Published February 07, 2012 Dow Jones Newswires

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By Eduard Gismatullin – Feb 2, 2012 8:02 AM GMT

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, expects to raise its dividend this year for the first time since 2009 as new projects generate more cash.

Shell plans net capital investment of $30 billion, with cashflow from operations in 2012-2015 expected to be as much as 50 percent higher than in the 2008 to 2011 period.

Chief Executive Officer Peter Voser said growth will be driven by more than 60 new projects, unlocking potential resources of more than 20 billion barrels of oil equivalent. That’s on top of 14 projects started in 2009-11, including Qatar’s Pearl gas-to-liquids venture.

“Our improving financial position creates an opportunity to increase both our dividends and investment levels,” Voser said today in a statement.

Net income fell to $6.5 billion in the fourth quarter from $6.79 billion a year earlier, The Hague-based Shell said. Excluding one-time items and inventory changes, profit missed analyst estimates.

Shell is the first of Europe’s biggest oil companies to report earnings. It will be followed by BP Plc on Feb. 7 and Total SA on Feb. 10. Exxon Mobil Corp., the world’s largest energy company by market value, reported fourth-quarter sales that fell short of analysts’ estimates earlier this week.

Shell posted adjusted earnings of $4.8 billion, compared with the $5.2 billion median estimate of 15 analysts surveyed by Bloomberg.

‘Substantial Undershoot’

“The overall result represents a substantial undershoot against a consensus which just three weeks ago was above $7 billion,” said Stuart Joyner, an analyst at Investec Bank Plc.

U.K. front-month natural gas prices are down about 20 percent since reaching a 2011 high of 67.80 pence per therm on Nov. 7. Milder weather in Europe and maintenance curbed Shell’s production by about 100,000 barrels of oil equivalent in the quarter, according to Sanford C. Bernstein & Co.

Shell will increase production to about 4 million barrels of oil equivalent a day in 2017-2018. Last March, it said daily output would rise to 3.5 million barrels this year and 3.7 million barrels by 2014.

Output fell 5.5 percent to 3.305 million barrels a day in the fourth quarter from the year-earlier period.

Profit was also curbed by maintenance at rigs in the Gulf of Mexico and the North Sea. Shell shut the Bonga field in Nigeria after an offshore oil spill, the nation’s worst in more than a decade. A fire disrupted shipments from Shell’s Pulau Bukom plant in Singapore, the company’s biggest.

Shell made a loss of $278 million from its refining and marketing operations, compared with a profit of $482 million a year earlier. Crude-processing fell 17 percent as sales dropped.

Refining margins from processing oil into fuels such as gasoline and diesel on the U.S. Gulf coast fell 22 percent to $7.16 a barrel in the fourth quarter from a year earlier, according to BP Plc data.

Of the 31 analysts that cover Shell, 21 recommend buying the shares, nine have ‘hold’ ratings, and one advises investors to sell the stock.

Shell plans to increase the dividend by 2.4 percent to 43 cents in the first quarter from 42 cents announced in the fourth quarter.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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James Kimer on January 4, 2012.

As the second largest energy company in the world after Exxon-Mobil, Royal Dutch Shell has been a major player in Nigerian oil and gas from the beginning, overseeing the first commercial export of oil from the country in 1958 from the Oloibiri Field.  Their success over the years has been notable, with operations are spread over 30,000 square kilometres in the Niger Delta, including more than 6,000 kilometres of flowlines and pipelines, 86 oil fields, 1,000 producing wells, 68 flowstations, 10 gas plants and two major oil export terminals at Bonny and Forcados.

But after a number of accidents, attacks by militants, and political scandals, is Shell’s honeymoon with Nigeria coming to an end?  Some recent events and transactions indicate a shift in the Dutch company’s strategy in the country, opening a window of opportunity for new operators.

The past year has battered and bruised Shell’s operations in Nigeria, with both environmental issues and political risk increasing.  Just this week, the company was forced to conduct emergency repairs on a sabotaged trunkline pipeline in Nembe Creek, Bayelsa State, where more than 200 barrels of oil were siphoned off by thieves, forcing Shell to cut production by 70,000 barrels a day during the repairs.  Sabotage and theft by militant gangs is currently on the rise following a brief lull since its height in 2005, while the company reportedly suffers the loss of between 70 to 200 barrels of oil stolen per day.

