A Review of the Nigerian Energy Industry

Nigerian agencies seek $11.5bn spill payout

01 April 2013, News Wires – Two Nigerian government agencies told a parliamentary hearing on Thursday that Royal Dutch Shell should pay a total of $11.5 billion in compensation for damage caused by an oil spill at its offshore Bonga field in December 2011, according to a report.

Shell has said that there is no legal basis for the proposed fines and the Nigerian government has never publicly charged foreign oil companies large sums for oil spills, Reuters reported.

The national assembly can recommend fines the government should impose on oil companies but it has no power to enforce them.

The National Oil Spill Detection and Response Agency (NOSDRA) told the national assembly Shell should pay $5 billion as a fine for environmental damage caused from a 40,000 barrel spill on 20 December 2011 at the Bonga offshore rig.

The Nigerian Maritime Administration and Safety Agency (NIMASA) sought $6.5 billion as compensation for 100 communities it says were affected onshore by the oil spill, which was one of the biggest in the history of Africa’s largest energy industry.

Shell has taken responsibility for the Bonga offshore oil spill but says onshore damage was the result of a different spill a few days later that was not its fault. It said it has cleaned up areas affected by both spills.

“We are going to do post-impact assessment to determine the effect on the environment. By May the contractor would get to the site and by the third quarter of the year the job would be concluded,” Chike Onyejekwe, managing director of Shell’s offshore Nigeria unit told lawmakers.

“We cannot do or say anything now until we do the post-impact assessment study. We have received over 300 letters of claims and we are replying to them.”

The national assembly told Shell to submit its clean-up plans and assessments to lawmakers next week when a date for a future hearing would be set.

NOSDRA and NIMASA are asking Shell for compensation which would equate to around $287,500 per barrel for the 40,000 barrel Bonga spill.

In comparison, BP has total provisions of $42.2 billion for compensation for the 4 million barrels spilled in the spill in the Gulf of Mexico in 2010, which amounts to around $10,550 per barrel.

Hundreds of thousands of barrels of oil are spilled in the mangrove creeks onshore Nigeria every year, destroying the environment and livelihoods.

Many are caused by sabotage or oil theft, but a United Nations report in 2011 said oil firms don’t do enough to clean up spills and maintenance of infrastructure was inadequate.

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  • It is indeed within the right of the government and her agencies to impose fines and punishments it deems fit for infractions and other offences to act as a deterrent against future occurrence.

  • It is indeed within the right of the government and her agencies to impose fines and punishments it deems fit for infractions and other offences to act as a deterrent against future occurrence.

  • It is indeed within the right of the government and her agencies to impose fines and punishments it deems fit for infractions and other offences to act as a deterrent against future occurrence.

  • It is indeed within the right of the government and her agencies to impose fines and punishments it deems fit for infractions and other offences to act as a deterrent against future occurrence.

  • It is indeed within the right of the government and her agencies to impose fines and punishments it deems fit for infractions and other offences to act as a deterrent against future occurrence.

  • It is indeed within the right of the government and her agencies to impose fines and punishments it deems fit for infractions and other offences to act as a deterrent against future occurrence.

  • It is indeed within the right of the government and her agencies to impose fines and punishments it deems fit for infractions and other offences to act as a deterrent against future occurrence.