A group of 11,000 Nigerians launched a suit against Royal Dutch Shell at the London High Court today, seeking tens of millions of dollars in compensation for two oil spills in 2008 that they say destroyed their livelihoods.
The case will be closely watched by the industry for precedents that could have an impact on other big claims against Western oil companies accused of polluting poor countries, including Chevron's protracted dispute with Ecuador.
SPDC, a Shell-run joint venture between the Nigeria's state oil firm, Shell, EPNL and Agip, has admitted responsibility for two spills that devastated the Bodo fishing communities in the restive Niger Delta, where a maze of pipelines criss-cross mangrove swamps and creeks.
But Shell and the London lawyers representing the claimants disagree about how much oil was spilt and how much compensation they should get. Talks to resolve it broke down last week.
"They made an offer and the community quite rightly said this is ridiculously low," said Martyn Day, of the London law firm Leigh Day and Company, who is leading legal proceedings. He said his hope was to resume negotiations with Shell at some point.
Mr Day declined to say how much Shell had offered. He said his clients would be claiming "many millions of dollars" through the High Court, but there was no precise figure because there were 11,000 claimants so far but more might join the action later.
Shell says 4,000 barrels of oil in total were spilt in Bodo in 2008 as a result of operational failures and a clean-up was completed in 2009. It says that since then, more oil has been spilt due to sabotage and oil theft, known as "bunkering".
"Our clean-up teams were able to deal with the initial operational spills, but subsequently they have been prevented by local communities from reaching sites that were reimpacted by this illegal activity," said Mutiu Sunmonu, SPDC managing director, in a letter to the Financial Times on Wednesday.
"This could be because those communities hold a misguided belief that more spilt oil, irrespective of the cause, equals more compensation."
Mr Day disputed this. He said experts had put the amount spilt because of Shell's two operational failures at 600,000 barrels, and that any bunkering that took place in the area would account for no more than 1 per cent of that.
In a report in November 2011, human rights group Amnesty International blamed Shell for spilling 280,000 barrels in Bodo and called on it to pay $1 billion to clean up the Niger Delta.
If the figures given by Amnesty or by Mr Day are close to the truth, that would make the Bodo spill one of the biggest in history.
Reuters