In December 2010, Shell also experienced its worst oil spill in Nigeria in the past decade, as more than 40,000 barrels of crude oil was spilled at the offshore Bonga Field (the accident being caused by tanker mishap instead of the usual sabotage).  According to a report in the Washington Post, “Some environmentalists say as much as 550 million gallons of oil poured into the delta during Shell’s roughly 50 years of production in Nigeria — a rate roughly comparable to one Exxon Valdez disaster per year.”

As a result, political pressure against Shell has also been mounting from civil society.  The Environmental Rights Action/Friends of the Earth (ERA/FoEN) has been on the offensive since the spill at Bonga Field, issuing statements demanding that the government secure independent verification of spillage data while enforcing clean-up payments.  The company’s environmental and human rights record has been under scrutiny at the highest levels, with the United Nations Environment Programme (UNEP) issuing a harsh report in August 2011 that examined the ecological and public health ramifications of oil spills in Ogoniland.  One of the UNEP report’s key findings included the following:  “Control and maintenance of oilfield infrastructure in Ogoniland has been and remains inadequate: the Shell Petroleum Development Company’s own procedures have not been applied, creating public health and safety issues.”

Even before all these issues came about, there were indications that Shell may be scaling back its exposure to Nigerian energy.  Shell is the 30% owner of the joint venture Shell Petroleum Development Company of Nigeria Limited (SPDC), which also features major stakeholders such as the state-owned NNPC with (55%), TotalFinaElf (10%) and Agip (5%), which together is responsible for a whopping 50% of all oil production in the country.  However in November 2011, Shell completed the sale of its shares in two major oil producing blocks (OML 26 and OML 42), while at the same time they are working to close ongoing deals to sell their stakes to three other blocks (OML 30, 34 and 40).

Representatives from the company are keen to express that these sales do not represent the beginnings of an “exit strategy.”  According to statements made by SPDC Managing Director Mutiu Sunmonu to NEXT Newspaper, “what we are doing is consolidating our operations to strengthen even our future in Nigeria. We are in Nigeria for the long haul. Some of these assets are of more value to indigenous companies than the multinationals. The sale of marginal oil fields is an exercise aimed at growing indigenous capacity in the upstream oil and gas industry.”

However, it appears that in fact the divestiture strategy is aimed at offloading the most vulnerable assets  in the company’s portfolio – the ones located onshore, and therefore susceptible to attacks, kidnappings, theft, and sabotage, indicating a declining confidence in the state’s ability to maintain law and order in the Delta region.  In recent years, Shell has experienced a steep decline in production among its onshore assets in Nigeria.  In 2009 Shell CEO Peter Voser said that due to violence in the Delta region, production has slacked to 120,000 barrels per day from the previous 300,000 barrels per day.

“The overall security situation is still very fragile, the government had some success with their amnesty programme and we are looking now towards the next few weeks to see how this influences the whole security situation,” Voser told Reuters. “But it would be by far too early to say that it has improved. We are still dealing with the same kind of issues.”

Two years later, it looks like Shell might be losing patience.  The sale of these marginal fields such as OML 40, referring to oil and gas assets that have yet to be developed due to difficult location, infrastructure, and access, are bringing about a sharp increase of participation by indigenous companies.  New players in the Nigerian oil sector include Mike Adenuga’s Consolidated Petroleum, Femi Otedola’s African Petroleum (AP) Consortium, Elcrest, and Neconde Energy.  There are other indigenous companies which are actually backed by international finance, such as Oando (China), Perenco (Afren – a Nat Rothschild entity), and Equinox Group (Gazprom).

