Oil and Gas

Shell faces further suit over Nigeria oil spills

Shell faces lawsuit over Nigeria oil spills
Shell faces lawsuit over Nigeria oil spills

Oil giant Shell is being sued again by two Nigerian communities over multiple spills in the oil-rich Niger Delta with claims that could run into "tens of millions of pounds given the impact on these communities" according to the law firm representing the claimants.

The Bille and Ogale communities, whose livelihoods are mainly based around fishing and farming, are pushing for compensation for environmental damage to the region: They say they have not had clean drinking water since 1989 because of oil spills.

The communities are suing Shell's Nigerian subsidiary, Shell Petroleum Development Company of Nigeria (SPDC) and are being represented by British law firm Leigh Day.

"The two new claims against Royal Dutch Shell plc (RDS) and the Shell Petroleum Development Company of Nigeria Ltd (SPDC) have now been issued in the High Court in London on behalf of residents of the Ogale Community in Ogoniland and the Bille Kingdom," Leigh Day said in a statement on Tuesday.

In a statement given to CNBC, Shell said it is at an "early stage" of reviewing the claims and that the case should be heard in Nigeria. It said it believes that many spills in those communities are caused by oil theft which damages pipelines and illegal refining.

A picture taken on March 22, 2013 shows an illegal oil refinery destroyed by Joint Task Force at Nembe Creek in the Niger Delta on March 22, 2013. Shell Petroleum Development Company of Nigeria (SPDC) on April 2, 2013 said it would temporarily shut down production the Nembe Creek Truck Line (NCTL) to remove a number of bunkering points o

"Both Bille and Ogale are areas heavily impacted by crude oil theft, pipeline sabotage and illegal refining which remain the main sources of pollution across the Niger Delta," Shell said.

"Ogale is in Ogoniland and it is important to note that SPDC has produced no oil or gas in Ogoniland since 1993. Access to the area has been limited following a rise in violence, threats to staff and attacks on facilities," the company added.

A first court hearing will take place in the Technology and Construction court in London on Wednesday which will decided whether the claimants can lodge a case against Shell's Nigerian business.

Leigh Day said the Ogale community had "been subjected to repeated oil spillages across much of the community since at least 1989" whereas in the smaller Bille community made up of fishing settlements, livelihoods had been "destroyed" from spills emanating from the Nembe Creek pipeline. Laigh Day accused Shell of failing to install a leak detection system and failing to protect against third party interference.

The law firm said Shell had failed to act upon a report from the United Nations Environment Programme (UNEP) in 2011 that recommended that Shell instigate a substantial program to clean up and decontaminate the Ogale area.

"At the time, Shell stated it accepted the findings and the recommendations of the UNEP Report. However, four years later, Shell has failed to comply with the recommendations of the UNEP Report and to clean up the sites polluted by their oil," Leigh Day said.

Shell contested that claim, however, stating that following the UNEP recommendations, its Nigerian subsidiary had "initiated action to address all the recommendations directed to it in the UNEP report as operator of the SPCD Joint Venture."

"In mid-2015 SPDC JV, along with the government, UNEP and representatives of the Ogoni community, agreed to an 18-month roadmap to fast-track the environmental clean-up and remediation of Ogoniland which includes a governance framework," it added.

Commenting on the claims and potential damages that Shell could face, Daniel Leader, a partner in the International Group Claims team at the law firm, said that "given the extent of the damage, we believe that the clean-up costs for both communities will run into several hundred million pounds. The claims from the thousands of individuals affected by this pollution, could run into tens of millions of pounds given the impact on these communities."

He said it was "scandalous that four years after the UNEP Report, Shell is yet to clean up its oil in either Ogale or Bille. Our client's patience has now run out and we intend to force Shell to act since it is clear they have no intention of doing so on their own."

It will be the second Nigerian lawsuit in five years for Shell which has had a long-history of tense relations with the local community during its oil extraction operation in the Niger Delta region. Violence and militancy has hampered the oil giant while locals have felt exploited and unable to see the economic benefits of their region's oil wealth.

Shell has already had to award compensation to locals. In January, it announced a £55 million (£76.8 million) payout for pollution caused by two spills in 2008 and 2009 with the compensation split between individuals (mainly fishermen) and the Bodo community which were affected by those spills. Law firm

Leigh Day also represented the Bodo community giving it a precedent in winning compensation.