Nigeria Agency Wants Chevron to Pay $3 Billion for Fire

Nigeria’s oil spill agency said it wants Chevron Corp. (CVX), the world’s fourth-largest energy company, to pay a $3 billion penalty for a rig explosion that caused a 46-day fire.

“Having looked at the relevant literature and what happens in other countries, we recommended a fine of $3 billion for Chevron,” National Oil Spill Detection and Response Agency’s Director-General Peter Idabor said in an interview in Abuja, the capital, yesterday. For now, the planned penalty is only a suggestion and “still not conclusive” as it requires the approval of lawmakers and President Goodluck Jonathan’s government, he said.

Chevron was drilling a gas-exploration well at Funiwa, about six miles (9.6 kilometers) off Nigeria’s delta coast, when it exploded Jan. 16, killing two workers. The fire that followed stopped on March 2 after the flow of natural gas dried up, the company said in a statement. The accident was caused by equipment failure, the oil spill agency known as NOSDRA, said.

Chevron “respects and complies with the laws in the countries in which it operates,” Kurt Glaubitz, a San Ramon, California-based company spokesman, said today in an e-mailed statement.

Worst Spill

NOSDRA is also investigating a seven-week gas leak that started on March 20 at the Obite field operated by Total SA (FP)’s Nigerian unit to determine appropriate penalty, Idabor said. The agency had suggested to the government in July that Royal Dutch Shell Plc (RDSA) pay a $5 billion fine for an oil leak in December from its offshore Bonga field that caused the country’s worst spill in more than a decade. Shell said less than 40,000 barrels leaked.

“NOSDRA’s actions indicate willingness to act in defense of the environment,” said Nnimmo Bassey, executive director of Environmental Rights Action, an affiliate of Friends of the Earth. “The companies must be held accountable for their actions; pollution must be punished and polluters must pay.”

Shell, Exxon Mobil Corp. (XOM), Chevron, Total SA and Eni SpA (ENI) operate joint ventures with state-owned Nigerian National Petroleum Corp. that pump more than 90 percent of the crude output of Africa’s top oil producer. Shell is the biggest operator in the West African country by number of oil fields, followed by Exxon Mobil and Chevron.

Emergency Response

Exxon Mobil today said an oil spill from an unknown source was sighted along the coast near Ibeno, in the southern Akwa Ibom state.

“An emergency response team was immediately dispatched to the shoreline and samples of the substance collected for fingerprinting to determine its source,” Nigel Cookey-Gam, a Lagos-based spokesman, said today in an e-mailed statement. Exxon Mobil operates a facility in the area.

Until Shell’s Bonga spill, the worst on record in Nigeria happened in January 1998, when a pipeline linking Exxon Mobil’s Idoho platform to its Qua Iboe export terminal failed, spewing about 40,000 barrels into the sea, the company said.

To contact the reporter on this story: Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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