FG May Be Liable For N25bn Of N45bn Ruling Against Shell In Ogoni

The federal government, through the Nigerian National Petroleum
Corporation (NNPC), may be liable for roughly N25.24 billion, that
is 55 per cent of the total N45.9 billion court-ordered
compensation against Shell Petroleum Development Company (SPDC),
for oil spillages in Ejama Ebubu community in Ogoni, Rivers State,
According to THISDAY
report.^[1]

Though, Shell is the operator of the affected oil field, some
analysts said last night the Joint Venture (JV) arrangement implied
that all the partners would be responsible for the judgment award
to the Ogoni community, “since they must all absorb all
liabilities.”

“The judgment is against one of SPDC’s joint ventures and the
partners would have to contribute in the proportion of their
interests,” remarked one analyst.

However, another analyst said it might not be that straight
forward, arguing that all the joint venture partners would only be
liable, “depending on the JV agreement and the operator agreement
signed.

Shell only runs the operations of joint ventures (JVs) in
Nigeria where the federal government is the holder of 55 per cent
of the assets.

If it turns out that all the JV partners are liable for the
Ogoni compensation, based on the JV/operator agreement, Shell is
expected to pay its share of 30 per cent of the recompense,
estimated to be N13.77 billion; Total E&P Nigeria Limited will
pay its 10 per cent, about N4.59 billion; while Eni which holds
five per cent will pay the least amount of N2.29 billion.

The affected oil field has the government-owned Nigerian
National Petroleum Corporation – NNPC owning (55 per cent share),
SPDC (30 per cent), Total E&P Nigeria Ltd (10 per cent) and the
Eni subsidiary Agip Oil Company Limited (five per cent), according
to details on Shell’s website.

Last Wednesday, Shell finally agreed to pay an agreed
compensation after a long legal battle, which commenced in 1991
over the spill that occurred 31 years ago, but was silent on the
liabilities of the JV partners.

Judgment first came in favour of the Ogoni community in 2010,
courtesy of Justice Ibrahim Buba of the Lagos division of the
Federal High Court.

The oil giant had initially declined payment and proceeded up to
the Supreme Court twice; first in 2017 to appeal the judgment of
the Court of Appeal, which had upheld the judgment of the trial
court and in 2019, to seek a review of the apex court judgment
dismissing its appeal.

Aham Ejelamo, a lawyer to Shell, the local arm of the Royal
Dutch Company, said the company resolved to pay the monetary
compensation awarded in 2010 after several attempts to amend
earlier judgement failed.

He informed the court of the decision to pay up the money and
sought permission of the trial judge, Justice Ahmed Mohammed, to
make payment through the Chief Registrar of the court in a bank
account to be opened for the purpose.

However, Mohammed ruled that the money should be paid through
the counsel to the Ogoni community, Chief Lucius Nwosu (SAN).

The development will put further strain on the finances of NNPC,
which is currently struggling to meet its obligations to its
stakeholders, including the federal and state governments, having
been consistently unable to remit up to 30 per cent of its
statutory contribution to the federation account for several
months.

Those to benefit from the judgment include the people of Ejama
Ebubu, a community in Tai Eleme local government area of Rivers
State, one of the six kingdoms in Ogoni land, while other kingdoms
are Babbe, Eleme, Gokana, Ken-Khana, and Nyo-Khan.

The Shell’s nod ended the legal tussle that entangled the oil
giant and the community for decades.

The case was instituted in 2001 by 10 representatives of the
Ejama Ebubu community against the oil company for the losses caused
by the oil spills.

A source at Shell said: “The spills occurred during civil war…
it was caused by the soldiers. And immediately after the war, we
mobilised, cleaned, and remediated the site. We got a certificate
from National Oil Spill Detection & Response Agency (NOSDRA) to
that effect. The case is one-sided and judgement without
justice.”

Shell had argued in court: “This spill was caused by third
parties during the Nigerian Civil War, a challenging period, which
resulted in significant damage to oil and gas infrastructure in the
region. While SPDC does not accept responsibility for these spills,
the affected sites in the Ebubu community were fully
remediated.

“The claimants have, at their own admission in court, materially
miscalculated and overstated the value of the award previously
sought in this case. The ruling of the Supreme Court did not decide
liability or the size of the award, which remains in dispute in
other ongoing court proceedings.

“It is our position that any attempt to enforce payment should
not be permitted. It is regrettable that the legal process in this
case had focused for so long on procedural issues and not the
merits of the case. We have always maintained that we are ready to
defend this case based on the available facts.”

There’s currently an ongoing negotiation between the federal
government and the oil giant as to its future operation in the
country, with the company’s Chief Executive Officer, Ben van
Beurden, insisting in May that the company could no longer bear its
exposure to the risk of theft and sabotage in the Niger Delta.

With 19 Oil Mining Leases (OMLs) in its SPDC subsidiary, a
THISDAY report quoted Wood Mackenzie , a global research firm,
yesterday as valuing Shell’s JV assets in Nigeria, excluding export
pipelines and terminals, at $2.3 billion.

Shell is planning to sell off all its assets in the shallow
waters and onshore, leaving only its offshore operations intact in
Nigeria.

