Nigerian community waited almost a decade for US$200M oil spill compensation

Mar 30, 2022 News

Kaieteur News – A Nigerian community had to wait almost a decade before it received compensation from American oil giant, ExxonMobil Corporation’s (EMC) subsidiary for a series of oil spills that occurred between 2000 and 2010.
In June 2021, nine years after the legal proceedings commenced, a Nigerian court ordered Nigerian National Petroleum Corp. (NNPC) and Mobil Producing Nigeria Unlimited (MPNU), which is a subsidiary of Exxon, to pay 82 billion Naira (US$199.5 million) in compensation to the Ibeno community of Akwa Ibom State for a series of oil spills.
The lawsuit had attempted to directly include MPNU’s parent company, ExxonMobil. However, the court disagreed.
According to media reports, the Plaintiffs’ contention was that ExxonMobil, though an American-based company, presides over or “holds itself” out as the parent organisation of Mobil Producing Nigeria Unlimited (MPNU), a Nigerian company that engages in crude oil exploration and production in Nigeria. According to the Plaintiffs, MPNU is a shell company and an appendage of EMC and as such EMC should bear joint liability for the tortuous claims of the Plaintiffs against NNPC and MPNU.

The impacts of an oil spill on a Nigerian river.

The Plaintiffs further contended that the limited liability status of MPNU renders it incapable of satisfying any corporate debt that may accrue to the Plaintiffs in the event of a successful determination of the lawsuit in their favour and, therefore, EMC “being the parent company should be compelled to bear whatever liability that may arise from the Suit.” The defendant in its arguments contended that ExxonMobil is not resident in the country and has no presence in Nigeria and consequently is not subject to the territorial jurisdiction of the Court.
In terms of physical residence, the EMC occupies no physical address in Nigeria, “whether as owner, lessee or licensee” of the said space. The defense also argued that ExxonMobil holds no shares whatsoever in the Nigeria’s state owned Petroleum Company.
In its judgment delivered on 21 June, 2021, the Court agreed completely with the defendant’s submissions and held that MPNU is not a subsidiary of EMC and that the Plaintiffs’ action as it relates to EMC was speculative. The court held that MPNU is capable of defraying the judgment that may arise from the Suit against it, and also found that in any case the NNPC should share the liability with the MPNU and not the EMC. On the basis of the findings and reasoning, the Court held that the EMC was not a necessary party to the Suit and was accordingly struck out.
This in effect served to afford ExxonMobil a reprieve from the finding of the Abuja Federal High Court that the two companies had been negligent in how they responded to oil spills in the community, and consequently had to pay the damages within 14 days. Failure to do so would result in accumulated interest added to the amount, at a rate of eight percent per year.
Nigeria’s Youths and Environmental Advocacy Centre (YEAC) welcomed the court finding and indicated that the ruling aligns with the recent case against Shell, from the Ejama-Ebubu community, in Eleme, Rivers State.
Also reacting to the development is the Executive Director of The Environmental Rights Action/Friends of the Earth Nigeria, Dr. Godwin Uyi Ojo, who described it as a landmark judgment on the long walk to environmental justice and protection of the environment and livelihoods.
“The judgment is significant because payment of compensation to victims of oil pollution will impact positively on the lives of the people of the Niger Delta suffering under the heavy burden of oil spills pollution and destruction of their livelihoods,” he said.
Similarly, Kaieteur News recently reported that 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 did 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.
This publication reported, last week that after two years of protest from citizens for full liability insurance coverage from 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, 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 organisation, but it is the PPP that is ensuring it is done.