Thus, in 2005 with very high world oil prices, the Russian economy will then continue to rely further on its energy exports. While Russia does have verifiably significant oil reserves, still its world’s largest proven natural gas reserves are largely undeveloped. Truth of the matter is that Russia lacks the much needed foreign investments to properly develop all its potentials on oil production, gas distribution, petrol yield productivity, trans continent pipeline expansion, power generation, and even ongoing build up of new nuclear reactors, locally and abroad (Corporation, 2006; Engineerlive, 2007; FindArticles, 1998; Marchenko, 2006).

Overview of Lukoil Operations

Within Russia, the major oil companies in descending order are Lukoil, Yukos, Surgutneftegaz, Tyumen Oil Company, Tatneft and Sibneft. However, when it comes to joint ventures, Gazprom and Rosopprom should be included in the list (Engineerlive, 2007).

What happens to Lukoil, happens not only to the Russian oil and gas industry but to Russia (Global Insights, 2007; Line, 2006) as well, as the saying goes. Responsible for 25 per cent of all Russian oil production and 18 per cent of its refining, it is Russia’s largest oil producer employing more that 130 000 people (Engineerlive, 2007).

Moreover, the company claims to have the largest oil reserves of any single company while doing business in 40 regions in Russia (Marshall, 2007; Watson, 2007c; Writer, 2007) and operating in 25 other countries (Davis, 2006a, , 2006b; Hill, 2007; Killen, 2007; Marshall, 2007; McNamara, 2007a, , 2007b, , 2007c; Stewart, 2006a, , 2006b; Watson, 2007a, , 2007b, , 2007c, , 2007d; Writer, 2007) with the continuing acquisitions of more than 2500 petrol stations (Davis, 2006a, , 2006b; Hill, 2007; Marshall, 2007; McNamara, 2007a, , 2007b, , 2007c; Stewart, 2006a, , 2006b; Watson, 2007b, , 2007c; Writer, 2007) around the world (Engineerlive, 2007).

Lukoil further received a boost recently with the completion of a favorable evaluation of its oil and gas reserves by US company Miller and Lents (Engineerlive, 2007).

Corporate Social Responsibility, CSR in General

As Lukoil becomes more and more the major player it is destined to be, like other numerous corporations before it, Lukoil cannot escape essentially the notion that if corporate social responsibility can neither make or break a company—at least improperly implemented CSR can eat up a company’s revenues (Baker, 2007; Baskins, 2005; csrnetwork, 2007; Khodorova, 2006; Poussenkova, 2006; SA, 2006).

Therefore, corporate social responsibility comes to some as:

“… how companies respond to the agenda for corporate citizenship – the growing need to manage issues that affect their business reputation – and to respond to the growing needs and concerns of a range of different stakeholders” (Baker, 2007).

So that companies could manage issues that affect their business reputation and so likewise that a range of different stakeholders can respond to their ever growing needs and concerns, it is noteworthy that Mr. Mallen Baker in http://www.mallenbaker.net/csr/ (Baker, 2007), as Development Director for Business in the Community, put up a new community-based Swicki search facility that aims to give the best, most relevant, results for such search in http://www.mallenbaker.net/csr/swicki.html (Baker, 2007).

That a recent global study by the OECD showing that emerging market companies already realize and do in fact voluntarily adopt corporate social responsibility show that evidently and obviously consumers, as one of the company stakeholders who are ultimately the customers or clients of these companies, then do have their say in the company’s reputation, therefore any future company success (Baskins, 2005).

Corporate social responsibility as the company’s triple bottomline also only means that the company is fulfilling its corporate, social and environmental responsibilities (Baker, 2007; csrnetwork, 2007; Khodorova, 2006; Poussenkova, 2006; SA, 2006).

Public Relations, PR

Where and when public relations disparagingly means “image shaping” to generate positive publicity or enhance one’s reputation; or the dissemination of information cynically as “spin doctoring”; or that as “advertisers lie about their product, public relations people lie about their company” (Princeton Review, 2007); however, all of those conditions should have ideally no place with in a company’s sphere of corporate social responsibility (Yudkin, 2007).

Why some companies combine their CSR activities with their PR unit is all too obvious. Properly implemented CSR does improve one’s image, generates positive publicity, enhances one’s reputation, and disseminates information effectively.

Where early and pioneering public relations, PR, outfits or companies were merely for further successfully building up the image of their client corporations (Creamer, 2006); moreover some public relations companies specialized in strengthening specifically their client corporation’s corporate social responsibilities such as from above the example of csrnetwork especially with its work on with Mittal Steel (csrnetwork, 2007).

The Silver Anvil, the much coveted public relations award of excellence for over 50 years, is given to companies which have forged public opinion by their successfully addressing a contemporary issue with exemplary professional skill, creativity and resourcefulness through their complete programs incorporating sound research, planning, execution. Maybe these citations could be the closest to approaching properly implemented corporate social responsibility as well (Ketchum, 2007).

