Shell to pay $111m to resolve long-running oil spill dispute in Nigeria

The Nigerian unit of Royal Dutch Shell Plc has agreed to pay $111 million to a local community to resolve a long-running dispute over an oil spill that occurred more than half a century ago.

The Anglo-Dutch energy giant will pay the Ejama-Ebubu people 45.7 billion naira ($111 million) in compensation to end a legal case that began in 1991, the lawyer for the community, Lucius Nwosu. Shell sued a Nigerian court on Wednesday [Aug. 11] disclose the development, he said.

The payment “is for the full and final satisfaction” of a judgment against the company 11 years ago, a spokesman for Shell’s Nigerian subsidiary said via email.

Related: Shell abandons efforts for oil spill trial to be heard in Nigeria

The settlement could simplify Shell’s withdrawal from onshore operations in Nigeria, Africa’s largest crude producer. The company has been selling assets to domestic investors for more than a decade to prioritize deepwater projects away from the challenges of managing community relations.

Among Shell’s onshore field portfolio is Mining License 11 – the site of the pipeline incident – which it operates in joint venture with state-owned Nigerian National Petroleum Corp., TotalEnergies SE and Eni SpA. Shell continues to be sued for oil spills in the Niger Delta region in courts in Nigeria, the UK and the Netherlands.

The origin of the Ejama-Ebubu community’s grievance against Shell dates back to a rupture of one of the company’s oil pipelines in 1970. Shell says it claims environmental damage was caused by ‘third parties’ during a civil war that raged through time.

Arbitration procedure

While the joint venture that Shell operates “accepts no responsibility for these spills, the affected sites in the community of Ebubu have been fully remediated”, the company said.

In 2010, a federal court ordered Shell to pay 17 billion naira to the community. The oil major has unsuccessfully challenged the decision on several occasions, most recently before the Supreme Court in November.

In March 2020, a judge in a related court case said that including accrued interest, Shell’s debt amounted to almost N183 billion in January 2019 – an assessment the company strongly disputed.

In February, Shell filed arbitration proceedings against the Nigerian government at the World Bank’s International Center for Settlement of Investment Disputes after its failed attempts to overturn the 2010 ruling. Shell did not say in its statement whether it would withdraw the application.

Shell will pay the agreed sum within 21 days, Nwosu said.

Photograph: Abandoned fishing boats sit on the ground as crude oil pollution coats the shore of an estuary in B-Dere, Ogoni, Nigeria, Saturday February 1, 2020. Photo credit: George Osodi/Bloomberg.

Copyright 2022 Bloomberg.

Energy Oil Gas

Interested in Energy?

Receive automatic alerts for this topic.

Previous Census shows Trumbull grew in size and diversity
Next Seven dead in attack on Shell facility in southeast Nigeria