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The Times: $1.5bn Shell Nigeria fine upheld

Feb 24th, 2006
by admin.

By Rhys Blakely and agencies
The Nigerian Federal High Court today ordered Shell, the Anglo-Dutch oil company, to pay $1.5 billion (£859m) to the Ijaw people of the country’s Bayelsa region. The Ijaw were first made the award in 2000 for environmental damage to their homeland in the Niger Delta through Shell’s oil exploration. Shell refused to pay and has since been targeted by Ijaw militants who have attacked the company’s facilities in Nigeria and are currently holding nine foreign oil workers hostage.
A statement today from the Movement for the Emancipation of the Niger Delta, the armed ethnic Ijaw group, said: “There have been reports that negotiations are ongoing towards the release of these individuals. This is absolutely untrue.”
It added: “We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning.”
Following the violence, Shell – the biggest oil producer in Nigeria – has halved its output from the country.
A spokeswoman for the company told Times Online that the company was unable to comment on the court ruling because it had not yet been made aware of it.
She added Shell remained convinced “independent expert advice” showed that it strong grounds to appeal the order to pay compensation.
“We remain committed to dialogue with the Ijaw people,” she said.
According to the BBC, Shell's lawyers argued in the Pourt Harcourt Federal Court that the joint committee of the Nigerian National Assembly that made the order in 2000 did not have the power to compel the oil company to make the payment.
The Nigerian Senate approved the fine in August 2004 after it was presented to the lower House of Representatives in 2003 and reviewed by an independent legal advisory panel set up by the lower house.
However, Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Shell has argued in the past that most oil spills in the southern Niger Delta, which kill fish and crops, are caused by saboteurs trying to steal oil.
A report published by the European Bank for Reconstruction and Development today said Shell's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. Reuters reported.
The bank is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project.
The application could be turned down if the bank decides the project fails to meet its environmental rules.

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