Oil spills: Shell to pay Delta community N43bn compensation

National news

07 January 2015

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The Shell Petroleum Development Company of Nigeria, SPDC, has agreed to pay N43bn (£55m) compensation to Bodo community in Delta State over oil spills. The Managing Director of the company, Mr. Mutiu Sunmonu, in a statement yesterday, confirmed that the board and management had entered into a settlement agreement with the community in respect of the two operational spills in the area in 2008.
“The £55m settlement provides for an individual payment to each claimant who accepts the settlement agreement in compensation for losses arising from the spills, amounting to up to £35m in total,” he stated.
Sunmonu hinted that the remaining £20m payment will be made for the benefit of the Bodo community generally, adding that from the outset, the company accepted responsibility for the two “deeply regrettable” operational spills and had wanted to compensate the community fairly.
“We are fully committed to the clean-up process being overseen by a former Netherlands’ Ambassador to Nigeria. “Despite delays caused by divisions within the community, we are pleased that clean-up work will soon begin now that a plan has been agreed with the community.
“However, unless real action is taken to end the scourge of oil theft and illegal refining, which remains the main cause of environmental pollution in the Niger Delta, areas that are cleaned up will simply become re-impacted through these illegal activities.
“SPDC has made efforts to raise awareness of the issue with the government of Nigeria, international bodies like the United Nations, the media, civil society and international non-governmental organisations (NGOs), and we will continue to play an active role in the search for solutions,” Sunmonu stated.
He also called on stakeholders, including Bodo community leaders and NGO groups, to support the effort.
The community filed a lawsuit against Shell in a London court on 23 March 2012, seeking compensation for the two oil spills, which occurred in 2008.
The community asked for compensation against losses suffered to their health, livelihoods and land as well as clean-up of the spills.
They stated that the spills occurred mainly because the pipelines constructed over 50 years ago were also poorly maintained.
The community stated that the firm responded too slowly after being alerted to the spills.
Shell admitted that SPDC, its Nigerian subsidiary is liable for the spills.
But it denied the allegations of the plaintiffs on the poor state of the pipelines and argued that the cause of the oil spills was oil theft and sabotage.
It disputed the alleged volume of oil spilled and the size of the area affected and made some settlement offers to the plaintiffs.
The community however refused to take the offers, arguing that they were too small considering the alleged volume of the spills.
A preliminary hearing took place from 29 April to 9 May 2014 to consider Shell’s duty to take reasonable steps to prevent spillage from their pipelines – whether from malfunction or from oil theft.
The judge ruled on 20 June 2014 that Shell could be held responsible for spills from their pipelines if the company fails to take reasonable measures to protect them from malfunction or from oil theft, known as “bunkering”.
In November 2014, documents produced in the UK High Court suggested that Shell was warned about the “risk and hazard” of the pipeline before the oil spill that affected the community.
The case was expected to go to trial in mid-2015 before the present offer.
It was however not clear whether the community would accept the latest offer.
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