THE Nigerian unit of Shell, the Anglo-Dutch oil giant, was yesterday hit with a $1.5 billion (£840 million) compensation claim by the Nigerian senate over multiple spillages, which the senate claims have caused environmental damage in the Niger Delta.
The claim is another blow to the multinational, which on Tuesday was hit with a record £17 million fine by the Financial Services Authority in the United Kingdom after misleading investors about the level of its oil and gas reserves.
The claim from the Nigerian senate follows a petition by members of the Ijaw tribe against the Shell Petroleum Development Company (SPDC), which is 30 per cent owned by Shell. Members of the tribe claim that they have suffered environmental and human rights abuses.
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SPDC is the largest oil-producing company in Nigeria, accounting for about 50 per cent of the country’s total output. The rest of the company is 55 per cent owned by the Nigerian Government, 10 per cent by Total SA, of France, and 5 per cent by Agip, from Italy.
The Nigerian senate has ordered SPDC to pay $1 billion up front, and a further $500 million in $100 million instalments over the next five years.
It is understood that Shell’s legal advisers do not believe the directive is legally binding.
A spokesman for Shell said that the Ijaws’ compensation claim was a longstanding issue, arguing that the oil company had previously contested their claims before a committee of the Nigerian house of representatives in 2002.
However, the Nigerian senate said that it based its directive on recommendations from a legal advisory panel formed in response to a petition from the Ijaws dating back to 2000.
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To muddy the situation further, Edmund Dakouro, presidential adviser on petroleum and energy in Nigeria, is reported to have said yesterday that the proposed $1.5 billion fine was “illegitimate” and could not be enforced.
He told reporters at the Offshore Northern Seas Conference in Norway that senate rulings had the force of public opinion and were very powerful, but cautioned that the senate did not have the executive force to carry them out.
In June a report by WAC Global Services, a group of international consultants, questioned whether Shell could continue to operate in Nigeria because of endemic crime and violence in the country.