But the reasons motivating Shell’s divestitures may be more complex than the challenges of violence, insecurity, and public scrutiny.  After all, the company has survived some of the roughest periods of Nigerian history, including the murder of activist Ken Saro-Wiwa by the Abacha regime, which resulted in a $15 million lawsuit settlement.  In 2008, attacks by militant groups such as the Movement for the Emancipation of the Niger Delta (MEND) had reached such heights, that Shell was forced to steeply cut production, driving global oil prices to record highs well above $120 a barrel.  And yet, despite these harsh circumstances, the company persevered and held on up to the 2009 amnesty, which helped production recover.

The problem for the company may be bigger than just oil spills, theft, and attacks, as some observers point to the pending passage of the Petroleum Industry Bill (PIB), which would revolutionize the tax and royalty structure for international oil companies doing business in Nigeria, carving out a sphere of participation in production and exploration (as opposed to simply regulation) for parastatal companies.  First proposed in 2008 by the presidential administration of Umaru Yar’Adua, the PIB is a complex, 100-page document that has been repeatedly stalled in the legislature due to controversy and disputes over its contents and purpose.  According to the former Minister of the Federal Capital Territory of Abuja, Nasir El-Rufai, international oil companies such as Shell stoutly oppose the passage of the PIB and are actively lobbying against it because the bill contains new royalties structures for offshore production (because the Nigerian government forfeited these rights in a 1991 agreement).

And while the PIB remains stalled, much-needed foreign investment is put on hold.  According to one analyst interview by The Financial Times, “The wait for the adoption of the PIB is very damaging. It’s why the big new investments have been put on hold. The impact becomes exponentially more problematic [because] if reserves don’t get replaced, there is the risk of production capacity in Nigeria dropping for the first time in 30 years.”

As demonstrated by the overwhelming protests and public outrage over President Goodluck Jonathan’s decision to remove the fuel subsidy at the New Year, there is a strong social aspect to the country’s economic policies concerning the energy sector.  For most citizens, who live on less than $2 a day, the fuel subsidy was seen as the only way that the oil wealth was shared – and, with its removal, there could be increased public support for the passage of the PIB that aggressively targets the traditional energy players with higher taxes and more difficult conditions.

For the moment, public anger is directed toward President Jonathan and a small group of advisers.  But if this pressure translates into real political costs for the administration, it is possible to imagine President Jonathan finding a scapegoat in the foreign oil companies, and satiating voters with promises to pass the PIB and enforce payments on environmental clean-up costs.  If that’s the case, Shell’s divestitures may accelerate, while local companies – which are in no way more accountable – will take over more and more critical onshore production fields, posing an unknown risk to global energy supplies.

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By JON GAMBRELL, Associated Press 26 December 2011

ABOARD THE BONGA FLOATING OIL VESSEL (AP) — The worst Nigeria offshore oil spill in more than a decade has been contained before reaching the West African nation’s coast, officials with Royal Dutch Shell PLC said Monday, less than a week after one of its lines bled crude into the Atlantic Ocean.

An investigation into how the spill of less than 40,000 barrels — or 1.68 million gallons — happened remains ongoing, though company officials acknowledged workers only discovered the leak after seeing a sheen of crude in water surrounding its Bonga offshore oil field.

Meanwhile, Shell officials say the company will clean up another spill it discovered while containing its own — highlighting how prevalent pollution remains in oil-stained Nigeria after more than 50 years of production.

“We can undeniably say we traced our oil … and stopped it,” said Cliff Pain, who manages the Bonga operation for a Shell subsidiary.

Shell organized a helicopter flight Monday for journalists to see the Bonga field — controlled from a large ship as opposed to a stationary rig — about 75 miles (120 kilometers) off Nigeria’s coast. There, waters appeared free of the oil sheen as ships continued to patrol along the underwater lines linking the vessel to oil fields and transfer buoys for filling tankers.

The leak discovered Dec. 20 came from a break in a flexible line about 360 meters out from the vessel that sends oil to tankers, Pain said. While the vessel has a variety of gauges to check pressure on the line, it wasn’t until daylight broke that workers noticed a sheen surrounding the Bonga vessel, he said.

It takes about 25 hours to fill a waiting tanker with 1 million barrels of oil from the vessel, Pain said. That means the leak could have spewed for hours before being noticed.

