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FG May Be Liable for N25bn of N45bn Ruling against Shell in Ogoni

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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.

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 straightforward, 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 percent 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 for 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).

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