Nigeria Spill Fines on Shell, Chevron, Not Backed by Law

Fines amounting to $8 billion sought by Nigeria from Royal Dutch Shell Plc (RDSA) and Chevron Corp. (CVX) for oil spills are not backed by law, said Bukola Saraki, chairman of the country’s Senate Committee on Environment.

“Under the existing law, there is no penalty for oil spills apart from just to clean it up,” Saraki, a senator representing the ruling People’s Democratic Party from central Kwara state, said in an interview in Abuja on Jan. 29. “You only pay 1 million naira ($6,362) for late reporting.”

Without the backing of law it is difficult for the National Oil Spill Detection and Response Agency, or Nosdra, to enforce fines levied on oil companies, he said. Lawmakers have moved to amend the law and stipulate tougher penalties, according to Saraki.

Shell, Exxon Mobil Corp. (XOM), Chevron, Total SA (FP) and Eni SpA (ENI) run joint ventures with state-owned Nigerian National Petroleum Corp. that pump more than 90 percent of the output of Africa’s top oil producer.

Nosdra recommended to the government in July that Shell should pay $5 billion for a December 2011 rupture from its offshore Bonga field that spilled about 40,000 barrels of oil, the country’s worst in more than a decade. The agency is also seeking $3 billion from Chevron for a rig explosion that caused a 46-day blaze in January last year on Nigeria’s Atlantic coast. It has been unable enforce the penalties because “there’s no law,” Saraki said.

Additional Penalties

The government is studying existing laws as they relate to oil spills and will make pronouncements in due course, Environment Minister Hadiza Mailafia said yesterday in Abuja without giving further details. Precious Okolobo, Shell spokesman in Nigeria, declined to comment when contacted on his mobile phone. Chevron obeys the laws of the countries in which it operates and won’t “comment on political matters,” Jim Craig, a San Ramon, California-based spokesman, said in an e- mailed response.

A new National Oil Pollution Management Agency Bill proposes fines of 250,000 naira for every barrel of oil spilled and will compel producers to pay compensation to affected communities, Saraki said. The bill proposes additional penalties of 15 billion naira for every onshore spill incident and 5 billion naira if it happens offshore, he said.

While improving the law will “definitely strengthen” Nosdra’s capacity to monitor energy producers, tough measures are unlikely to be enforced against companies engaged in partnerships with the government, Nnimmo Bassey, executive director of Environmental Rights Action, an affiliate of Friends of the Earth campaigning against oil pollution in Nigeria, said by phone today from Benin City. “I think that’s the political issue we still have to confront, no matter how good the law will be.”

Nigeria, Africa’s most populous country with more than 160 million people, relies on oil for 95 percent of export earnings and 80 percent of government revenue, according to the Petroleum Ministry. With pipeline networks spread over the 70,000 square- kilometre (43,500 square-mile) Niger River delta region and largely unguarded, oil companies blame sabotage for most of the spills.

A Dutch District Court in The Hague ruled on Jan. 30 that Shell must pay compensation in one of five claims by Nigerian villagers from the Niger delta for a spill from its facility that affected their livelihood. Judge Henk Wien said Shell wasn’t liable for four other claims.

Bonny Light crude, Nigeria’s leading export grade, rose less than 1 percent to $117.41 as of 10.06 a.m. in London. The naira declined 0.1 percent to 157.20 a dollar as of 11.08 a.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.

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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