Nigerian Oil Spills Will Cost Shell Over $63 Million

Royal Dutch Shell has reached an out-of-court settlement to pay $63.3 million in compensation for two “highly regrettable” oil spills in 2008.

Part of that total will include an average of about $3,000 to each fisherman in the Niger River delta's Bodo region, where the spill occurred; the rest will be for repair of environmental damage in the area and the building of health and educational infrastructure.

The payment by the Anglo-Dutch oil giant ends a three-year-old legal battle in a court in London over Shell's liability for leaks in the Bomu-Bonny pipeline that fouled an area of the Niger delta that is home to 35 villages with a population of 49,000 people, many of whom are poor farmers and fishermen.

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Under the settlement, about 15,600 people from Ogoniland in the delta, including about 2,000 children, will soon receive payments of about $3,000 each, an amount more than 30 times larger than the minimum monthly wage in Nigeria.

“From the outset, we’ve accepted responsibility for the two deeply regrettable operational spills in Bodo,” Mutiu Sunmonu, managing director of Shell’s Nigerian unit, said in the statement. “We’ve always wanted to compensate the community fairly and we are pleased to have reached agreement.” The company also said it would soon begin cleaning up the spill sites.

Shell is the biggest oil company extracting oil in Nigeria, and local critics say it also is a leading polluter. In 2009, the company agreed to pay $15.5 million to settle lawsuits filed in the United States over spills, also in the Ogoniland area. As part of the settlement, Shell was allowed to deny any wrongdoing.

As for the latest settlement, Martyn Day, the claimants' lawyer, said in an e-mail statement that he was happy on their behalf, but added that it was “deeply disappointing” that it took Shell six years to grasp the extent and depth of the damage it's pipeline caused.

“We hope that in future Shell will properly consider claims such as these from the outset and that this method of compensation, with each affected individual being compensated, will act as a template for Shell in future cases in Nigeria,” Day said.

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Shell's subsidiary operating in Nigeria, Shell Petroleum Development Company of Nigeria (SPDC), at first estimated that no more than 4,000 barrels of oil had escaped in the two spills. But examination of film of the accidents showed that the amount of oil was 60 times larger.

Day predicted that the Bodo settlement is likely to lead to more victories for people hurt by what he called oil companies' negligence. “We have four or five other cases which we have been asked to look at,” he said. “We and others will look to bring other cases.”

As for the people in Bodo themselves, Chief Sylvester Kogbara, chairman of the Bodo Council of Chiefs and Elders, was optimistic. “The community can start to live again,” he said. “For the last few years people here have had no income at all. It has been very painful. We cannot start fishing again, but we start business and begin to trade. There is some optimism again.”

By Andy Tully of Oilprice.com

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