A Review of the Nigerian Energy Industry

Shell debacle over Niger Delta oil spills gets complicated

Bodo creekOscarline Onwuemenyi

18 November 2014, Sweetcrude, Abuja –
If any company has been at the heart of oil and gas exploration in Nigeria with the attendant mix of wealth, power, and environmental devastation, that company is Shell.

Royal Dutch Shell, Plc (Shell D’Arcy) was among the earliest companies to explore for oil in the Niger Delta region of Nigeria, which led to the first commercial find in Oloibiri in 1956. With the discovery of oil came immense wealth for the national government, but that has also created huge and intractable environmental issues for the local people in the region.

The environmental devastation Shell’s oil exploration has caused to Ogoni lands in the Niger Delta was a primary reason for the Ogoni movement against Shell, which still goes on till today. In 2006, the Niger Delta Natural Resource Damage Assessment and Restoration Project (an independent team of scientists from Nigeria, the U.K. and the U.S.) characterized the Niger Delta as “one of the world’s most severely petroleum-impacted ecosystems.”

Their report noted that the Delta is “one of the 10 most important wetlands and marine ecosystems in the world. Millions of people depend upon the Delta’s natural resources for survival, including the poor in many other West African countries who rely on the migratory fish from the Delta.” Of the near 27 million people living in the Niger Delta, an estimated 75 percent rely on the environment for their livelihood, often farming and fishing for market or subsistence living. Shell’s operations in the Delta have led to the deep impoverishment of the Ogoni people and surrounding communities in the Delta.

Oil Spills

An estimated 1.5 million tons of oil has spilled in the Niger Delta ecosystem over the past 50 years. This amount is equivalent to about one “Exxon Valdez” spill in the Niger Delta each year. Many of the spills have taken place in sensitive habitats for birds, fish and other wildlife, leading to further loss of biodiversity and, in turn, further impoverishment of local communities. The spills pollute local water sources that people depend on for drinking, cooking, bathing, laundering and fishing. They also release dangerous fumes into the air, sometimes rendering villages uninhabitable and causing serious illness for those who are unable to relocate. Many of the oil spills can be attributable to poorly maintained infrastructure such as aging pipelines.

Environmental groups in Nigeria and Europe have filed numerous lawsuits against Shell in the Netherlands and elsewhere in Europe for its history of oil spills and lack of cleanup in Nigeria. According to the Nigerian environmental group involved in the suit, wanton oil spills that have gone on for several years and which have done irreparable damage to the land, waters and the psyche of the people of the area. It adds that cleanup of oil spills is often very superficial, sometimes involving little more than turning the land so that the oil remains just beneath the surface of the soil.

Fresh reports have indicated that the oil company Shell vastly underestimated the size of oil spills from its pipelines in the Niger Delta, and repeatedly ignored warnings from its own staff that the pipelines were in urgent need of maintenance, court documents exposed by human rights group Amnesty International have revealed. The failure of the company to replace the pipeline despite being told their lifespan was “non-existent or short”, eventually culminated in two devastating oil spills in 2008.

The documents, exposed by the human rights organization, Amnesty International, were submitted to the High Court in London as part of its defence in a lawsuit against the Dutch oil company by 15,000 Nigerians from Bodo, mostly local farmers and fishermen, in relation to compensation claims resulting from the spills.

Shell has consistently maintained that only 4,000 barrels of oil were spilt as a result of the burst pipeline – 1,640 barrels in the first spill and 2,503 in the second, despite repeated calls from Amnesty and local residents that this is a gross underestimate.

Amnesty International has repeatedly challenged Shell’s figures and supplied the company with photographic, satellite and video evidence showing that the data on the JIV reports for Bodo were incorrect.

Shell, however, has continued to defend its figures. For example in a letter to the UK Financial Times in March 2012 the Managing Director of Shell Nigeria “admitted liability for two spills of about 4,000 barrels in total, caused by operational failures”. Responding specifically to evidence published by Amnesty International in 2012 which showed the first Bodo spill was under-estimated, Shell told the UK Guardian newspaper: “[The JIV] process … was employed with the two spills in question, and we stand by the findings [of 1,640 barrels].”

According to an Amnesty spokesman, “Only two cases of oil spills in the Niger Delta have ever been taken to court, and today we have revealed that in both cases the oil company has grossly underestimated the extent of the problem. You can only imagine how this applies to the many other incidences that have occurred over the years.”

“We could possibly be looking at hundreds of thousands of more people seeking compensation,” he said.

The reports used by Shell in their estimations, titled ‘Joint Investigation Visit’ reports, decide how much compensation a community gets, if any. The reports also determine the extent of the clean-up required.

According to Amnesty, an independent assessment published by the U.S. firm Accufacts Inc. in 2012 said the total amount of oil spilt exceeded 100,000 barrels, 2,400% more than that claimed by Shell.

Leigh Day, the law firm representing the Bodo community, say that the the oil spill could be closer to 600,000 barrels, according to independent analysts.

Following the release of their defence documents by Amnesty, Shell acknowledged that the size of the spills is likely to have been substantially higher than their previous estimates.

However, Amnesty believes they have long known this. “Amnesty International firmly believes Shell knew the Bodo data were wrong,” said Audrey Gaughran, Director for Global issues at Amnesty. “If it did not it was scandalously negligent – we repeatedly gave them evidence showing they had dramatically underestimated the spills.”

