Shell Fights Lawsuits Over Environmental Record in Nigeria

Royal Dutch Shell PLC is fighting lawsuits this coming week in London and the Netherlands over its environmental record in Nigeria, highlighting the quagmire of problems the energy company faces there as it tries to pivot away from the West African nation.

The oil-rich Niger Delta has generated billions of dollars for Shell over the past 60 years, but the company’s operations have been plagued by sabotage, theft and oil spills that ravaged the local environment.

Though Nigeria was one of its most prolific regions for crude production in 2015, Shell has sold off tracts of onshore oil fields. Its new focus—sealed with the mammoth $50 billion acquisition of BG Group PLC this year—is deep-water wells off the coasts of the U.S. and Brazil and a historic shift toward natural gas that puts it at the forefront of oil companies offering a more climate-friendly image to investors.

The flurry of lawsuits Shell is facing for oil spills from its Nigerian operations are a legacy of decades of drilling that now carry financial and reputational risks at a time when the company is contending with the slump in oil prices.

The hearings in London’s High Court, scheduled to start Tuesday, represent an early test for cases brought by the community of Ogale and a group from the Bille Kingdom. The communities are hoping to hold Shell accountable for environmental damage they claim has been caused by spills from infrastructure operated by Shell’s Nigerian subsidiary, Shell Petroleum Development Co. of Nigeria Ltd., or SPDC.

Shell is expected to argue that only the subsidiary should be held liable and that the cases should be heard in Nigeria, SPDC’s base and where the incidents took place.

“This litigation is divisive, it’s costly, it’s time consuming, and asking courts unfamiliar with the reality on the ground in Nigeria does nothing to address the very real problems they’re facing like oil theft, criminality and illegal refining,” a spokeswoman for SPDC said.

But the communities and their lawyers say seeking justice in Nigeria won’t hold Shell responsible for the actions of its subsidiary and is extraordinarily difficult. It can take decades for cases to wind their way through the court system with no relief for land poisoned by oil spills, barren fishing creeks and the foul water that runs from their pumps, they say.

“You cannot fight Shell in Nigeria,” the king of Ogale, Emere Godwin Bebe Okpabi, said in a phone interview. “Shell is Nigeria, Nigeria is Shell.”

It is a point Shell has already contested in The Hague, where four Nigerian farmers and Friends of the Earth successfully appealed a ruling that was largely in Shell’s favor last year, allowing them to pursue a case against the company in the Netherlands. The next hearing in the case is scheduled for Thursday.

Last year, the company said it experienced on average nine oil spills a month caused by sabotage or theft, with a handful of additional spills caused by operational issues. An uptick in violence this year has knocked important export terminals out of action for months at a time, though divestments onshore have helped reduce the overall number of spills Shell has recorded.

Shell blames the spills in the legal cases on third-party interference, like sabotage and theft. Under Nigerian law, the company isn’t required to pay compensation for spills caused by sabotage or theft. It also points to illegal refining, a source of pollution in the region that is unrelated to the company’s infrastructure.

Shell also maintains that it cleans up all oil spills, regardless of the cause.

These are assertions that the lawsuits in London and The Hague challenge, claiming that Shell has failed to properly clean up oil-spill sites years after oil oozed out of their pipes, and hasn’t adequately protected pipelines where spills were caused by third-party damage.
The company has already paid out £55 million, or roughly $80 million, to compensate another Niger Delta-based community in a settlement reached last year after they brought a separate lawsuit in London. In that instance, Shell admitted the spills were caused by operational failures.

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