At its height, Shell statistics show the sheen spread across about 350 square miles (900 square kilometers), matching an estimate earlier issued by an independent watchdog group called SkyTruth. Nigerian government officials previously said the spill only affected an area a third that size

Using ships and aircraft, workers spread chemical dispersants to break up the oil, which also evaporated in the region’s warm water and air, said Steve Keedwell, a Shell employee who helped oversee the cleanup operation. Shell ultimately stopped the sheen about 11 miles (18 kilometers) before it made landfall, Pain said.

However, workers then discovered a separate oil spill around the mouth of a river in Delta state, said Mutiu Sunmonu, Shell’s Nigeria country chairman. Sunmonu said samples of the oil showed it came from a different source, though the company would clean it up as well.

“When I sighted it myself, my initial reaction was anger, but I told myself: ‘You know, you just cannot afford to be angry, just deal with it,’” Sunmonu said.

The Nigerian group Environmental Rights Action, which monitors spills around Nigeria’s oil-rich southern delta, has blamed Shell for the new spill. Nnimmo Bassey, the group’s executive director, could not be immediately reached for comment Monday night.

Shell operates the Bonga field in partnership with Italy’s Eni SpA, Exxon Mobil Corp., France’s Total SA and the state-run Nigerian National Petroleum Corp. It produces about 200,000 barrels of oil a day — around 10 percent of production in Africa’s most populous nation. The field remains shut down and Shell officials offered no estimate Monday of when production could resume at a field vital to Nigeria’s government finances.

Nigeria, an OPEC member nation producing about 2.4 million barrels of crude oil a day, is a top supplier to the United States. However, pollution from spilled oil stains its Niger Delta region, with crude lapping against beaches and leaving a black ring around creeks in an area about the size of Portugal.

Some environmentalists say as much as 550 million gallons of oil poured into the delta during Shell’s roughly 50 years of production in Nigeria — a rate roughly comparable to one Exxon Valdez disaster per year. Many blame Shell and foreign companies working in Nigeria for the pollution. However, Shell in recent years has blamed most of its spills on militant attacks or thieves tapping into pipelines to steal crude oil, which ends up sold on the black market or cooked into a crude diesel or kerosene.

Talking with journalists, Sunmonu acknowledged that the limited spill, open ocean and favorable weather had helped Shell quickly contain the spill. If it had been on land, the oil could have sunk into the soil, remaining there for years, he said.

It also would have pushed Shell into negotiations with village elders to clean up the spill, something it often contracts other companies to handle. Many view the company with hostility after its years in the delta, and its employees remain targets of kidnap gangs and militants.

“You don’t have communities to contend with” on the ocean, Sunmonu said.

• Royal Dutch Shell PLC: http://www.shell.com
• Shell’s Nigeria spill website: http://bit.ly/rqfnxi

Copyright © 2011 The Associated Press. All rights reserved.

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Attempts by Royal Dutch Shell, the parent company, to argue the charges should not be levelled at the ‘mother company’ but its Nigerian subsidiary prompted an 18 month delay to the proceedings. Royal Dutch lost that argument in December 2009.  But it hasn’t given up the fight – requests by prosecutors to access relevant information from the parent company have recently been blocked in the Dutch courts.

December 9th, 2011 | by Nick Mathiason

People living in the Niger Delta where land and rivers are indelibly polluted after decades of oil extraction have long suffered violations of several internationally recognised human rights.

These rights comprise the right of access to food, work, an adequate standard of living, health and a healthy environment.

Environmental degradation has wrecked farming and fishing livelihoods in the Delta on a massive scale. This was confirmed by the United Nations Environment Programme in August when it called for an initial $1bn fund to clean up oil related pollution.

Three years prior to the UN’s detailed study, in May 2008, four Nigerian fishermen and farmers from the Delta villages of Oruma, Goi and Ikot Ada Udo filed several lawsuits against Royal Dutch Shell in the district court of the Hague where the oil giant has its international headquarters.

The villagers alleged Shell was negligent in its clean-up of oil spills.  They claimed their health was adversely affected as a result. Shell argues that a recent preliminary court ruling stated that all the spills under the spotlight were caused by sabotage.

