Four Nigerian farmers sue Shell in Dutch court over pollution

Four Nigerian farmers sued Shell before a Dutch court, accusing the oil giant of destroying their livelihoods in a case that could set a precedent for global environmental responsibility.

The civil suit, backed by lobby group Environmental Action Right/Friends of the Earth, alleges that oil spills dating back to 2005 by the Anglo-Dutch company made fishing and farming in the plaintiffs’ Niger Delta villages impossible.

The four, who are fishermen and farmers, are seeking unspecified compensation and argue they can no longer feed their families because the area has been polluted with oil from Shell’s pipelines and production facilities.

Shell says the pollution was caused by oil thieves and that it has played its part in cleaning up.

“The real tragedy of the Niger Delta is the widespread and continual criminal activity, including sabotage, theft and illegal refining, that causes the vast majority of oil spills,” the group said in a statement.

Friends of the Earth said it hopes the case – set to last a day during which attorneys for both sides will present arguments before the judges retire to give their verdicts next year – will set a precedent and lead to “an end to the corporate crimes committed by oil giants like Shell in Nigeria and around the world”.

Wetland ecosystem

With around 31 million inhabitants, the Niger Delta, which includes the Ogoniland region, is one of the top 10 wetland and coastal marine ecosystems in the world and is a main source of food for the poor, rural population.

It’s not only environmental groups who have been critical of Shell’s Nigerian operations.

Last year, the United Nations said in a report the government and multinational oil companies, particularly Shell, were responsible for 50 years of oil pollution that had devastated the Ogoniland region.

In one community near an oil pipeline, drinking water was contaminated with benzene, a substance known to cause cancer, at levels over 900 times above the World Health Organization guidelines.

Shell also faced legal action this month in the United States, where the U.S. Supreme court is hearing a case in which Nigerian refugees accused it of aiding the Nigerian military in the torture and killing environmentalists in the 1990s.

The government and oil firms have pledged to clean up the region and other parts of the Delta, but residents say they have seen very little action.
Royalty payments from oil firms and the sharing of federal oil revenues mean state governments in the Niger Delta have larger budgets than many West African nations, but endemic corruption has meant that little development has been achieved.

Shell Petroleum Development Co (SPDC) is the largest oil and gas company in Nigeria, with production capacity of more than 1 million barrels of oil equivalent per day. It operates a joint venture with the Nigerian National Petroleum Corp and other oil companies including Total SA subsidiary Elf Petroleum Nigeria Ltd.

Shell says PIB will make projects unviable

Leading oil producer Shell has said that the tax terms proposed in the Petroleum Industry Bill (PIB) are so uncompetitive they risk rendering offshore oil and gas projects unviable, the firm’s managing director and industry sources said.

In comments from a stakeholders’ forum that Shell sent to Reuters on Wednesday, the Shell Nigeria managing director Mutiu Sunmonu welcomed the bill’s arrival in parliament, but warned it may stifle investment if its terms are not improved.

President Goodluck Jonathan approved the latest draft of the PIB last month, and parliament is expected to start debating it over the next few weeks.

If it goes through, the bill should end years of regulatory uncertainty that has blocked billions of dollars of investment.

“A balanced PIB is what is required – one that will provide optimal revenue to the government whilst providing sufficient incentives for new investment to fuel growth,” Mr Sunmonu said, adding it must also “take local business challenges into consideration as well as the impact on existing investments.”

“What we have seen of the draft PIB to date does not indicate a bill that fits these criteria.”

The PIB is meant to change everything from fiscal terms to overhauling the Nigerian National Petroleum Corporation (NNPC). Its comprehensive nature caused disputes between lawmakers, ministers and the oil majors that have held it back for more than five years. A previous draft never got through parliament.

“The current draft PIB requires significant improvement to secure Nigeria’s competitiveness,” Sunmonu warned. “As it stands right now the PIB will render all deepwater projects and all dry gas projects … non-viable.”

“Strange competitiveness”

Government officials were not immediately available for comment.

On the current draft, oil companies will pay 50 percent profit tax for onshore and shallow water areas and a 25 percent one for frontier acreage and deep water areas.

Current taxes on both are not disclosed.

An industry source, who could not be named, said the deep water profit tax was a worse deal than most oil majors were getting on existing deep water projects.

Since the PIB is supposed to govern these retrospectively, the companies would lose earnings on these existing investments, he said, although there was no disagreement over onshore.

Mr Sunmonu also expressed concern over the terms on projects to unlock Nigeria’s huge latent gas potential for domestic use in power plants. The country has 187 trillion cubic feet of proven gas reserves, he said.

