Nigeria fines Shell $5.0 bn over oil spill

July 18, 2012
Nigeria has fined Shell $5.0 billion over an oil spill late last year at an offshore field, but the company told on Tuesday there was no basis for the fine.

Shell was forced to halt operations at the Bonga oilfield in the Gulf of Guinea following the December 20 leak of some 40,000 barrels of crude.

Nigerian authorities levelled the fine on Shell's local operation, the head of the state-run National Oil Spill Detection and Response Agency, Peter Idabor, told a parliamentary hearing on Monday.

Idabor said the «administrative penalty» on Shell Nigeria Exploration and Production Company (SNEPCO) was in line with international industry practice.

But Shell spokesman Tony Okonedo said the fine was unwarranted as the company had acted quickly to contain the spill.

«We do not believe there is any basis in law for such a fine. Neither do we believe that SNEPCO has committed any infraction of Nigerian law to warrant such a fine», Okonedo told.

«SNEPCO responded to the incident with professionalism and acted with the consent of the necessary authorities at all times to prevent environmental impact as a result of the incident», he said.

Shell can contest the penalty in court.

An expert on Shell's operations in Nigeria with rights group Amnesty International, Audrey Gaughran, said the fine was the heftiest ever levelled by the country and applauded the move.

But, she added, it was crucial for Nigeria to specify the justification for the penalty, including whether negligence by Shell led to the spill.

«There is very little guarantee that it won't happen again because it's not yet clear what happened in the first place», she told.

Nigeria has typically penalised companies over inadequate cleanups after spills.

But the investigative body, with its limited capacity, has previously been unable to establish that some spills were caused by the failure of major oil companies to properly maintain and manage their equipment, Gaughran said.

Often, she explained, oil companies are charged with investigating the incidents themselves.

«What we want Nigeria to tell is, «who did the investigation and exactly what went wrong?», she said.

Officials said the incident was Nigeria's worst offshore spill since a 1998 Mobil incident, though onshore leaks are common in the oil-producing Niger Delta.

Bonga, which has a capacity of 200,000 barrels per day, is located some 120 kilometres (75 miles) off the coast of Nigeria, Africa's top oil producer and the eighth largest in the world.

Copyright 2012, AFP. All rights reserved.