This keenly watched case, expected to be heard in the Hague next year, is a lesson in how corporate ownership structures can affect legal redress in alleged human rights violations.

Attempts by Royal Dutch Shell, the parent company, to argue the charges should not be levelled at the ‘mother company’ but its Nigerian subsidiary prompted an 18 month delay to the proceedings.

Royal Dutch lost that argument in December 2009.  But it hasn’t given up the fight – requests by prosecutors to access relevant information from the parent company have recently been blocked in the Dutch courts.

Corporate secrecy
For campaigners seeking greater economic transparency it seems the problems of corporate secrecy and difficulties establishing who owns what are now entering the human rights arena.

Human rights defenders say parent companies often try to counter cases against them by arguing that claims should be brought against the operating company. They say that it is the subsidiary – where the alleged violation took place – that is at fault, not them.

‘This is not about avoidance,’ stated a Shell spokesman. ‘It is about who is legally responsible. Like most corporate groups, Shell’s corporate structure is determined by normal business considerations.’

For those seeking redress against alleged wrong-doing, prosecuting a subsidiary company though is problematic.

Potential claimants in developing countries are often unable to hold that company to account for three reasons.

Firstly, legal systems in developing countries often find it hard to manage lengthy and complicated cases. Secondly the subsidiary in the developing country may not have enough cash to meet the size of financial claims. And finally, developing countries may be unwilling to hold a corporation to account due to complicity or corruption.

That said, developed countries also have a history in preventing sensitive cases from being heard. Witness the UK government’s decision in 2006 to end an investigation into alleged bribery and false accounting in BAE’s arms deals with Saudi Arabia.

The challenge of human rights defenders is best summed up in one phrase: piercing the corporate veil.

The corporate veil is a term given by human rights lawyers in their attempt to pin liability on the parent companies of major corporations.

Andie Lambe, head of the international justice at Global Witness, said: ‘Very few of the alleged abuses committed or facilitated by companies ever make it to court for a variety of reasons. One of these is that the structure of the corporation protects it from liability.’

Professor Sheldon Leader, director of the Essex University Business and Human Rights Project, added: ‘What Shell has said to the Netherlands’ judiciary – and it will be important to see how far other major companies argue the same – is that they do have high standards but they do not give orders to subsidiaries. Therefore, they argue, they are not responsible for damage to local populations due to the shortcomings in their subsidiaries’ performance.’

Take profits, not responsibility
Companies may not admit to legal responsibility of their subsidiaries when difficulties arise but they certainly take responsibility for the cash they generate. When companies publish financial reports, subsidiaries are inextricably linked to the parent. Consolidated accounts, by definition, embrace the thousands, if not millions of transactions conducted by all subsidiaries in which the owner has a beneficial interest.

What’s more, quoted companies in the US and UK stock exchanges are obliged to reveal all the subsidiaries they either own outright or have substantial stakes in which are considered to be materially important.

Clearly in financial reporting, a link between the parent and subsidiary is manifest. Yet company law treats every business entity as legally separate, even within the same ‘business family’. And this is where difficulties arise in seeking to hold a parent company accountable even in instances where it knew of or supported the conduct of its subsidiary.

To remedy this, a corporate ‘duty of care’ principle needs to be established which states that in the event of a parent financially benefitting from a subsidiary, it has a responsibility to ensure the subsidiary carries out duties in line with established laws. When the subsidiary fails to live up to required standards, the parent has to face legal liability – and not  hide behind a corporate veil.

This article is also published in the Guardian.

SOURCE ARTICLE

Rights group says oil giant’s 2008 spills have wrecked livelihoods of 69,000 people and will take 30 years to clean up

• Reuters
• guardian.co.uk, Thursday 10 November 2011 18.04 GMT

By Jerome Mwanda
IDN-InDepth NewsReport

NAIROBI (IDN) – “We help to meet the world’s growing energy needs in economically, environmentally and socially responsible ways,” claims the oil giant Shell on its website. But a new report avers that it has been doing just the opposite: triggering devastating oil spills, indulging in the illegal practice of gas flaring, and crassly violating human rights in the Niger Delta region of Nigeria by paying money and awarding contracts to armed militants.