“A bad PIB will deter investment … Nigeria needs to compete – and the PIB will either enable or strangle that competitiveness,” Sunmonu said.
Analysts say the terms for onshore are way more favourable than the deals in existence now. Little is known about secretive terms on offshore contracts.

Nigeria exports some 2 million barrels per day (bpd) but could double that with a better-managed industry, foreign oil majors say. They also say fiscal terms need to compensate them for the extra security risks of operating here such as piracy, kidnapping and oil theft by armed gangs.
An amnesty ended political militancy in the oil rich Niger Delta in 2009, but industrial scale oil theft continues.

“All of this has had a huge impact on both cost and revenues, but we can live with them … provided the underlying fiscal regime is positive,” Mr Sunmonu said.

Shell confrims pump failure in Bayelsa

Shell's office in Port-HarcourtThe Shell Petroleum Development Company on Wednesday confirmed a pump failure at their facility in Niger Delta,  Bayelsa State.

Precious Okolobo who is the spokesman for Shell said, the incident occurred at Nembe Creek, 3 Flow Station, Bayelsa State.

Okolobo said “A pump failure was reported at SPDC’s  Nembe Creek 3 flow station this morning. The pump was immediately shut down,”

“However, some oil escaped from the seal into the saver pit in the flow station with some sheen observed. The pump has been repaired,” the spokesperson said.

“There was no oil spill, and there was no impact on the environment,” the statement quoted him as saying.

Chairman of the Oil and Gas Committee, Nengi James, said the spill was as a result of a technical fault.
He added that the spill had already flown from Nembe Creek to the Brass River down to the Atlantic Ocean.

Nengi called on the Anglo Dutch oil firm to pay appropriate compensation and embark on a thorough clean-up of the area.

Senate to probe $1.092 billion Malabu oil deal

The Senate on Thursday resolved to investigate the alleged sale of oil Block, OPL 245 to Malabu Oil and Gas Limited at $1.092 billion (about N178.812billion) by the Federal Government.

This resolution followed a motion moved by Ahmed Abdul Ningi (Bauchi Central) and supported by 46 other senators pointing out the legal and ethical issues arising from the transaction and pattern of distribution of proceeds to the beneficiaries.

Senator Ningi argued that the investigations should be conducted by an ad-hoc committee constituted by the Senate because issue involved oil resources, bank transactions and also raised issues of corruption.

He said Nigeria signed up to the Global Extractive Industries Transparency Initiative (EITI) in 2003 and began implementation in 2004 and that the country later supported the policy with the Nigerian Extractive Industry Transparency Initiative (NEITI) Act 2007.

According to the Senator, the objective of the Act as encapsulated in Section 2(a and c) of the Act, included ensuring due process and transparency in payments made by all extractive industry companies to the Federal Government and statutory recipients.

Senator Ningi insisted that the Act also seeks to eliminate all forms of corrupt practices in the determination, payment, receipts and posting of revenue accruing to the Federal Government from the extractive industry companies.

He expressed worries over recent clamour for a review of “circumstances surrounding a tripartite transaction involving the Federal Government, Shell/Agip as well as Malabu Oil and Gas Limited in respect of Oil Bloc referred to as ‘OPL 245’ to the effect that the Federal Government purported to sell OPL 245 to Shell/Agip Consortium in the sum of 1,092,000.000 United States Dollars.”

Despite an objection by Heineken Lokpobiri, the senate referred the motion to the senate’s selection committee to determine which of its standing committees should handle the probe.

The Red Chambers thereafter adjourned plenary till September 17, 2012.

Bonga spill: Shell says $5 billion fine is unjustified

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.

Nigeria loses $5billion to oil theft annually-Shell

Oil theft is costing the nation, a whooping N5 billion loss every year.

This was revealed by the Managing Director of Shell Petroleum Development Company Nigeria PLC, Mr Mutiu Sumonu, who addressed a public hearing on the upsurge of illegal oil bunkering activities in Nigeria’s coastal region.

The Shell boss told the hearing organised by the House of Representatives Joint Committee on Petroleum Resources (Upstream) and Navy, that Nigeria loses approximately 150,000 barrels of oil to illegal oil bunkering daily, while the company lost 100 barrels daily between 2003 and 2004.

He adds that the activities of oil thieves have shifted from pilfering to a higher dimension.

Mr Sumonu believes all those involved in the oil sector must display the political will to fight illegal oil bunkering.