Russian Press Freedom Vanishing

“‘Not only has Anna Politkovskaya been murdered…but many hopes for Russia’s future have been quashed as well’ as Russian writer Viktor Yerofeyev was reminded of his time as a political dissident in the Soviet Union” (Matthias Schepp, 2006). 

Vanishing Russian press freedom cannot be fully fathomed without first grasping the ever broadening scope of authoritarianism that is taking place in the whole of Russia.

Slowly but Surely, only a Prelude to Authoritarianism?

In the early years of the break up of the then Soviet Union, under President Boris Yeltsin, Russian journalists, likewise with their new found freedom, became nothing more than eloquently excited, hard-hitting, and insolent (Matthias Schepp, 2006).

Not only did the Russian oligarchs acquire entire industrial sectors for themselves during the divestment of state enterprises, but they bought through a wide swath to all media entities from TV stations to major newspapers (Matthias Schepp, 2006).

However, when Putin came to power, he vowed to restore the Kremlin’s political authority (Matthias Schepp, 2006).

The very first to fall, with Putin only five months into office was Vladimir Gusinsky, Russia’s leading media entrepreneur, who was arrested. The state-controlled natural gas monopoly Gazprom took over Gusinsky’s media holding company includin TV channel NTW (Matthias Schepp, 2006).

Companies with ties to the government and the Kremlin’s blessings were allowed to purchase as many publishing houses as they could (Matthias Schepp, 2006).

In September, Alisher Usmanov, formerly a Communist Party’s youth federation high ranking official, billionaire and longtime acquaintance of Putin’s spokesman Alexei Gromov, and in charge of a Gazprom subsidiary acquired the highly profitable Kommersant publishing group, thereby silencing its critical stance towards the government (Matthias Schepp, 2006).

Finally, Usmanov affirmed himself “entirely loyal to the state,” after he installed a Putin supporter as editor-in-chief, despite his earlier promise of his “not meddling with editorial policy” (Matthias Schepp, 2006).

Authorities swoop down on smaller non-conformist or critical newspapers with absurd and surprise inspections for fire and health hazards according to Valery Yakov, the editor-in-chief of Novye Izvestia (Matthias Schepp, 2006).

Thus, in Russia tough investigative journalism has become very rare (Matthias Schepp, 2006).

Finally, authoritarianism looks like the only way to go due to utter lawlessness in the country with assassinations coming left and right and targets anyone or everyone.

Between year 2001 up to now 2007, no less than 8 internationally respected and recognized institutions with their respective reporters completed invariably well-documented reporting, for emphasis here, were: NewsMax.com’s Phil Brennan on 23 April 2001; Reporters Without Borders for Press Freedom rankings on 20 October 2003 and 23 February 2005; the International Press Institute or IPI in 2005; Der Spiegel’s Matthias Schepp, Christian Neef and Uwe Klussmann on 20 October 2006; Human Rights Watch on 7 March 2007; British Broadcasting News or BBC News’ Steven Eke on 21 March 2007; Freedom House, Inc. on 30 March 2007; and the Voice of America News on 2 April 2007.

Vanishing Russian Press Freedom vis-à-vis Lukoil’s Public Relations and CSR

Whether CSR is within the jurisdiction or not of the Public Relations Department of a Corporation, in order for any CSR activity to be considered successful, there must undeniably be press freedom.

Unfortunately, though how important Lukoil’s role in Russia will be– or even though how important Russia’s role will be in supplying international energy resources to a very energy-hungry world; but with Russia’s increasing stance towards authoritarianism in government, the first to fall and be sacrificed is inevitably press freedom.

Therefore, any due importance Lukoil will give to the correct definition and proper implementation to CSR will all come to naught all because of the ever-increasing curtailment of Russian press freedom.

Without press freedom any successful CSR activity will forever be in doubt because certainly the government press will pick it up.

On the other hand, the required balanced reporting for complainants against Lukoil obviously will not be reported at all.

Theoretical Considerations of Content Analyses

Like any other tool, the various available methods for content analyses are applied depending on what the purpose of the analyses will be (Audiencedialogue, 2004; Stemler, 2001; University, 2007).

For example, for voluminous sources of documents, it would be wise to apply more the quantitative aspects of analyses so as to determine the endpoint of what all the resources want to say. To date, there are even now new computer softwares which are able to quantify how many times a word, for example, appears in any given set of documents. However, any amount of quantification is meaningless without relating those figures to what the whole picture should be all about (Audiencedialogue, 2004; Stemler, 2001; University, 2007).

