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The Guardian: Shell hit by $1.5bn Nigeria spill claim

The Guardian: Shell hit by $1.5bn Nigeria spill claim

Senate action on pollution adds to damage from reserves scandal

Terry Macalister

Thursday August 26, 2004

Shell has been hit by a $1.5bn (£840m) pollution claim from the Nigerian parliament 24 hours after being fined in Britain and the United States by financial regulators for “unprecedented misconduct”.

The latest bombshell was delivered by the Nigerian senate after it reviewed a compensation demand from the Ijaw tribe in the oil-rich Niger Delta.

Shell has been under fire in Nigeria for many years over its environmental record, which has been made worse by sabotage in the politically turbulent south of the country.

The company admits that in 2002 alone there were 262 oil spill incidents in Nigeria, involving 2,700 tonnes of crude. In the same year it identified 548 sites, including pipelines, that needed “remedial” action to avoid contamination.

“The motion was overwhelmingly passed and the senate committee on petroleum was asked to monitor compliance,” said a senate spokesman quoted by Reuters.

Newspapers in Nigeria said the Ijaws were demanding to be paid for health problems and economic hardship caused by several spillages.

Shell’s head office in London played down the reports, saying it had not yet seen the senate resolution and would not comment in detail until it had.

But the Anglo-Dutch group confirmed it had contested claims made by the Ijaw at a public hearing by a committee of the Nigerian house of representatives in May 2002.

“It is important to note that the resolution that was eventually passed on the matter by the house of representatives did not endorse the panel of jurists’ recommendation to pay $1.5bn to the petitioners,” said a Shell spokeswoman.

Nigeria is a major source of oil revenues for Shell but has been a thorn in its side.

Shell has been in conflict with the Nigerian authorities over allegations it abused a tax-break system, the so-called reserves addition bonus. It also upset the government when it admitted Nigeria was at the heart of the reserves reporting scandal that led to £80m of fines in Britain and the US.

It recently angered local unions by confirming that it was looking at restructuring its business, a move some believe will cost 1,000 jobs.

Last night, however, there was confusion about the impact of the Senate resolution when Nigeria’s presidential adviser on petroleum, Edmund Dakouro, suggested the $1.5bn fine might be “illegitimate” and unenforceable. “Senate rulings have the force of public opinion, and are a very powerful statement, but the senate doesn’t have the executive force to carry it out,” Mr Dakouro told Dow Jones Newswires.

Shell has been keen to rebuild its battered image in Nigeria, recently announcing plans to appoint its first Nigerian national to head its business in the country.

Yesterday Shell’s London head office was keen to draw a line under the bad publicity, announcing plans to increase capital investment for 2004 in European exploration and production by $150m to $1.8bn. Last week it was the most active foreign participant in the latest round of licensing in Brazil.

Shell is in a desperate hurry to rebuild its reserves after slashing its estimates by nearly 25% to bring it into line with the requirements of the US regulator, the securities and exchange commission. It has fallen behind leading rivals in replenishing its asset base.

But delays in informing stock markets left it open to censure for making what the Financial Services Authority described on Tuesday as “false and misleading announcements” about its real reserves position.,,1290922,00.html

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