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Shell faces $5 billion fine over Nigeria Bonga oil spill

By Joe Brock and Camillus Eboh

ABUJA | Tue Jul 17, 2012 2:39pm EDT

(Reuters) – Nigerian regulators have told parliament that Royal Dutch Shell (RDSa.L) should be fined $5 billion for environmental damaged caused by an oil spill at its offshore Bonga field, one of the biggest in the history of Africa’s largest energy industry.

Shell said on Tuesday there was no legal basis for the proposed fine.

The National Oil Spill Detection and Response Agency (NOSDRA) told a parliamentary committee on Monday that although last year’s spill, estimated at around 40,000 barrels, was contained offshore, there was a serious environmental threat.

NOSDRA said the spill was caused by a failure in Shell’s oil export hose.

“The spilled barrels impacted approximately 950 square kilometers of water surface, affected a great number of sensitive environmental resources,” the NOSDRA presentation to the environment committee of the national assembly said.

“It has a direct social impact on the livelihood of people in the riverine areas whose primary occupation is fishing.”

Shell said last December’s spill happened while a tanker was loading oil, leading to the complete shutdown of the company’s 200,000 barrel per day (bpd) Bonga facility, about 120 kilometers off the coast of the West African nation.

“We do not believe there is any basis in law for such a fine. Neither do we believe that SNEPCo (Shell Nigeria Exploration and Production Co) has committed any infraction of Nigerian law to warrant such a fine,” Shell said on Tuesday.

“SNEPCo responded to this incident with professionalism and acted with the consent of the necessary authorities at all times to prevent environmental impact as a result of the incident.”

Bonga accounts for around 10 percent of monthly oil flows from OPEC member Nigeria, the continent’s largest exporter of crude oil. Production restarted in January.

Oil spills are common in the mangrove creeks onshore Nigeria. Many are caused by sabotage strikes or oil thieves tapping into easily accessible pipelines. Several communities have taken Shell to court over a failure to clean up spills.

A United National Environment Programme report last year said Shell was not doing enough to clean up spills and maintenance of infrastructure was inadequate.

(Writing by Joe Brock; Editing by Dan Lalor)


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