He described illegal oil bunkering as a highly syndicated operation that involved oil company workers.

The Speaker of the House of Representatives, Alhaji Aminu Tambuwal, however assured Nigerians that the National Assembly would continue to support the committee in checking illegal oil bunkering.

Also speaking, the chairman, House Committee on Petroleum Resources Upstream, Representative Muraina Ajibola called for strengthening of relevant institutions by way of allocating more fund for purchase of equipment.
He said that the Nigeria Maritime Administration and Safety Agency (NIMASA) need to step up it’s operations to check maritime theft.


Ogoni village sues Shell in London over oil spill compensation

The residents of Bodo community in Gogana local government area of Rivers state on Friday squared off against Shell’s Nigeria operation in a London courtroom, demanding compensation for recent oil spills.

While the Nigerian unit of Royal Dutch-Shell Group of Companies, based in London, took responsibility for the spill of about 4,000 barrels in the Niger Delta, lawyers representing the community had to file a lawsuit after negotiations broke down, the BBC reported Friday.

The head of Shell Petroleum Development Co. of Nigeria said lawyers representing claimants made it difficult for the matter to be resolved.

When Shell accepted responsibility last August for spills in 2008 and 2009, it said they were caused by operational failures and promised to clean up the oil, restore the land and pay compensation in accordance with Nigerian law.

Martyn Day, the British attorney representing Bodo residents, said the spills devastated a once-thriving fishing community of about 50,000 people.

“I’ve been around Bodo on a number of occasions and you just have to walk round. It looks like a World War I scene, where the oil has totally destroyed much of the local environment and the fish … have basically disappeared from the area,” he told the BBC.

Shell has argued that much more oil was spilled because of illegal activity in the Niger Delta, such as sabotage and theft.

Mutiu Sunmonu, managing director of the Nigerian operation, said understanding the “the complexities of the Niger Delta” was key when considering compensation.

“We did do everything possible to make sure that we pay compensation to the affected communities, but we also have to make sure that this compensation is paid to the right people,” Sunmonu said. “The trouble is you cannot do that as long as [different] lawyers are representing them.”

Why we can’t build refinery in Nigeria-Shell

The outgoing Executive Director of Shell Petroleum Development Company (SPDC), Malcolm Brinded on Friday said the company cannot build a refinery in Nigeria because there are surplus refineries across the world.

Mr Brinded, who is in-charge of the Upstream International unit of Shell, said this in an interview with the State House correspondents, after a farewell visit to President Goodluck Jonathan at the State House.

The out-going Shell Director, who led a delegation to the State House, Abuja, said rather than build new refineries, the company was divesting from those it had interest in around the world.

“With respect to downstream, two comments there. Shell is divesting from refineries all over the world because there is a surplus of refineries; we no longer own any refineries even in the United Kingdom.

“I will also say because of the surplus of refineries available in a way, one has to look very closely whether building new refineries is a good investment for anyone not just for Shell but for countries involved.

“In today’s world, not looking at the past but where we are today, there is surplus of refinery capacity which essentially means many refineries in the world run at a loss.

“Which also means one can get refined products back again and pay very little for it to be refined,’’ he said.

Mr Brinded said that building refineries was no longer profitable and that informed the company’s decision to invest in the gas sector.

According to him, Shell would continue to invest in the development of the gas sector.

“I do believe that investment in the downstream sector, especially gas sector in Nigeria, as I touched on, is very important,” he said.
On the concentration on exporting gas rather than supporting domestic supply, particularly government’s drive to develop the power sector, he said, “yes if you look at our reinvestment over recent years, particularly the involvement and the building of Afam power station, the construction of the Baron UBA and it’s supply to local power and now as we look at the next round of projects, we tend to be involved in the development of the local gas sector for use in power, commercial, industry and so forth. If I look back 10 years ago, we might have done more, but today, I completely agree is a very important sector for the country and is important sector for Shell in this country.”

On the issue of oil spillage, he said most of the spills were caused by bunkering.

“I think the first thing is to distinguish between operational spills which shouldn’t happen and the spills that come from bunkering and theft, which of course we will be pleased to see absolutely stopped.

“Our focus is on cleaning up spills whatever the course, but of course we feel we must prevent the spills that come from our own operations. We are looking and addressing how we can we make sure that the way we remediate and clean up spills is done to the highest international standards and especially how can we give confidence to local communities that the attribution of the spills have been correctly done. And we are making moves to bring in more independent observations of that process of how we determine cause of spills.”

