Shell Faces Two Niger Delta Oil Spill Lawsuits

LONDON - Royal Dutch Shell PLC is facing two lawsuits over its activities in Nigeria, after lawyers acting for a Niger Delta community whose land and water was polluted from a 2009 oil spill lodged a series of actions against the Anglo-Dutch giant in Port Harcourt and a separate suit was filed in London over two earlier spills in the same region.

The claims are the latest attempt by residents from the oil-rich Delta to seek restitution from foreign oil companies. Shell's operations there have long been criticized by environmental and rights groups, although the company contends that much of the damage caused by spills in the area is due to sabotage and theft. The company has sought to reduce its onshore Nigeria presence in recent years by selling off some fields.

However, the West African country still accounts for around 10% of the oil major's total global output of around 385,000 barrels of oil equivalent a day.

Lawyers representing tens of thousands of residents from the village of Kegbera Dere and other Ogoniland communities filed suit March 6 at the Federal High Court in Nigeria's oil hub Port Harcourt, against Shell's local onshore unit, the Shell Petroleum Development Co., or SPDC. The action pertains to an April 2009 fire on the Bomu-Bonny Trans-Niger pipeline--and subsequent oil spill--that has since been comprehensively documented in a United Nations report funded by Shell.

The suit calls on SPDC to pay compensation totaling 121 billion naira ($767 million) to assuage their hurt. The plaintiffs also want Shell to carry out the recommendations of last year's U.N. report, which suggests a nine point clean-up plan for the affected site. The report said these remediation efforts should be coordinated and conducted by a new body set up and funded by the oil industry and government.

"We are calling on Shell to acknowledge the economic and health impact on the people of K-Dere," said the plaintiff's lawyer, Amaechi Nwaiwu. "Under the common law of Nigeria, the community is entitled to compensation."

Nwaiwu said that the suits are expected to be served next week.

SPDC has conducted remediation of a site at Bomu, a company spokesman said, but added that it wasn't possible at this stage to ascertain whether it was the same area referred to in the suit as the company hadn't received notice of the action.

The Kegbera Dere lawsuit is the first to address the consequences of the Bomu manifold fire. In April 2009, a fire broke out at the manifold--a hub for a number of pipelines, used to control flow from individual oil wells. The blaze was likely due to leaking oil from rust-damaged pipes catching alight, according to a report by the installation's contractor seen by Dow Jones Newswires.

Crude oil has continued to seep into the soil and creeks that surround the Bomu manifold, a community activist told Dow Jones Newswires. According to the 2011 report by the U.N. Environment Program, some 19,000 square meters of land outside the manifold is contaminated by oil and oily residue.

"SPDC has no record of being served in any of these suits and cannot therefore comment further," a spokesman said.

A second suit against Shell was filed in London Friday by lawyers acting on behalf of the Bodo community, after talks aimed at setting compensation for two spills in 2008 broke down last week. Shell admitted liability for the two operational spills at Bodo following a joint investigation before beginning negotiations with the community's lawyers, Leigh Day & Co.

"We are desperately disappointed that the attempts to negotiate a settlement for all those affected have now failed," said Martyn Day, the lawyer representing the claimants. "We are now left with the only option of taking the claims through the U.K. Courts to obtain justice for the people of Bodo."

A lack of agreement on the number of barrels of oil spilled is believed to be the principle reason for the failure of negotiations, a person close to the talks said under condition of anonymity as the settlement process was confidential.

Shell said the Bodo legal proceedings were ongoing. It said SPDC had always accepted that it would pay compensation for the two operational spill incidents at Bodo and that the "the level of compensation would be decided in accordance with Nigerian law."

The quantum of damages being sought has yet to be established, though it is highly unlikely to be anywhere in the region of the $7.8 billion BP PLC paid out to thousands of individuals and businesses hurt by the 2010 Gulf of Mexico disaster. Shell, which posted a 2011 net profit of $29 billion, has said in its most recent annual report that although the "various environmental and contractual disputes" it faces in Nigeria "could be seen as material" if taken together, "these matters are not expected to have a material impact on Shell."

Last October, a Nigerian tribal king filed a lawsuit in a U.S. court seeking $1 billion in damages from Shell for decades of pollution in Ogoniland. The matter is currently being heard by the Supreme Court, which is weighing whether the action--brought under an 18th-century federal law that permits foreigners to sue in U.S. courts over violations of international law--can apply to corporations.

Separately, Shell in 2009 agreed an out-of-court settlement of $15.5 million with the family of activist Ken Saro-Wiwa and other plaintiffs in response to allegations of human rights abuses. Shell maintained its innocence throughout the legal battle, saying at the time the settlement was a "humanitarian gesture" to help the Ogoni, although human rights lawyers in New York two years ago hailed the agreement as a precedent for holding Shell and other oil giants responsible for activities in countries with repressive governments.

SPDC, which has publicly disclosed oil spills in the region since 1995, says it is cleans up "all spills in the Niger Delta when they occur, as fast as possible, no matter what their cause."

Shell maintains that around 75% of spills in the region have been caused by "third-party interference"--militant attacks on oil infrastructure or locals stealing oil from pipelines for use in illegal refineries.

Shell owns 30% of SPDC and holds operatorship, while Nigeria's National Petroleum Corp. owns 55%, Total SA has 10% and Nigerian Agip Oil Co. Ltd. has 5%.

Copyright (c) 2012 Dow Jones & Company, Inc.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
MIKE | Mar. 26, 2012
Another money making scam attributed to the greed of politicians lining their pockets and not passing on the actual moneys and help from Oil company's working in Nigeria to the local communities that are initially entitled to receive such help,cut out the obvious corruption and Nigerian People would be far richer and happy than they are now, the wealth generated would be equally distributed to all instead of the few. Worked their saw it with own eyes for five years.

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