A new report titled ‘Counting the Cost,’ implicates Shell in cases of serious violence in Nigeria’s oil-rich Niger Delta region from 2000 to 2010, detailing how Shell’s routine payments to armed militants exacerbated conflicts and led to the destruction of Rumuekpe town.

The report published in London by a coalition of local and international non-governmental (NGO) organisations, led by the London based NGO, the Platform, comes within a few weeks of the United Nations Environment Programme (UNEP) publicising its findings that looked into the ecological impact of oil spills in Ogoni.

UNEP found that Shell has fallen below its operating standards and covered up the full extent of its pollution. It recommended an initial fund of $1 billion to start the clean-up process in Ogoni. The full cost of cleaning oil spills in the Niger Delta is, however, estimated to be up to 500 times higher.

The report by the NGO Platform accuses Shell – with headquarters in the Dutch capital, The Hague – of collaborating with the state in the execution in 1995 of writer, Ken Saro-Wiwa and other leaders of the Ogoni tribe.

The coalition backing the report includes Centre for Environment, Human Rights and Development (CEHRD), Friends of the Earth Netherlands/Milieudefensie, Environmental Rights Action/Friends of the Earth Nigeria, Social Action, Spinwatch and Stakeholder Democracy Network.

According to the Nigerian Tribune, Shell was said to have paid $15.5 million to the eight families in settlement, and key documents implicating it never saw the light of day during the trial.

Shell has, however, disputed the report, defending its human rights record and questioning the accuracy of the evidence, while pledging to study the recommendations, according to its London office, the Nigerian Tribune reported.

Key findings of the report include testimonies of contracts that implicated Shell in regularly assisting armed militants with lucrative payments, such as an alleged transfer of over $159,000 to a group credibly linked to militia violence in late 2010.

Shell was also alleged to have, from 2006 onwards, paid thousands of dollars every month to armed militants in the town of Rumuekpe, in the full knowledge that the money was used to sustain three years of conflict.

One gang member, Chukwu Azikwe, told the NGO Platform, the newspaper adds, that “we were given money and that is the money we were using to buy ammunition, to buy this bullet, and every other thing to eat and to sustain the war,” adding that his gang and its leader, S. K. Agala, had vandalised Shell pipelines.

Ransom

“They will pay ransom. Some of them in the management will bring out money, dole out money into this place, in cash,” he said.

Platform alleged that in Rumuekpe, “the main artery of Shell’s eastern operations in Rivers State,” Shell distributed “community development” funds and contracts via Friday Edu, a youth leader and Shell community liaison officer.

By 2005, Edu’s monopoly over the resources of the Shell Petroleum Development Company of Nigeria (SPDC) was reported to have sparked a leadership tussle with Agala’s group, with the latter reportedly forced out of the community and a number of people killed.

The allegations, according to Platform, were largely substantiated by a Shell official, adding that a manager with Shell confirmed that in 2006, one of the most violent years, Shell awarded six types of contract in Rumuekpe, says the newspaper.

Rumuekpe is just one of several case studies examined by the report, which alleged that in 2009 and 2010, security personnel guarding Shell facilities were responsible for extra-judicial killings and torture in Ogoniland.

In the meantime, a Nigerian environmental activist, Sunny Ofehe, standing trial in The Netherlands for alleged plot to bomb pipelines in the Niger Delta, has cried out, saying “I am not a terrorist or suicide bomber.”

In an e-mail made available to the Nigerian Tribune, Ofehe, who is also the founder of Hope for Niger Delta Campaign, said his travail was traceable to the parliamentary testimonies he gave at the Dutch parliament about degradation of Niger Delta environment by Shell Oil and other oil majors.

“I have been campaigning against environmental devastation of our people’s environment for many years and testified at the Dutch Parliament against Shell in a parliamentary hearing, where Shell was summoned to defend its practice in the region,” he said.

Less than a month after the hearing, he added, “a team of about 30 policemen came to my house and arrested me on trumped-up charges and I was detained for 14 days before being released, but remained a suspect; when they could not establish a case against me, they came up with a new charge of conspiracy to commit terror act by blowing oil pipelines” belonging to Shell in the Niger Delta.