Shell asks U.S. Supreme Court to squash Nigeria’s human rights law suit

The Royal Dutch Shell has asked that the U.S. Supreme Court throw out a law that allows the corporation to be sued on U.S. soil by Nigerians seeking damages for human right abuses committed by the Nigerian government in the 1990s, even as Supreme Court justices expressed doubts about the validity of the law.

According to Reuters, the U.S. Supreme Court is considering limiting the power of the 1789 U.S. law, used more frequently in the past two decades, by foreigners seeking to hold multinational corporations liable for abuses committed outside Western borders.

In 2002, 12 Nigerians filed a lawsuit against oil-producing giant Shell was complicit in the “widespread and systematic human rights violations” committed by the military regime of late General Sani Abacha, which include torture, executions, illegal detentions and indiscriminate killings in the Ogoni region of the Niger Delta.

Recently released court documents had revealed close ties between the oil corporation and the military regime. They alleged that Shell bankrolled Nigeria’s military and police officials that had forcefully supressed peaceful protests carried out by locals outraged by the oil company’s destructive activities in the oil-rich Ogoniland region.

Earlier reports by the Guardian said that confidential memos, faxes and witness statements had shown that Shell had often times helped plan raids on villages suspected of opposing them.

Business Week reported, however, that Shell had argued before the high court in Washington today that the 1789 law can’t be used to sue corporations.

Kathleen Sullivan, a lawyer for Shell in the Kiobel v. Royal Dutch Petroleum Co. case, said Shell was not seeking a “rule of corporate impunity”.
“Corporate officers are liable for human-rights violations and for those they direct among their employees. There can also be suits under state law or the domestic laws of nations. But there may not be ATS federal common-law causes of action against corporations.”

The Nigerian plaintiffs argued that the law applies and Shell should be held accountable, adding that there is nothing in the law that limits its reach to just individuals.

In a Business Week report, Paul Hoffman, who represents the Nigerian plaintiffs, was cited as criticising the corporation’s position and arguing that “even if these corporations had jointly operated torture centres with the military dictatorship in Nigeria to detain, torture, and kill all opponents of Shell’s operations in Ogoni, the victims would have no claim.”

A number of conservative Supreme Court justices on Tuesday argued that the law should not apply to corporations, arguing that the case against Shell has no place in a U.S. court room.

“What business does a case like that have in the United States?” Justice Samuel Alito asked Paul Hoffman, the California attorney who argued for the plaintiffs.

“There’s no connection to the United States whatsoever,” Alito said. “This kind of lawsuit only creates international tension.”

Reuters also reported that Justice Anthony Kennedy questioned whether international law recognized corporate responsibility for the alleged offenses in the lawsuit, while Justice Antonin Scalia suggested the United States Congress make amendments to the law to include corporations.

The Obama administration, Reuters reported, was in support of Hoffman, representing the Nigerian plaintiffs. Deputy Solicitor General Edwin Kneedler argued that a U.S. appeals court in New York was wrong in ruling that an international corporation could not be held accountable in the U.S.

Kennedy opposed Kneedler’s arguments; he said: “Suppose an American corporation commits human trafficking with U.S. citizens in the United States. Under your view, the U.S. corporation could be sued in any country in the world.”

Shell’s counsel Sullivan who had argued that corporations be held to different standards from individual officials was opposed by some Supreme Court justices who disagreed with her argument that only individuals could be held accountable for human rights abuses.

“Where do you find that in international law?” Justice Elena Kagan asked.

Shell has the support of the British, Dutch and German governments, Reuters reported, as well as that of other multinational corporations.

The United States has seen more than 120 lawsuits against 59 corporations for alleged wrongful acts in 60 countries in the past two decades, lawyers have confirmed.

The cases are largely unsuccessful, and a handful of cases are settled out of court. Many still have gone on for years, with no ruling in sight.
Reuters reports that the Supreme Court is expected to rule in the case by the end of June.

Smugglers steal 150,000 barrels of oil daily – Shell

Organized crime syndicates in Nigeria are stealing about 150,000 barrels of oil daily from the maze of pipelines crisscrossing Nigeria, an executive with Royal Dutch Shell PLC (RDSA) said at a gas conference in Abuja on Tuesday.

Even after the end of a decades-long conflict with oil militants, and as Nigeria’s oil production returns to pre-conflict levels, the country is struggling to squash an increasingly mafia-like network of oil smugglers, whose crude is tapped from pipelines and sold on international markets, said Sub-Saharan Africa Executive Vice President Ian Craig for Shell Upstream International, the exploration and production arm of the oil company.

