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U.N. Study Says $1 Billion Needed for Oil Cleanup in Nigeria

AUGUST 4, 2011

By ALEXIS FLYNN in London and WILL CONNORS in Lagos, Nigeria

A landmark United Nations study into the long-term environmental impact of oil production in Nigeria says that oil spills have led to acute health risks for area residents and widespread environmental damage that may take as many as 30 years and $1 billion to clean up.

The report released Thursday also shines a spotlight on the activities of Royal Dutch Shell PLC, which for years drilled in the area and which funded the report.

“The oil industry has been a key sector of the Nigerian economy for over 50 years, but many Nigerians have paid a high price, as this assessment underlines,” said Achim Steiner, U.N. under-secretary general and the executive director of the U.N. Environment Program, which carried out the report.

The study, which focused on one small region of the vast Niger Delta and was commissioned by the Nigerian government and funded by Royal Dutch Shell, found that drinking water in at least 10 communities was contaminated with hydrocarbons and that the contamination went as deep as five meters below ground in some places. Shell no longer operates in the studied area.

Mr. Steiner said the report provided the scientific basis on which a long-overdue environmental restoration of the area, known as Ogoniland, can begin. The report recommends establishing three institutions in Nigeria, including a cleanup fund, to underpin the restoration effort. The fund would require a total of $1 billion contributed by the oil industry and government for the first few years, according to the report.

UNEP presented the report to Nigerian President Goodluck Jonathan on Thursday. Mr. Jonathan “made it clear that the government would take appropriate steps to make sure issues raised in the report would be addressed,” said government spokesman Ruben Abati.

At least four Shell executives were present when the report was handed over, according to Mr. Abati.

Separately this week, Shell said that its Nigerian joint venture will begin out-of-court settlement talks with a Nigerian community affected by a 2008 oil spill. The law firm representing the community said that compensation could be in the tens of millions of dollars.

The renewed focus on Shell’s activities in Nigeria comes as the Anglo-Dutch oil major seeks to reduce its onshore footprint in the West African nation. Shell is in the process of selling its stake in four onshore fields, including one for which the top bidder offered $1.3 billion.

Shell’s onshore Nigeria operations have long been beset by sabotage and theft, and the company has faced decades of criticism from environmental and human-rights groups concerned about the impact its activities have had on the local ecosystem. “Even we were amazed by the depth of the pollution detailed in the report” by the U.N., said Evan Hassink of the environment watchdog group Friends of the Earth.

Shell says the vast majority of the pollution in its Nigeria operations in recent years has been caused by oil theft and militant attacks. For its Nigeria operations, it says an equivalent of 102,000 barrels of oil were spilled into the Niger Delta in 2009 as a direct result of sabotage or theft.

“All oil spills are bad—bad for local communities, bad for the environment, bad for Nigeria and bad for SPDC,” said Mutiu Sunmonu, the managing director of Shell’s joint venture, Shell Petroleum Development Co. of Nigeria, or SPDC, in a written statement. “Although we haven’t produced oil in Ogoniland since 1993, we clean up all spills from our facilities, whatever the cause, and restore the land to its original state.”

The mangrove-lined swamps of the delta region have been hit by thousands of oil spills since oil production began there in the 1960s, and the country has almost nonexistent response capabilities.

In the field offices of Nigeria’s National Oil Spill Detection and Response Agency, workers receive near-daily calls from villagers complaining of spills. The spill-response agency said it had recorded about 2,405 oil spills involving all the major international oil companies operating in Nigeria between 2006 and June 2010.

West African countries have some of the world’s least-rigorous regulatory schemes, watchdog groups say. The agency relies on oil companies to follow up and inspect the spill sites.

After the Deepwater Horizon disaster in the Gulf of Mexico in 2010, BP PLC says it and the U.S. government marshaled an armada of 6,000 ships and 100 aircraft to battle that oil spill.

West Africa’s standing response team consists of a single small plane, based in Ghana, and a few boats.

U.N. Study: Environmental Assessment of Ogoniland


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