Shell hit by $1.5bn oil pollution claim from Nigerian Senate
Shell, the beleaguered oil giant, has been asked by Nigeria's Senate to pay $1.5bn (£830m) compensation to communities affected by oil pollution in the country.
The resolution passed by the Senate, against the company's Nigerian joint venture, Shell Petroleum Development Corp, was to compensate the Ijaw tribe in the southern Bayelsa state. SPDC has long been accused by activists of not cleaning up oil spills and complicity in human rights abuses.
The Senate move backed a similar resolution passed by Nigeria's House of Representatives. However, according to a local SPDC spokesman, the resolutions would be binding "only if the law backs it" - implying it would need the support of the government of President Olusegun Obasanjo.
According to the Senate, the money is to cover health problems, economic hardship and avoidable deaths as a direct or indirect result of oil spillages from facilities owned in the Niger delta by SPDC, which is operated and part-owned by Shell.
The compensation claim does not relate to the grievances of the Ogoni people, also of the Niger delta, the area which contains most of the oil reserves. The Ogoni are in a neighbouring state to Bayelsa and although their protests against the impact of oil production on their traditional land has received greater international attention, the Ijaw are a larger and more politically powerful group within Nigeria.
Nigeria is an important region for Shell, accounting for about 10 per cent of group production. The company's image problem in Nigeria last came to a head in 1995 when Shell was linked by international campaigners to the military government of Sani Abacha, which executed a delta activist, Ken Saro-Wiwa.
Although oil pollution in the Niger delta has received less international attention in recent years, two independent reports published this year were scathing about Shell's continuing record in the country and revealed that conditions in the area had seriously deteriorated.
A study commissioned by Shell from the consultants WAC Global Services warned that increasing violence in the delta could ultimately force the Anglo-Dutch company out of the region. It said that Shell's action "creates, feeds into, or exacerbates conflict" in the area.
Separately, the charity Christian Aid criticised the oil giant for "scandalously inadequate" oil spill clean-ups, badly implemented social projects, and for making "stay-at-home" payments to militants to try to stop them disrupting their activities. It said the situation in the delta was "spiralling out of control".
According to yesterday's Senate resolution, Shell is expected to pay $1bn now and the balance of $500m in equal instalments over the next five years.
A Shell spokesman in London said the company had not studied the Senate's resolution so it was unable to comment.