“Shell has refused to engage with us and only now that they find themselves in a UK court have they been forced to come clean,” Gaughran said.

As a result of the underestimates in the reports, hundreds of thousands of people are likely to have been underpaid compensation, and many may not have received any at all. “These spill investigation reports have cheated whole communities out of proper compensation.” Gaughran said. “For years Shell has dictated the assessment of volume spilled and damage caused in spill investigation reports, now these reports aren’t worth the paper they’re written on,” she said.

The documents also show that Shell was advised by its own staff in 2002 that the 30-year-old pipeline passing through a network of impoverished Nigerian communities desperately needed replacing.

The court papers include a note by Shell made following a 2002 internal study which says: “the remaining life of most of the [Shell] Oil Trunklines is more or less non-existent or short, while some sections contain major risk and hazard”.

Another document, an internal Shell project report dated February 2002, said the company should “initiate an immediate replacement” of the trans-Niger pipeline.

It wasn’t until six years later, in November 2008, that the company publicly admitted that there was something wrong when the 24-inch trans-Niger pipeline burst twice within two days, releasing thousands of barrels of oil.

Following the UK court case, Shell has agreed to carry out another investigation into the amount of oil spilled in the two oil spills, but will carry out the investigation itself. “They will be investigating into their own misconduct, and this will bring exactly the same problems”, an Amnesty spokesperson said.

Speaking to SweetcrudeReports, a spokesperson for Shell described the two spills as “deeply regrettable.” According to him, “We want to compensate fairly and quickly those who have been genuinely affected and to clean up all areas where oil has been spilled from our facilities,” he said.

He added that, “As part of the litigation process, we asked satellite remote sensing experts, hydrologists and specialists in mangrove ecology to assess how the Bodo waterways and mangroves were impacted and other relevant information addressing the question of the volume of these spills, and the extent of the damage. Having reviewed their findings, we accept that the total volume of oil released as a result of the two operational spills is likely to have exceeded the joint investigation visit estimates.”

Whilst the company have taken responsibility for the two 2008 spills, they have repeatedly blamed oil thieves for the many other incidents that have occurred along its pipelines and have refused to pay more than £15m compensation.

In a statement made available to the media, Shell said, “We are in the process of preparing for a trial in May 2015 regarding the Bodo operational spills, at which time internal documents produced by SPDC relating to the Trans Niger Pipeline (TNP) will be set in their proper context for review by the court.”

Meanwhile, the Shell Petroleum Development Company of Nigeria Ltd, SPDC, has recommitted to cleaning up the operational oil spills which occurred in Bodo, Ogoni land in 2008, while dismissing suggestions it knowingly operated with compromised pipelines.

According to a spokesman for the SPDC Ltd., “From the outset, we’ve accepted responsibility for the two deeply regrettable operational spills in Bodo. We want to compensate fairly and quickly those who have been genuinely affected and to clean up all areas where oil has been spilled from our facilities.

“Following the 2008 spills, as part of a statutory process overseen by the regulator, a team including relevant government agencies, SPDC and representatives of the Bodo community visited the spill sites and completed a Joint Investigation Visit report. They estimated that the total volume of oil spilled was in the region of 4,144 barrels.

“As part of the litigation process, we asked satellite remote sensing experts, hydrologists and specialists in mangrove ecology to assess how the Bodo waterways and mangroves were impacted and other relevant information addressing the question of the volume of these spills and the extent of the damage. Having reviewed their findings, we accept that the total volume of oil released as a result of the two operational spills is likely to have exceeded the Joint Investigation Visit estimates.

“While naturally, the findings in relation to the Bodo Joint Investigation Visit and the volume of oil from these spills are of concern to us, it’s not the key issue for the purpose of determining the appropriate level of compensation. SPDC is prepared to compensate all members of the Bodo community who have been genuinely affected by the spills, taking account of the entire area which has been impacted.”

The statement further noted that SPDC has been working together with the National Coalition on Gas Flaring and Oil Spills in the Niger Delta to improve the quality of Joint Investigation Visits at SPDC facilities in the Niger Delta. A number of important changes have been made to the Joint Investigation Visit process such as the inclusion of independent observers (including NGOs) and the publication of spill reports online. “We will continue to work with regulatory and community bodies in Nigeria to improve these processes further,” it added.

SPDC has also dismissed the suggestion that it has knowingly continued to use a pipeline that is not safe to operate. The condition of the pipeline is regularly assessed. Also, SPDC has always made use of the opportunity presented during sabotage/crude theft point leak repairs to carry out on-the-spot coating and internal checks to confirm the integrity of the pipeline and coating. The majority of failures on the TNP have been third party damage resulting from sabotage (hacksaw cuts, drilled holes, etc.) and illegal crude theft. From 2010-13, a total of 25 leaks were recorded on the facility – 23 of which were due to sabotage and two operational pinhole leaks.

According to the statement, “SPDC ceased operations in Ogoniland in 1993 following a rise in violence, threats to staff and attacks on facilities. Levels of violence and criminality have remained high over the following 21 years constraining SPDC’s ability to access the area.

“We are in the process of preparing for a trial in May regarding the Bodo operational spills at which time internal documents produced by SPDC relating to the Trans-Niger Pipeline will be set in their proper context for review by the court.”

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