Thus, aptly put, each reference document when properly identified as to the nature of the document, what it is saying or what does it mean—and most importantly to point out the possible implications or consequences of its effect on all those concerned Lukoil stakeholders may perhaps be the whole essence and the truest exercise of the phrase content analysis. This part of the activity of correctly describing such reference documents is the descriptive phase or the qualitative aspects of content analysis (Audiencedialogue, 2004; Stemler, 2001; University, 2007).

The extent and to the degree that content analysis will be applied to a given set of documents must always return to the purpose for which such content analysis is being conducted (Audiencedialogue, 2004; Stemler, 2001; University, 2007).

Thus, this author can only consider it a brazen exercise in futility if sincere, true, and honest-to-goodness content analysis will only be shelved. Much hard work put upon a Study or Paper like this one deserves that the beneficiary be benefited so that, through that individual or entity can act/react appropriately and accordingly for the good of all.

Previous Studies

As an example of a previous study, there is a very excellent Paper in CSR of an oil company in Russia (Tripod, 2003).

However, such Paper because its touted “Subject” had been “decapitated” and “deboned”, remains, for all intents and purposes, in the realm of content analysis, a “dead paper” or a document no longer serving a purpose but to just remain a ready reference for whatever purpose it may serve (Kramer, 2007; Tripod, 2003).

The Paper is entitled, “Corporate Social Responsibility of Russian Oil Companies: Driving Forces Behind Corporate Social Responsibility in Russia or Why Russian Oil Companies Behave Responsibly” with no known author ascribed to it published through Tripod of Lycos, Inc. in year 2003. The “Subject” is Yukos which was “decapitated” when its former chairman Mikhail Khodorkovsky was arrested, convicted, and presently serving an eight-year prison sentence for fraud. Shortly, thereafter, Yukos was “deboned” when its main production arm or outfit, was pulled from under its feet and sold at a giveaway price to Rosneft due to Yukos’ partial payment of backtaxes (Kramer, 2007).


Definition of Terms

Corporate Social Responsibility as defined here generally is “a comprehensive set of policies, practices and programmes that are integrated throughout business operations, and decision-making processes that are supported and rewarded by top management” that represent business’ response to the expectations of the society” from “Corporate Social Responsibility of Russian Oil Companies: Driving Forces Behind Corporate Social Responsibility in Russia or Why Russian Oil Companies Behave Responsibly” of http://members.tripod.com/lidia_b/papers/CSRinRussia.htm;

Content Analysis as defined here is “any technique for making inferences by objectively and systematically identifying specified characteristics of messages” from “An Overview of Content Analysis” of http://pareonline.net/getvn.asp?v=7&n=17;

Internal Documents as defined here are all documents emanating from Lukoil;

External Documents as defined here are all documents not at all prepared by Lukoil;

Stakeholders of Lukoil as defined here are the economic agents, social groups, and state authorities that the business affects and which may in turn affect the business, from Social Code of OAO LUKOIL of http://www.lukoil.com/static_6_5id_262_.html.

Statement of the Problem

Does the Press pick up the CSR activities or issues of Lukoil considering that Lukoil has given much importance, in terms of public relations, to maintaining high CSR level nowadays?

Thesis Statement

The Press does not pick up the CSR activities or issues of Lukoil.

Significance of the Study

A very responsive and highly sensitive Lukoil management will benefit the most from the results of this Study or Paper.

Objectives of the Study

To find out if Lukoil is properly implementing its CSR policies.

To find out if the Press interests itself to cover favorably Lukoil especially its CSR activities.

Procedural Flow

For this Paper’s study in Content Analysis, all resource reference documents will be broadly classified into 2 categories from the point of view of Lukoil: Internal Documents coming from Lukoil and External Documents, not produced by Lukoil, pertaining to CSR of Lukoil.

Lukoil Internal Documents will be downloaded as those available from Lukoil’s website.

Only a maximum of 5 most recent External documents will be gathered.

Each document will be sorted out as to type of document, nature of document, issues involved in the document, implications or consequences to stakeholders.

As the situation allows, results of only a very simple quantitative aspect of the content analyses will be undertaken.

Out of these documents, one mini-case study will be formulated in order to determine if Lukoil, through the documents available, has been practicing CSR, with due diligence.

This critical evaluation of Lukoil CSR due diligence, given the situation and conditions, will be the qualitative aspects of this content analysis.

The presentation of the findings and results will be followed by the evaluation/analyses and discussion and finally by the Paper’s Insights or Recommendations.

Limitations of this Study

Due to sheer lack of material time, it could no longer be the scope of this Study to verify nor confirm the veracity or the truthfulness of the statements of the Lukoil Internal Documents.

Sufficeth it to say that much inference through common sense, much logical reasoning, or even justification when very necessary, are all to be taken into consideration for determining the value of the Lukoil External Documents.

Presentation of Findings/Results




Agree or Disagree whether Press picks up Lukoil

Insights or Recommendations


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