Bonga Oil spill: Govt agencies want Shell to pay $11bn compensation

Two Federal Government agencies on Thursday at a parliamentary hearing demanded $11.5bn compensation from Royal Dutch Shell for the damage caused by an oil spill at its offshore Bonga field in December 2011.

Shell has said that there is no legal basis for the proposed fines, although government has not publicly charged foreign oil companies any amount for oil spills, Reuters reported.

The National Assembly can recommend fines the government should impose on oil companies but it has no power to enforce them.

The National Oil Spill Detection and Response Agency told the National Assembly that Shell should pay $5bn as a fine for environmental damage caused from a 40,000-barrel spill on December 20, 2011 at the Bonga offshore rig.

The Nigerian Maritime Administration and Safety Agency sought $6.5bn as compensation for 100 communities, which it said were affected onshore by the oil spill. The spill was one of the biggest in the history of Africa's largest energy industry.

Shell has taken responsibility for the Bonga offshore oil spill, but said the onshore damage was the result of a different spill and was not its fault.

It also said it had cleaned up areas affected by both spills.

'We are going to do post-impact assessment to determine the effect on the environment. By May, the contractor would get to the site and by the third quarter of the year, the job would be concluded,' Managing Director of Shell's offshore Nigeria unit, Mr. Chike Onyejekwe, told the lawmakers.

He added, 'We cannot do or say anything now until we do the post-impact assessment study. We have received over 300 letters of claims and we are replying to them.'

The National Assembly told Shell to submit its clean-up plans and assessments to lawmakers next week when a date for a future hearing would be set.

NOSDRA and NIMASA are asking Shell for compensation, which would equate to around $287,500 per barrel for the 40,000-barrel Bonga spill.

In comparison, BP has total provisions of $42.2bn for compensation for the four million barrels spilled in the Gulf of Mexico in 2010, which amounts to around $10,550 per barrel.

Hundreds of thousands of barrels of oil are spilled in the mangrove creeks onshore Nigeria every year, destroying the environment and livelihoods.