Reps panel orders Shell pay $4b for Bonga oil spill

Reps panel orders Shell pay $4b for Bonga oil spill

Thursday, November 27, 2014 6:59 am

an area devastated by oil spill

an area devastated by oil spill

Nigeria’s House of Representatives committee has ordered oil major Shell to pay $3.96 billion(N604billion) for a 2011 spill at its offshore Bonga oilfield in the latest assessment of damage to the environment.The spill was said to have been caused by equipment failure.

The non-binding decision comes after years of analysis by various Nigerian state agencies, which have proposed a range of fines as high as $11.5 billion.

The reps committee on environment finally reached a decision based on the report of the National Oil Spill Detection and Response Agency (NOSDRA), which previously recommended a fine of $5 billion.

The committee chairman, Uche Ekwunife, gave the directive during an investigative public hearing on the SNEPCo Bonga crude oil spill, which occurred on the December 20, 2011.

The breakdown of the independent value analysis adopted by the Committee indicated that N63.6bn is to be paid for direct losses, which are irreversible damages, another N103.192bn for loss of income, N85bn for provision of water, while N27.4bn is for forestry and NTFP.

Ben van Beurden : Shell CEO Worldwide

Ben van Beurden : Shell CEO Worldwide

For the indirect losses, the oil company is to pay N14.35bn for health hazards; N8million for injurious affection and N302.4bn for punitive damage.

According to the report, the oil spillage and harmful chemical pollutants affected 350 coastal communities and satellite villages in the state. SNEPCo had in its report agreed “to an oil spill estimate at 40,000 barrels into the marine environment in Bonga on December 2011”.

“The cause of the spill was equipment failure resulting from a snapped loading hose under water,” said the report.

Earlier in his submissions, director-general of National Oil Spill Detection Response Agency (NOSDRA), Peter Idabor, who expressed disgust over the high-handedness of SNEPCo management, accused the oil company of frustrating moves to hold the multi-stakeholders meeting as directed by the Committee earlier.

He pointed out that at the meeting initiated by SNEPCo, the NOSDRA had disagreed on what he called insincerity on the part of SNEPCo, on the unilateral adoption of different titles like ‘mystery oil spill’ and ‘meeting of SNEPCo palliative’ at different fora.

He added that various stakeholders resolved to withdraw from the meeting and the minister of environment, when briefed on the outcome of the multi-stakeholders meeting, further directed other parties not to attend any of such meetings again.

Shell declined to comment. The company has previously said it took responsibility for the spill and had cleaned the area.

The parliament’s decision is non-binding as it only has the power to recommend fines to the government and cannot enforce them.

NOSDRA estimated that around 40,000 barrels were spilled when a tanker was loading crude at the offshore platform operated by Shell’s subsidiary SNEPCO. The Bonga field was producing 200,000 barrels per day at the time.

NOSDRA has previously said the spill had hurt locals in the area who rely on fishing for their livelihoods as the slick covered an area of around 950 square km.

“Since all efforts by this committee were tactfully rebuffed by SNEPCO, (it) has decided to adopt the damage assessment report submitted by NOSDRA as the lead agency in all oil spill management,” Uche Ekwunife, chairman of the environmental committee told the assembly.

Shell is also being pursued in a class action case for two other spills in the Niger Delta in 2008. In June, it offered 30 million pounds ($51 million) in compensation to 15,000 residents in the Bodo Community but this was rejected.

The United Nations Environment Programme has criticised Shell in the past for not doing enough to clean up spills and maintain infrastructure.

Environmental toll has been huge in Nigeria. The mangrove creeks of the delta region are heavily polluted mainly due to leaks from illegal pipeline tapping and sabotage.

Foreign companies have been selling their stakes in onshore oilfields after becoming frustrated with industrial scale theft and resulting spills, which show no signs of abating.

On Monday, Shell had to shut down a pipeline as a result of a new leak close to where it was removing oil taps

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