Tag Archives: Shell Petroleum Development Co (SPDC)

Assigning Responsibility for Oil Leaks: Shell’s Deep Pockets

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Royal Dutch Shell’s  Nigerian subsidiary has been ordered on January 29, 2021 by a Dutch court to pay compensation for oil spills in two villages in Nigeria…The case was first lodged in 2008 by four Nigerian farmers and Friends of the Earth Netherlands. They had accused Shell and its Nigerian subsidiary of polluting fields and fish ponds through pipe leaks in the villages of Oruma and Goi.

The Court of Appeal in the Hague, where Shell has its headquarters, also ordered the company to install equipment to safeguard against future pipeline leaks. The amount of compensation payable related to the leaks, which occurred between 2004 and 2007, is yet to be determined by the court.  The case establishes a duty of care for the parent company to play a role in the pollution abroad, in this case by having the duty to make sure there is a leak-detection system…

Shell argued that the leaks were caused by sabotage…

In recent years there have been several cases in U.K. courts related to whether claimants can take matters to a parent company’s jurisdiction. In 2019, the U.K. Supreme Court ruled that a case concerning pollution brought by a Zambian community against Vedanta, an Indian copper-mining company previously listed in the U.K., could be heard by English courts. “It established that a parent company can be liable for the actions of the subsidiary depending on the facts,” said Martyn Day, partner at law firm Leigh Day, which represented the Zambians.

The January 2021 case isn’t the first legal action Shell has faced related to pollution in Nigeria. In 2014, the company settled a case with over 15,000 Nigerians involved in the fishing industry who said they were affected by two oil spills, after claims were made to the U.K. High Court. Four months before the case was due to go to trial Shell, which has its primary stock-exchange listing in the U.K., agreed to pay 55 million British pounds, equivalent to $76 million…  

The January 2021  verdict tells oil majors that “when things go wrong they will be held to account and very likely held to account where their parent company is based,” said Mr. Day, adding that the ruling could spark more such actions.

Excerpts from Sarah McFarlane, Shell Ordered to Pay Compensation Over Nigerian Oil Spills, WSJ, Jan. 29, 2021

No Clean-Up, No Justice: Ogoniland, Nigeria

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The UN Environment Programme in 2011 proposed the creation of a $1 billion fund to repair the damage done by decades of crude spills in the Ogoniland area in southeastern Nigeria. However, progress has been poor and the little work that has been done is sub-standard, advocacy groups including Amnesty International reported in June 2020.  “Research reveals that there is still no clean-up, no fulfillment of ‘emergency’ measures, no transparency and no accountability for the failed efforts, neither by the oil companies nor by the Nigerian government,” the groups said.

Shell’s Nigerian unit pumped oil in Ogoniland until 1993, when the company withdrew amid increasing protests against its presence. Even though the Hague-based company no longer produces crude in the area, a joint venture operated by Shell Petroleum Development Company, or SPDC, still owns pipelines that crisscross the region.

A government agency responsible for overseeing the clean-up, the Hydrocarbon Pollution Remediation Project, known as Hyprep, was finally set up in 2017 after several false starts, but it’s failing to deliver. …“Hyprep is not designed, nor structured, to implement a project as complex and sizable as the Ogoniland clean-up,” the report cites UNEP as saying in 2019

Excerpt from Clean Up Oil in Nigerial Lacks Progress, Bloomberg, June 18,, 2020

Left to their Own Bad Devices: the Future of Ogoni Land in Nigeria

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The decades-overdue clean-up of Ogoniland, after years of oil spills from the pipelines that criss-cross the region, is finally under way. But the billion-dollar project — funded by Nigeria’s national oil company and Royal Dutch Shell — is mired in allegations of corruption and mismanagement.  “We are not pleased with what is going on,” said Mike Karikpo, an attorney with Friends of the Earth International and a member of the Ogoniland team that negotiated the creation of the Hydrocarbon Pollution Remediation Project (Hyprep), the government body running the clean-up… 

Nigeria is Africa’s biggest oil producer, pumping out about 1.8m barrels per day. It provides roughly 90 per cent of the country’s foreign exchange and more than half of government revenues.  The clean-up began only the summer 2019, about a year after the first of an expected five tranches of $180m in funding was released to Hyprep. Mr Karikpo complains of a lack of transparency, alleging that planning, budgeting and awarding of contracts took place behind closed doors. Work started at the height of the rainy season, washing away much of the progress as contaminated soil collected for treatment was swept back into the environment…

Ogoniland, like the broader Niger Delta, has become more polluted and development has stalled, with little to show for the billions of dollars in crude that has been extracted. Critics have now accused Hyprep of being, like much of Nigeria’s oil sector, a vehicle for political patronage and graft. This year 16 companies were awarded contracts for the first phase of the clean-up, which — to the consternation of critics — focuses on the least contaminated parts of Ogoniland.

An investigation by the news site Premium Times found that almost all the companies were set up for other purposes, including poultry farming, car sales and construction, and had no experience of tackling oil pollution.  Meanwhile, insiders have questioned Hyprep’s capacity to handle such a massive project…

Shell and Hyprep have rejected the criticism.  Shell, which closed its Ogoniland operations in 1993, said it accepted responsibility “for spills arising from its operations”, but that some of the blame for the pollution must go to thieves who illegally tapped into pipelines and makeshift refining operations in the Delta’s creeks

Excerpts from Craft and Mismanagement Taint Nigeria’s Oil CleanUp, Financial Times, Dec. 29, 2019

9 oil spills per month: Niger Delta

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The oil-rich Niger Delta has generated billions of dollars for Shell over the past 60 years, but the company’s operations have been plagued by sabotage, theft and oil spills that ravaged the local environment.  Though Nigeria was one of its most prolific regions for crude production in 2015, Shell has sold off tracts of onshore oil fields. Its new focus—sealed with the mammoth $50 billion acquisition of BG Group PLC this year—is deep-water wells off the coasts of the U.S. and Brazil and a historic shift toward natural gas that puts it at the forefront of oil companies offering a more climate-friendly image to investors.

The hearings in London’s High Court on November 2016 represented an early test for cases brought by the community of Ogale and a group from the Bille Kingdom. The communities are hoping to hold Shell accountable for environmental damage they claim has been caused by spills from infrastructure operated by Shell’s Nigerian subsidiary, Shell Petroleum Development Co. of Nigeria Ltd., or SPDC.  Shell is expected to argue that only the subsidiary should be held liable and that the cases should be heard in Nigeria, SPDC’s base and where the incidents took place…

But the communities and their lawyers say seeking justice in Nigeria won’t hold Shell responsible for the actions of its subsidiary and is extraordinarily difficult...“You cannot fight Shell in Nigeria,” the king of Ogale, Emere Godwin Bebe Okpabi, said in a phone interview. “Shell is Nigeria, Nigeria is Shell.”

It is a point Shell has already contested in The Hague, where four Nigerian farmers and Friends of the Earth successfully appealed a ruling that was largely in Shell’s favor in 2015, allowing them to pursue a case against the company in the Netherlands.

In 2015, the company said it experienced on average nine oil spills a month caused by sabotage or theft, with a handful of additional spills caused by operational issues. An uptick in violence this year has knocked important export terminals out of action for months at a time, though divestments onshore have helped reduce the overall number of spills Shell has recorded…

The company has already paid out £55 million, or roughly $80 million, to compensate another Niger Delta-based community in a settlement reached last year after they brought a separate lawsuit in London. In that instance, Shell admitted the spills were caused by operational failures.

Excerpts from Shell Fights Lawsuits Over Environmental Record in Nigeria, Wall Street Journal, Nov. 19, 2016