“I became the first person to be charged under this law since it came into effect in 2004. I appeared in court for the first time on September 5 and we now have a new hearing date of December 5, 2011,” the Nigerian Tribune quoted Ofehe saying.

Global Implications

The report finds that:

- Shell’s close relationship with the Nigerian military exposes the company to charges of complicity in the systematic killing and torture of local residents.

- Testimony and contracts seen by Platform implicate Shell in regularly assisting armed militants with lucrative payments. In one case from 2010, Shell is alleged to have transferred over $159,000 to a group credibly linked to militia violence.

- Shell’s poor community engagement has provided the “catalyst” for major disruption, including one incident that shut down a third of Shell’s daily oil production in August 2011.

- In the absence of proper supervision and controls, Shell contractors, including multinationals like Halliburton, Daewoo and Saipem, have replicated many of Shell’s mistakes.

“Shell’s conduct in the Delta has local and global implications. Basic company errors have exacerbated violent conflicts in which entire communities have been destroyed. Billions have been lost in revenues to the government and oil companies, sending shockwaves through the global economy,” says the report.

These are not new phenomena, it adds. In 2003, a leaked internal report denounced Shell for its active involvement in the Delta conflict. Then, as now, Shell pledged to improve. But NGO Platform’s report finds that Shell has not taken the necessary steps to de-militarise its operations in the Delta, resolve long-standing grievances and respect the human rights of local communities.

The eight cases in this report are the thin end of the wedge. Many further cases of human rights abuse are associated with Shell’s operations in the western, central and outer Delta regions, as well as with Chevron, Eni and other oil companies and private military and security contractors (PMSCs), says the report.

Platform visited the Niger Delta in September to October 2010 and conducted over 50 interviews with women, ‘youth’, elders, community leaders, ex-militants and human rights defenders. Platform interviewed the families, victims, witnesses and perpetrators of human rights abuses, oil company employees, contractors and academic experts. Due to the risk of reprisals, Platform has changed or withheld the names of some informants.

Where available, hospital records, contracts, court documents, photographic evidence and other forms of documentation have been relied on. Media articles, academic publications, company records and NGO reports have also been used for reference.

The report points out that in a country where access to justice is denied to many, moments of accountability are rare. But on two recent occasions Shell’s operations in Nigeria have been the subject of international scrutiny, raising legal, financial and reputational risks for the company.

On June 8, 2009, Shell settled a landmark U.S. lawsuit brought by nine plaintiffs from the minority Ogoni region of the Niger Delta. The case accused Shell of colluding with government forces in crimes against humanity and gross human rights abuses, including the execution of writer and activist Ken Saro-Wiwa and eight other activists on November 10, 1995. The Wiwa v Shell lawsuit cost the company more than the $15.5 million settlement it eventually paid out. Shell’s reputation and brand, valued at $3.3 billion in 2008, suffered substantially. [IDN-InDepthNews - November 8, 2011]

Picture: Shell Nigeria | Credit: priceofoil.org

2011 IDN-InDepthNews | Analysis That Matters

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PLATFORMLondon.org

Monday 3 October 2011

Shell fuelled human rights abuses in Nigeria by paying huge contracts to armed militants, according to a new report published today by Platform and a coalition of NGOs and featured in The Guardian. [1]

Counting the Cost implicates Shell in cases of serious violence in Nigeria’s oil-rich Niger Delta region from 2000 to 2010.[2] The report uncovers how Shell’s routine payments to armed militants exacerbated conflicts, in one case leading to the destruction of Rumuekpe town where it is estimated that at least 60 people were killed.[3]

According to Platform’s report, Shell continues to rely on Nigerian government forces who have perpetrated systematic human rights abuses against local residents, including unlawful killings, torture and cruel, inhumane and degrading treatment. The report is available to download here.

