A Review of the Nigerian Energy Industry

Shell says lawyers delaying Nigeria spill pay

22 March 2012, Sweetcrude, Lagos – Shell has blamed “cynical games played by lawyers” and legal process for holding up the payment of compensation resulting from its admittance of responsibility over two oil spills in Nigeria in the last decade.

The Anglo-Dutch supermajor has also hinted that its clean-up efforts following the 2008 and 2009 spills in Ogoniland’s Bodo community in Niger Delta may have been hampered by locals seeking to claim more cash.

In a letter published in the Financial Times on Thursday, Mutiu Sunmonu, head of Shell’s Nigerian joint venture Shell Petroleum Development Company (SPDC), criticised an article which had appeared in the newspaper the previous day and which focused on the aftermath of the spills.

Wednesday’s article refers to a report from Amnesty International suggesting 4000 barrels of crude were spilled in the first leak alone with even more in the 2009 incident, whereas Shell’s figure of 4000 barrels covers both spills.

“Though environmental damage in the Delta is extensive, compensation for victims and proper clean-up is rare, thanks to weak laws, government indifference and the lax standards of oil companies,” it read.

In August last year, Shell admitted responsibility for both spills and committed to settling with claimants under Nigerian law. The claimants’ cases were led by London-based law firm Leigh Day and included three sets of claims: firstly, for $100 million of clean-up funding, secondly for damages to community land; and thirdly for losses suffered by the claimant families of Bodo, many of whom rely solely on fishing for their livelihood.

“Half a year on, the clean-up has yet to start. SPDC said it could not comment due to continuing talks with Leigh Day,”the Financial Times report continued.

Sunmonu’s letter accused the newspaper of failing to “properly…convey the highly complex situation in the Niger Delta”, reaffirming the supermajor’s commitment to “cleaning up all oil spilt from our facilities, no matter what the cause”.

“In the case of Bodo, it is deeply regrettable that both before and since those two operational spills occurred, much more oil has been spilt as a result of illegal activity – sabotage, illegal refining and theft – which blights the Delta generally.

“Our clean-up teams were able to deal with the initial operational spills, but subsequently they have been prevented by local communities from reaching sites that were re-impacted by this illegal activity to begin clean-up and remediation work. This could be because those communities hold a misguided belief that more spilt oil, irrespective of the cause, equals more compensation.

“Of course, we accept the need for due process to be followed. However, it is the legal process, initially in Nigeria and subsequently in the UK, and the cynical games played by lawyers in both countries, that has prevented the swift payment of compensation in this case, and has certainly delayed clean-up operations,” the letter concluded.

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