Nigerians waited 30 years for oil spill compensation

Mar 28, 2022 News

Kaieteur News – Oil spill disasters are costly and the effects they have on the marine ecosystem are quite worrying. It is in this vain that a proper oil insurance policy is needed for oil producing nations.
Having a proper oil insurance policy, would help safeguard a country in the event of an oil disaster. While in contrast not having a proper insurance policy could leave a country with polluted waters and shores, exposed to lawsuits and immense expense for the cleaning and the remediation of the environment. In Nigeria’s case, it was proven that not having a proper insurance policy from oil companies operating in that country was ill-considered.
In fact, it took 30 years after a legal proceeding commenced against an oil company for citizens to receive compensation following a spill in that country. The lawsuit was filed by Nigerian farmers and communities affected by spilled hydrocarbons. The communities and farmers had long fought legal battles over oil spills and environmental damage before they received compensation. It should be noted that not only were the affected Nigerians had to wait 30 years after the legal proceedings commenced to be compensated but the compensation came 11 years after a federal court had ordered the company to pay same.

The effect of the oil spill in Nigeria.

In August 2021, 30 years after Nigerian farmers and affected communities commenced a legal case against Royal Dutch Shell (RDS) – the company finally agreed to pay them $45.7 billion Naira (US $110.9 million) in compensation to put an end to the 1991 legal battle.
While speaking on the company’s decision to finally pay up, community lawyer for the Ejama-Ebubu people, Lucius Nwosu, disclosed, “They ran out of tricks and decided to come to terms.” According to him, that decision is a vindication of the resoluteness of the community for justice.
It was reported in the media that Shell had approached a court in Abuja, Nigeria’s capital, on Wednesday August 11, 2021, to disclose the development. Also, the company had agreed to pay the sum within 21 days. A spokesman for Shell Nigeria had said by e-mail, that the payment is for full and final satisfaction of a court judgement issued against the company in 2010.
According to energy news website Energyvoice, the origin of the community’s grievance against Shell dates back to a rupture in one of the firm’s pipelines in 1970. Shell had maintained that the environmental damage was caused by “third parties” during a civil war that was raging at the time. While the joint venture that Shell operates “does not accept responsibility or liability for these spills, the affected sites in the Ebubu community were fully remediated,” the company said.
In 2010, a federal court ordered Shell to pay 17 billion Naira to the community. The oil major unsuccessfully challenged the decision on multiple occasions, including at the Supreme Court in November, 2020.
In March 2020, a judge in a related court case said that, with interest accrued, Shell’s debt stood at nearly 183 billion Naira by January 2019 – a valuation, the company vehemently contested. After a 13-year legal battle, a Dutch court in January 2021, ordered Shell to compensate Nigerian farmers for spills that polluted much of their land in the Niger Delta.
The court ordered Shell to compensate three out of four farmers who lodged the case in 2008. The case has dragged on so long that two of the Nigerian farmers have died since it was first filed. In February 2021, Shell had initiated arbitration proceedings against the Nigerian government at the World Bank’s International Centre for Settlement of Investment Disputes following its unsuccessful attempts to overturn the 2010 ruling.
Kaieteur News reported last week that after two years of protest from citizens for full liability insurance coverage from oil giant, ExxonMobil in the unfortunate event of an oil spill in the country’s waters, Vice President Bharrat Jagdeo has finally come on record to assure that his administration is now working with the parent company to secure such guarantee. Jagdeo made the revelation last Thursday evening, during an interview with the Department of Public Information.
Since the startup of its oil operations in December 2019, ExxonMobil has evaded demands to provide insurance coverage, and instead tied its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) to provide this guarantee. It has been argued however that EEPGL, being a fairly new company, with assets worth only about US$5 billion, it would not be able to effectively cover all costs associated with an oil spill in Guyana, should such an adverse event occur.
So far, three of the oil company’s operations, Liza One, Liza Two and Payara have been granted approval, without guarantees in place from the parent company. With approval for its fourth project -the Yellowtail development – in the making, Jagdeo has made it clear that a separate document will be issued to Exxon, which ensures a guarantee is secured, should an oil spill occur.
He said, “…Yellowtail will be stronger than any (Permit) they (the former government) have issued and separately, not part of the permitting process for Yellowtail, but separately, we are working with the companies to secure a parent guarantee that will cover the entire Stabroek Block. Not Liza 1, Liza 2, Payara or Yellowtail, but the entire Stabroek Block, but that is a separate issue.”
The Vice President did not disclose figures, or further details regarding the guarantee his government is now looking to secure from ExxonMobil; more than two years post first-oil. Jagdeo was keen to note during his interview, however, that the former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams had merely thought of or “had something” up his sleeves while at the organization, but it is the PPP that is ensuring it is done.