Nigeria to pay 55%, Shell 30%… how N45bn compensation for Ogoni community will be paid

Four joint partners in the Shell Petroleum Development Company (SPDC) joint venture, including the federal government, will pay the N45.9 billion ($111 million) court judgement awarded to the people of a community in Ogoni land, TheCable understands.

Two days ago, TheCable reported that Shell agreed to pay compensation awarded to the people of Ejama Ebubu.

Ejama Ebubu is a tiny community in Tai Eleme local government area of Rivers State, one of the six kingdoms in Ogoni land. The 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 ten representatives of the Ejama Ebubu community against the oil company for the losses caused by the oil spills.

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

Sources told TheCable that officials of SPDC were not happy with the judgment, stating that the “case is one-sided” and “judgement without justice.”

“The spills occurred during civil war… it was caused by the soldiers. And immediately after the war, we mobilise, clean, and remediate the site.

“We got a certificate from National Oil Spill Detection & Response Agency (NOSDRA) to that effect.”

Another source claimed SPDC was “not allowed to defend itself in the case”

“They told the judgement to the United Kingdom to register the judgement so they could efforts it by attaching assets of Shell in the UK, he added.

“The court said the judgement will not work in the UK because the other party was unable to defend itself, it is one-sided.”

In May, Ben van Beurden, chief executive officer of Shell, had said the company can no longer be exposed to the risk of theft and sabotage in the Niger Delta.

He further stated that the oil giant is divesting its onshore oil assets in Nigeria.

WILL ONLY SHELL PAY THE RECORD N45.9BN?

No, as Shell only runs the operations of joint ventures (JVs) in Nigeria where the federal government is the holder of 55 percent of the assets.

The JV has the government-owned Nigerian National Petroleum Corporation – NNPC owning (55 percent share), SPDC (30 percent), Total E&P Nigeria Ltd (10 percent) and the Eni subsidiary Agip Oil Company Limited (5 percent), according to details on Shell’s website.

The business venture focused on onshore and shallow-water oil and gas production in the Niger Delta which produced the country’s first commercial oil exports in 1958.

SPDC has licences in 19 oil mining leases (OMLs).

Wood Mackenzie group, a global research firm, valued Shell’s JV assets in Nigeria, excluding export pipelines and terminals, at $2.3 billion.

NNPC WILL PAY N25.24BN, SPDC N13.77BN…HOW THEY WILL PAY

The joint venture arrangement implies that all the partners will be responsible for the judgment award to the people of Ogoni land.

Of the N45.9 billion, the federal government, through NNPC, will pay N25.24 billion while SPDC will pay N13.77 billion.

Others include N4.95 billion from Total E&P Nigeria Ltd, and Eni will pay the least amount of N229.5 million from its 5 percent holding stake in the joint venture.

Bamidele Odugbesan, media relations manager of SPDC, also confirmed to TheCable on Friday that the judgment is for the SPDC joint venture.

“They (partners) have to contribute in the proportion of their interests,” he said.