The federal government, through the Nigerian National Petroleum
Corporation (NNPC), may be liable for roughly N25.24 billion, that
is 55 per cent of the total N45.9 billion court-ordered
compensation against Shell Petroleum Development Company (SPDC),
for oil spillages in Ejama Ebubu community in Ogoni, Rivers State,
According to THISDAY
report.^[1]

Though, Shell is the operator of the affected oil field, some
analysts said last night the Joint Venture (JV) arrangement implied
that all the partners would be responsible for the judgment award
to the Ogoni community, “since they must all absorb all
liabilities.”

“The judgment is against one of SPDC’s joint ventures and the
partners would have to contribute in the proportion of their
interests,” remarked one analyst.

However, another analyst said it might not be that straight
forward, arguing that all the joint venture partners would only be
liable, “depending on the JV agreement and the operator agreement
signed.

Shell only runs the operations of joint ventures (JVs) in
Nigeria where the federal government is the holder of 55 per cent
of the assets.

If it turns out that all the JV partners are liable for the
Ogoni compensation, based on the JV/operator agreement, Shell is
expected to pay its share of 30 per cent of the recompense,
estimated to be N13.77 billion; Total E&P Nigeria Limited will
pay its 10 per cent, about N4.59 billion; while Eni which holds
five per cent will pay the least amount of N2.29 billion.

The affected oil field has the government-owned Nigerian
National Petroleum Corporation – NNPC owning (55 per cent share),
SPDC (30 per cent), Total E&P Nigeria Ltd (10 per cent) and the
Eni subsidiary Agip Oil Company Limited (five per cent), according
to details on Shell’s website.

Last Wednesday, Shell finally agreed to pay an agreed
compensation after a long legal battle, which commenced in 1991
over the spill that occurred 31 years ago, but was silent on the
liabilities of the JV partners.

Judgment first came in favour of the Ogoni community in 2010,
courtesy of Justice Ibrahim Buba of the Lagos division of the
Federal High Court.

The oil giant had initially declined payment and proceeded up to
the Supreme Court twice; first in 2017 to appeal the judgment of
the Court of Appeal, which had upheld the judgment of the trial
court and in 2019, to seek a review of the apex court judgment
dismissing its appeal.

Aham Ejelamo, a lawyer to Shell, the local arm of the Royal
Dutch Company, said the company resolved to pay the monetary
compensation awarded in 2010 after several attempts to amend
earlier judgement failed.

He informed the court of the decision to pay up the money and
sought permission of the trial judge, Justice Ahmed Mohammed, to
make payment through the Chief Registrar of the court in a bank
account to be opened for the purpose.

However, Mohammed ruled that the money should be paid through
the counsel to the Ogoni community, Chief Lucius Nwosu (SAN).

The development will put further strain on the finances of NNPC,
which is currently struggling to meet its obligations to its
stakeholders, including the federal and state governments, having
been consistently unable to remit up to 30 per cent of its
statutory contribution to the federation account for several
months.

Those to benefit from the judgment include the people of Ejama
Ebubu, a community in Tai Eleme local government area of Rivers
State, one of the six kingdoms in Ogoni land, while other kingdoms
are Babbe, Eleme, Gokana, Ken-Khana, and Nyo-Khan.

The Shell’s nod ended the legal tussle that entangled the oil
giant and the community for decades.

The case was instituted in 2001 by 10 representatives of the
Ejama Ebubu community against the oil company for the losses caused
by the oil spills.

A source at Shell said: “The spills occurred during civil war…
it was caused by the soldiers. And immediately after the war, we
mobilised, cleaned, and remediated the site. We got a certificate
from National Oil Spill Detection & Response Agency (NOSDRA) to
that effect. The case is one-sided and judgement without
justice.”

Shell had argued in court: “This spill was caused by third
parties during the Nigerian Civil War, a challenging period, which
resulted in significant damage to oil and gas infrastructure in the
region. While SPDC does not accept responsibility for these spills,
the affected sites in the Ebubu community were fully
remediated.

“The claimants have, at their own admission in court, materially
miscalculated and overstated the value of the award previously
sought in this case. The ruling of the Supreme Court did not decide
liability or the size of the award, which remains in dispute in
other ongoing court proceedings.

“It is our position that any attempt to enforce payment should
not be permitted. It is regrettable that the legal process in this
case had focused for so long on procedural issues and not the
merits of the case. We have always maintained that we are ready to
defend this case based on the available facts.”

There’s currently an ongoing negotiation between the federal
government and the oil giant as to its future operation in the
country, with the company’s Chief Executive Officer, Ben van
Beurden, insisting in May that the company could no longer bear its
exposure to the risk of theft and sabotage in the Niger Delta.

With 19 Oil Mining Leases (OMLs) in its SPDC subsidiary, a
THISDAY report quoted Wood Mackenzie , a global research firm,
yesterday as valuing Shell’s JV assets in Nigeria, excluding export
pipelines and terminals, at $2.3 billion.

Shell is planning to sell off all its assets in the shallow
waters and onshore, leaving only its offshore operations intact in
Nigeria.