Shell to pay $83.5M for Nigeria oil spill

Oil giant Shell has agreed to pay a Nigerian fishing community about $83.5 million for the worst oil spill ever suffered in Nigeria.

Wednesday's agreement ends a three-year legal battle in Britain over two spills in 2008 that destroyed thousands of acres of mangroves and the fish and shellfish that sustained villagers of the Bodo community in Nigeria's southern Niger Delta.

The largest ever out-of-court settlement relating to oil spills in Nigeria is a step forward for the oil-rich Niger Delta region that has been hit by regular environmental damage, but it is tiny compared with the billions in compensation and fines BP had to pay after the Macondo rig disaster in the Gulf of Mexico in 2010.

However, the agreement reached between Shell and the Bodo community "is thought to be one of the largest payouts to an entire community following environmental damage," said the claimants' London lawyers, Leigh Day.

Shell said it is paying $53.1 million to 15,600 fishermen and farmers and $30.4 million to their Bodo community.

"We've always wanted to compensate the community fairly," said Mutiu Sunmonu, managing director of Shell Nigeria, which is 55 percent owned by the Nigerian government.

Shell originally offered $6,000 to the entire community, Leigh Day said. The community rejected the offer.

Sunmonu said Shell also has agreed and is "fully committed" to a cleanup.

Shell said that a major remediation operation would take place in the coming months, following an initial clean-up phase, but it did not disclose how long this would take, nor how much it would cost.

Chief Sylvester Kogbara, chairman of the Bodo Council of Chiefs and Elders, said he hoped "that Shell will take their host communities seriously now" and embark on a cleanup of all of Ogoniland.

A U.N. Environment Program report (PDF) has estimated it could take up to 30 years to fully rehabilitate Ogoniland, an area where villagers have been in conflict with Shell for decades.

Kogbara said the community money will be used to provide needed basic services. "We have no health facilities, our schools are very basic, there's no clean water supply," he said.

Individually, he said villagers are discussing setting up as petty traders and other small businesses until their environment is restored. Each person will receive $3,340 in a country where the minimum monthly wage is less than $100.

This is the first such case to pay compensation directly to individual community members, said Martyn Day, a senior partner at Leigh Day.

Previous similar claims have tended to go through the Nigerian authorities, resulting in a disbursement to community chiefs, who were then expected to distribute the money.

“It’s very unusual to have thousands benefit," Day said. "The money will go directly to their bank accounts and this will hopefully be a model for future claims.”

Shell's Sunmonu insisted that oil theft and illegal refining remain "the real tragedy of the Niger Delta" and "areas that are cleaned up will simply become re-impacted."

Amnesty International said Shell continues to blame oil theft for spills — which means it does not have to pay compensation — when the company's own documents state its aging oil pipelines present a "major risk and hazard."

Shell had argued that only 4,000 barrels of oil were spilled in Bodo while Amnesty International used an independent assessor who put it at over 100,000 barrels — considered the largest ever oil spill in mangroves.

"Oil pollution in the Niger Delta is one of the biggest corporate scandals of our time," said Audrey Gaughran of Amnesty International. She said thousands more people remain at risk because of Shell's failure to fix aging and dilapidated pipelines.

Wire services