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Shell faces big bill for oil spills

  |   Aug. 12, 2011 at 1:35 PM
PORT HARCOURT, Nigeria, Aug. 12 (UPI) -- Oil titan Royal Dutch Shell faces a bill for hundreds of millions of dollars for two big 2008 oil spills in Nigeria's main oil-producing zone, a region devastated by 6,800 recorded spills over the last half century.

Shell reportedly has accepted liability for two spills following a 4-month legal battle in London over a suit initiated by a law firm representing the pollution-stricken communities in the Niger Delta, where some 31 million people live. Most are impoverished, living on $1 a day.

The case seems set to establish a precedent for other high-profile lawsuits against leading oil companies in other parts of the world. Chevron of the United States, for instance, is being sued for $27 billion in damages for massive pollution in the Amazon jungles of Ecuador.

Shell, which along with BP -- then known as British Petroleum -- discovered oil in Nigeria in 1956, has claimed that less than 40,000 gallons of crude oil leaked from the twin ruptures in November and December 2008 of the 50-year-old Bodo-Bonny pipeline. It pumps 120,000 barrels of oil a day across the Niger region.

But London's Guardian newspaper reported that technical experts estimate more than 280,000 barrels may have been spilled around the town of Bodo, a hub for a network of pipelines that carry oil from around 100 wells in the pollution-plagued Ogoni district.

"Experts who studied video footage of the spills in Bodo … say together they could be as large as the 1989 Exxon Valdez disaster in Alaska."

Between 260,000 and 750,000 barrels of oil leaked from the tanker after it hit a reef in the Gulf of Alaska in March 1989.

Amnesty International has estimated that if all types of oil pollution in the delta were added up over the last half century, it would "be on a par with Exxon Valdez every year over the last 50 years."

The Alaska spill was the worst environmental disaster in U.S. waters until the Deepwater Horizon oil spill in the Gulf of Mexico in April 2010, during which 4.9 million barrels of crude leaked from the offshore BP well.

The Nigerian spills in 2008 devastated the creeks and marshes around Bodo and 30 other communities. The oil has seeped into the water table and ruined farmland and fishing. No attempt has been made to clean up the oil.

The entire delta, where Shell and other international oil companies operate more than 600 oil wells, has been hit by more than 6,800 recorded oil spills since oil production began 50 years ago.

Environmental groups say these account for anywhere between 9 million to 13 million barrels of oil – twice the volume involved in the Gulf of Mexico spill.

A three-year investigation by the U.N. Environment Program completed in 2010 -- commissioned by the Nigerian government and partly paid for by Shell -- outlined the scale of the pollution crisis.

It said Shell and others had systematically contaminated 400 square miles of Ogoniland, with disastrous consequences for the tribal communities and wildlife.

The report said the people of the delta had "paid a high price" for the economic gains brought by the oil industry.

It said the spills over the last five decades will cost $1 billion and 25-30 years to rectify.

Shell and other oil companies claim that only a small fraction of the spills in Ogoniland were caused by equipment failures and negligence.

The bulk of the pollution, they say, was caused by local tribesmen stealing oil from pipelines -- these is a lucrative local trade in siphoning off crude and selling it illegally by the tankerload to neighboring states -- or sabotaging oil company pipelines.

In 2006, tribal militants launched an insurgency in the delta against the oil companies and the federal government to demand cleanups and a greater share of the oil revenue produced in their region.

That insurrection has largely been contained but not before it slashed Nigeria's oil production by about one-third -- 1 million barrels per day.

But despite the scale of the oil pollution in the delta, it has never received the attention paid to the Alaska or Gulf of Mexico catastrophes.

Exxon Mobil was ordered in 1994 to pay $5 billion in punitive damages for the Alaska disaster, although that was reduced in 2009 to $507.5 million.

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