Wednesday 27 March 2013

Nigeria threatens Shell with US$11.5 billion in fines and compensation payments over the Bonga Oil Spill.

The Nigerian National Oil Spill Detection and Response Agency and Nigerian Maritime Administration and Safety Agency have recommended that oil giant Shell be ordered to pay a total of US$11.5 billion over the Bonga Oil Spill, which resulted in around 40 000 barrels of oil being lost into the sea off the Nigerian coast in December 2011. This is an unprecedentedly large sum from the Nigerian agencies, which have often been accused of being to close to oil producers. Shell Nigeria has contested the amount and claims much of the oil damage was caused by a second leak from an unnamed third party vessel.

Satellite image showing the extent of the Bonga Oil Spill.  Skytruth.

The spill occurred in December 2011, when an offshore storage facility developed problems while transferring oil to a tanker. Shell estimated the loss to be slightly under 40 000 barrels, though independent agencies suggested the spill might have been three times as large. The spill was treated with dispersants, which the oil company claim prevented the oil from reaching the shore. 

However around a hundred communities in the Niger Delta region were affected by oil washing onshore during the incident, something for which Shell denies responsibility, citing a second spill from an unnamed vessel. Given the disparity between the amount of oil Shell admit to having lost and the amount independent agencies estimate was in the water, this would suggest the unnamed vessel lost around twice as much as the Shell facility, which given Shell admits to having lost the equivalent of 20% of one day's production for the entire oil-field, seems slightly improbable. 

As a result of this the Nigerian National Oil Spill Detection and Response Agency has recommended to a hearing of the Nigerian Parliament that Shell be fined US$5 billion for environmental damages and The Nigerian Maritime Administration and Safety Agency has suggested that the company pay a further $6.5 billion in compensation to communities in the affected area. It is unclear if Nigeria has the legal framework to enforce these charges, though potentially they could be pursued through the courts in other nations, particularly The Netherlands where Shell Nigeria's parent company, Shell Oil, is based.

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