Key findings include:

Platform has heard testimony and seen contracts that implicate Shell in regularly assisting armed militants with lucrative payments. In one case in 2010, Shell is alleged to have transferred over $159,000 to a group credibly linked to militia violence. [4]

Shell admits that from 2006 onwards, the company paid thousands of dollars every month to armed militants in the town of Rumuekpe, in the full knowledge that the money was used to sustain three years of conflict. [5]

A company manager exposes structural problems with Shell’s ‘community development’ programme, claiming that “the money is not going into the rightful hands,” and that poor community engagement caused Shell to shut down a third of its oil production in August 2011 after 12 oil spills in the Adibawa area. [6]

NGOs from the UK, Netherlands and Nigeria are demanding that Shell put an end to over five decades of social and environmental devastation and break its close ties with government forces and other armed groups responsible for abuses. Platform’s report also condemns the Nigerian government for failing to protect the rights of its citizens and urges President Goodluck Jonathan to find political solutions to the Delta crisis instead of military responses.

Ben Amunwa from Platform said: “This research sheds new light on Shell’s active role in human rights abuses during a decade of terrible violence in the Niger Delta. Shell claims it has nothing to do with the crisis, but the company is involved in widespread abuses and militarisation. While Shell cites ‘security issues’ as a convenient excuse for its appalling environmental record, it has also failed to take the necessary steps to resolve conflicts. In many cases, Shell’s activities have created insecurity.”

Nnimmo Bassey of Friends of the Earth International said: “Shell’s obligations are clear: it must clean up after decades of devastating oil spills, end the illegal practice of gas flaring and compensate the victims of human rights abuses in Nigeria. It is unacceptable that Shell continues to deny responsibility, while pushing communities deeper into poverty and fuelling destructive conflicts.”

“Shell’s divisive practices have led to daily human rights violations in the Niger Delta,” said Geert Ritsema from Friends of the Earth Netherlands. “Many of the victims have no access to justice and cannot afford to take the oil giant to court. Lawsuits in Nigeria can take decades to resolve and the remedies are often inadequate. Yet Shell must be held accountable for its environmental destruction and complicity in human rights abuses in Nigeria, and home governments like the UK and the Netherlands must ensure that remedies are available and accessible to the victims.”

Platform’s report follows months of controversy for Shell, in which:

• The UN issued a damning report on the ecological impact of oil spills in Ogoni, many of which are from Shell’s facilities. The UN Environment Programme found that Shell had operated in Nigeria below international standards and the company had certified heavily contaminated sites as “clean”.[7]

• Shell admitted liability for two massive oil spills in the Ogoni community of Bodo in 2008 to 2009 after a lawsuit filed in London. The company now faces a compensation payout estimated at $410 million and could be forced to clean up the damage.

• Court hearings in The Hague where a lawsuit by Friends of Earth and four Nigerian victims of Shell oil spills is ongoing.

CONTACT:

UK – Ben Amunwa, (Platform): ben@platformlondon.org, +44 (0)7891 454 714, +44(0)207 403 3738.

Nigeria – Nnimmo Bassey (Chair Friends of the Earth International): nnimmo@eraction.org, +2348037274395.

NL – Geert Ritsema, Milieudefensie / Friends of the Earth Netherlands, geert.ritsema@milieudefensie.nl, +31 (0)20 5507 391.

Notes:

[1] Platform is a UK charity that campaigns for social and ecological justice. The coalition backing the report includes: Centre for Environment, Human Rights and Development (CEHRD), Friends of the Earth Netherlands/Milieudefensie, Environmental Rights Action/Friends of the Earth Nigeria, Social Action, Spinwatch, Stakeholder Democracy Network and Platform.

[2] Counting the Cost focuses on eight cases of human rights abuse in the ‘eastern division’ of Shell’s operations in Nigeria. Platform believes these cases are part of a wider pattern of violence that is being fuelled by routine oil company activities.

[3] Rumuekpe in Rivers State was destroyed by inter-communal conflict between 2005 to 2008. For details on Shell’s active role in the conflict, see pages 28 to 36 and Appendix 1 in the report.

[4] See the case of Joinkrama 4, at pages 36 to 43 in the report.

[5] See pages 28 to 36 in the report.

[6] See pages 42 to 43 in the report.

[7] See UNEP, Environmental Assessment of Ogoniland, (2011): p12.