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Nigerians reject Shell compensation offer

Villagers rejected a deal offering them around R17,000 each following a damaging oil spill.

Villagers rejected a deal from Shell offering them around R17,000 each following a damaging oil spill. Picture: EWN

PORT HARCOURT, NIGERIA - Nigerian villagers on Friday rejected an offer of compensation from Royal Dutch Shell for damage done to their livelihoods by oil spills from pipelines operated by the company, their lawyers said.

Failure to reach a settlement means the Anglo-Dutch oil major and around 15,000 members of the Bodo fishing communities in southeastern Nigeria remain locked in litigation.

Their lawyers said they will now go back to a British court to request a trial timetable.

The legal action is being closely watched by the oil industry and by environmentalists for precedents that could have an impact on other big pollution claims against majors.

"We haven't reached agreement on compensation, which is disappointing," a spokesman for Shell's Nigeria unit said.

"Nonetheless, we're pleased to have made progress in relation to cleanup," he added, saying measures had been put in place to get remediation work done as soon as possible.

A source close to Shell and another source involved in the negotiations told Reuters the company offered total compensation of 7.5 billion naira (R460 million).

Leigh Day, the British law firm representing the villagers, said the compensation offer amounted to just under R17,000 per individual impacted, without giving the number of people it says were affected.

"The whole week has been deeply disappointing," said Martyn Day of the London-based law firm, who has been in talks with Shell since Monday in Nigeria's oil hub Port Harcourt.

"The settlement figures are totally derisory and insulting to these villagers," he added.

The Nigerians launched a suit against Shell at the High Court in London in March 2012, seeking millions of dollars in compensation for two oil spills in 2008, but both sides agreed to try and settle in compensation talks in Port Harcourt.

Shell accepts responsibility for the Bodo spills but the two sides disagree about the volume spilt and the number of local people who lost their livelihoods as a result.

Citing independent experts, Leigh Day says up to 600,000 barrels of crude were spilt, which would make it one of the worst in history. The volume spilt in Alaska in the 1989 Exxon Valdez disaster was put at 257,000 barrels.

But Shell, citing a report by a joint investigative team not controlled by the firm, puts the volume spilt in the two original incidents at just 4,100 barrels.

Shell accepts that a significantly higher volume of oil was spilt later but says this was due to other factors including sabotage. It has complained that its clean-up teams were at times denied access to sites by local groups.

The Niger Delta has for years been plagued by a range of problems including environmental degradation, kidnappings, theft of crude from pipelines, armed rebellions, and conflict between communities over clean-up contracts or compensation deals.

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