Along with the increasingly sophisticated deep water technology, the theft is pushing major oil producers like Shell to seek oil blocks farther off-shore in Nigeria, where oil production facilities are safe from both theft and much of the regulation Nigeria applies to on-shore platforms.

On a single pipeline, Mr Craig said his company observed 50 illegally-installed valves where thieves tapped oil, along with “industrial scale illegal refineries with major, major environmental impact.”

With Nigeria’s daily output currently estimated at 2.4 million barrels, the shadow bunkering industry would account for one out of every sixteen barrels of oil the country drills.

“Some countries aspire to that level of production,” the Shell executive said.

The company is considering another 200 wells and three platforms in Nigeria, particularly across Nigeria’s “substantially understated” off-shore reserves, he said.

“Nigeria has the resources to attract hundreds of billions of dollars in oil investment,” he said. “Nigeria’s deep-water development has been impressive, but when compared to Angola, it is clear the level of development is far below Nigeria’s full potential.”

Shell fixes Nigerian pipeline

Royal Dutch Shell’s Nigerian venture has finished repairs to a damaged Nigerian oil pipeline and restored output, the company said on Friday, boosting supplies from Africa’s top exporter.

Shell fixes Nigerian pipeline

Shell Petroleum Development Co. (SPDC) had to shut down the 90-kilometre (56-mile) Nembe Creek Trunkline on December 24 after leaks caused by crude theft, delaying oil output of 70,000 barrels per day (bpd).

“Repair of the Nembe Creek Trunkline has been completed and production restored,” Shell said in an emailed statement. Earlier on Friday, the company said it aimed to finish the work before the end of January.

Shell said an investigation by government officials, Shell and community representatives found thieves had installed valves at two points on the line in Nembe, Bayelsa State. The company recovered more than 200 barrels of spilled oil.

“What is really worrying about this leak is that it happened on a facility which was commissioned in October 2009 to replace an old line which was repeatedly targeted by crude oil thieves,” said Tony Attah, a Shell official, quoted in the earlier statement.

Oil theft, known as bunkering in Nigeria, is rampant in the Niger Delta and often disrupts output. Thieves drill into pipelines that pass through winding creeks and waterways in the Niger Delta region.

The practice is thought to be worth hundreds of millions of dollars a year.

Nigerian oil is of high quality and significant supply disruptions can boost world prices. Nigeria is set to export around 164,000 bpd of Bonny Light in February, 8.5 percent of total Nigerian shipments of 1.94 million bpd.

The Nembe pipeline sends crude produced by Shell’s venture and other companies to the Bonny export terminal. As a result of the leak, Shell declared force majeure on Bonny Light crude exports in early January.

Shell said on Friday the force majeure — a legal clause allowing a company to miss deliveries due to circumstances outside its control — remained in place.

An oil trader said he expected the force majeure to be lifted soon given that production has been recovering.

Oil Giant Shell Shuts Down 200,000 bpd Oilfields in Bonga

Nigeria’s largest oil producer Royal Dutch Shell released a statement today confirming that the company will be shutting down its 200,000 barrels per day (bpd) Bonga oilfield after a leak occurred off the Nigerian coast.

According to the statement “less than 40,000 barrels of oil” has leaked into the ocean; however spokesman for the giant oil company assured that the flow of oil has now ceased.

The statement explained that an oil tanker transporting crude product from Shell’s Bonga facility, about 120km off the Nigerian coast, was responsible for the leak.

A Reuters data reported that the Shell facility in Bonga “accounts for around 10 percent of monthly oil flows from OPEC member Nigeria”.

“We are sorry this leak has happened. As soon as we became aware of it, we stopped the flow of oil and mobilised our own resources, as well as industry expertise, to ensure its effects are minimised,” said Shell Nigeria Country Chair Mutiu Sunmonu.

“It is important to stress that this was not a well control incident of any sort, and to make clear that no-one has been injured. Our focus now is on a speedy and effective clean-up,” he added.

The flow of oil is reportedly halted on all three of the platform’s export lines where it is believed that the leak occurred, the Spokesman said.

Shell has assured that it is launching an investigation in order to discover the reason behind the leak; they however did not disclose a timeframe for restarting production at the facility.

According to Reuters, Shell’s share price fell during the day by around 1.5 per cent on Wednesday to 2,271 pence by 1314 GMT today.

West Africa’s oil traders speculated that the shut-down of Shell will “likely boost prices for other Nigerian grades”. “It should lend some support to the remaining Nigerian (oil),” said one trader.