Bonga spill: Shell says $5 billion fine is unjustified

Channels Television  
Updated July 18, 2012

Royal Dutch Shell on Wednesday said it broke no laws in Nigeria that would warrant a $5 billion penalty from a 40,000-barrel oil spill in December.

Shell in December closed operations at the offshore Bonga production platform following a leak from an export line feeding a tanker. The company said preliminary estimates indicated 40,000 barrels of oil spilled, making it one of the worst in Nigeria in decades.

Nigeria’s National Oil Spill Detection and Response Agency (NOSDRA) proposed a $5 billion fine, which represents about $125,000 per barrel spilled, to the National Assembly.

NOSDRA said the spill was caused by a failure in Shell’s export pipe and that the it badly affected approximately 950 square kilometers of water surface and a great number of sensitive environmental resources.

“It has a direct social impact on the livelihood of people in the river areas whose primary occupation is fishing,” the NOSDRA maintained.
Bonga accounts for around 10% of monthly oil flows from Nigeria. Production restarted in January.

Oil spills are often onshore in Nigeria with many caused by sabotage or thieves tapping into easily accessible pipelines. Several communities have taken Shell to court over a failure to clean up spills.

A United National Environment Programme report last year said Shell was not doing enough to clean up spills and maintenance of the infrastructure was inadequate.

Shell said the Nigerian penalty was without merit.

“We do not believe there is any basis in law for such a fine,” a Shell spokesman was quoted by The Wall Street Journal as saying. “Neither do we believe that Shell Nigeria Exploration and Production Co. has committed any infraction of Nigerian law to warrant such a fine.”

Shell said fallout from the spill was minor and the response to the December incident was sufficient.

NOSDRA needs to justify the proposed penalty to members of the National Assembly before it’s approved.