Thursday, May 6, 2010

Shell reports record oil spillages in Nigeria. Oil giant blames thieves and militants for the spilling of nearly 14,000 tonnes of crude oil into the Niger Delta last year.

Niger Delta residents pass a burning Shell oil pipeline as they evacuate their homes by boat in December 2005. Photograph: George Osodi/AP

Royal Dutch Shell plc spilled nearly 14,000 tons of crude oil into the creeks of the Niger Delta last year, the company has announced, blaming thieves and militants for the environmental damage.

The amount of oil spilled by Shell's Nigerian subsidiary was more than double the amount poured into the delta in 2008, and quadruple what was spilled in 2007 – highlighting the worsening situation the oil company faces in Nigeria.

Shell faces regular attacks by militants who have targeted pipelines, kidnapped petroleum company workers and fought government troops since 2006. Its chief executive officer has even hinted that the company can no longer depend on Nigeria as a profit-maker, despite its 50-year history in the country.

The majority of the total, according to the company, was lost through two incidents – one in which thieves damaged a wellhead at its Odidi field, and another where militants bombed the Trans Escravos pipeline. In all, some 13,900 tonnes spilled into the swamps, but Shell said it was able to recover nearly 10,000 tonnes of that.

In its annual environment report, released yesterday, Shell also quadrupled its original estimate of oil spilled during normal operations in 2008 to 8,800 tonnes, blaming an explosion in November of that year at its Iriama field for the increase.

The government is aware of the spills, and Shell has properly taken care of the damage and remains "involved in serious clean-up exercises", said Levi Ajonuma, a spokesman for the state-run Nigerian National Petroleum Corp.

Responding to the spills remains difficult, however, as Shell's workers are increasingly seen by criminal gangs as lucrative kidnap targets. The company reported that 51 of its employees and contractors were kidnapped for ransom in 2009, compared with 11 in 2008.

"Nigeria, especially the Niger Delta, remains a very challenging place in which to operate," Peter Voser, the Shell CEO, said in the report. "Security issues and sabotage are constant threats to our people, assets and the environment. But we are cautiously optimistic that conditions there are improving."

Still, Voser has said Shell can no longer depend on growing profits coming from Nigeria, a country of 150 million people that sees nearly all of its government operations funded by oil money. That money funnels down into massive federal and state budgets that remain open to manipulation in a country consistently ranked as one of the most corrupt in the world.

Shell discovered the first oil play in the Niger Delta in 1956 and started pumping crude out of the swamps two years later. It has since been the dominant oil company in the former British protectorate – and has been criticised both by environmentalists and by community activists who want more of Nigeria's oil wealth to flow back into the poverty-stricken delta.

The delta itself, some 51,800 sq km (20,000 square miles) of wetlands in southern Nigeria, is home to about 150 species of fish and other wildlife that remain endangered by spills.

Shell also was accused in a US lawsuit of playing a role in the 1995 executions of activist Ken Saro-Wiwa and other civilians by Nigeria's former military regime. Shell reached a $15.5m settlement to end the lawsuit in June, but acknowledged no wrongdoing.

Since Saro-Wiwa's execution and Nigeria's return to democracy in 1999, the company has tried to burnish its image in the country. The environmental reports, started in 1997, are part of that effort.

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