By Andy Rowell and James Marriott
Last month, it was widely reported that another chapter in Shell’s dirty and disastrous eighty-seven-year operations in the Niger Delta was coming to an end, with the company selling its onshore business.
It’s easy to see why Shell wants to untangle itself from its controversial past. For years, the oil giant has tried to hide from its ongoing corporate liability lawsuits. However, it looks like Shell could be up to its old tricks again: trying to avoid legal responsibilities from its devastating Nigerian operations.
Shell may hope that by offloading its oil and gas fields onto a Nigerian consortium it will make it harder to sue the corporation in American or European courts.
Ever since starting to explore for oil in the late 1930s, Shell’s operations in the country have been a vortex of constant controversy, environmental devastation, double standards, and complicity in human rights abuses — most notoriously in the murder of the Ogoni 9, including writer Ken Saro-Wiwa.
In a press statement on 16 January 2024, the company said it had “reached an agreement to sell its Nigerian onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance, a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group.”
Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, was quoted as saying that the agreement with Renaissance “marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta.”
So, is this the end of the road for Shell in Nigeria, as some news outlets have reported? The simple answer is no.
Here’s why: It seems like Shell wants to sell the controversial parts of its business and keep the potentially profitable ones.
Shell says that after the sale it “will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG. Shell will also continue producing oil in the country’s lucrative offshore sector, as well as providing gas to consumers. The company holds a 25.6% interest in NLNG, producing and exporting LNG to global markets.”
However, as ever with Shell, nothing is quite what it seems. In fact, the company will continue to be involved in onshore exploration. Renaissance comprises four Nigerian companies, ND Western, Aradel Energy, First E&P, and Waltersmith, and one Geneva-based company, Petrolin, involved in exploration, production, and oil trading.
Renaissance will be responsible for dealing with spills, theft, and sabotage. SPDC and its new owners will also reportedly be responsible for the company’s ongoing contribution to the remediation of past environmental damage.
The assets on sale are estimated to be worth $2.8 billion. Initially, Shell will receive USD $1.3 billion and then a further $1.1 billion, on completion of the sale. But here comes the rub: Shell will provide a loan of up to USD $1.2 billion to the buyers to help them buy their stake in SPDC.
Furthermore, “Shell is providing additional financing of up to US$1.3bln over future years to fund SPDC’s share of the development of the SPDC JV’s gas resources to supply feed gas to NLNG, and its share of specific decommissioning and restoration costs.”
However, the new owners are not short of money. For example, Petrolin owns a minority stake in Seplat Energy, Nigeria’s largest listed energy group and the ninth most valuable company on the Nigerian Stock Exchange, worth hundreds of millions of dollars.
If someone lends you the money to buy a house, then that lender is as much of an owner of the house as you are, until you pay off the loan. So it is with Shell’s arrangement with Renaissance. Shell may well carry on investing in SPDC’s gas business and putting some money aside for “decommissioning and restoration.” Perhaps this arrangement will last for years, or decades?
So there has been a sale publicly, but privately, Shell still effectively owns part of the business. It is then investing in the business, too. However, the realities of these matters will be further and further away from public scrutiny. Worse still, it’s likely the terms of the $1.2 bn loan from Shell to Renaissance will be hidden behind a smoke screen of “commercial confidentiality.”
It is not hard to see why Shell would want you to think its days onshore in Nigeria are done. In the nineties, as civil society and community opposition to the company grew, Shell always tried to distance itself from its Nigerian subsidiary, saying it was a small problem with a local subsidiary in Africa and not one rooted back where the hierarchy operated in London or the Hague.
But the evidence painted a different picture. Nigerian experts felt that Shell responded to the community protests, not with sincerity but with a mindset driven by a public relations department intent on “damage limitation.” Much of the public relations response was driven from the head office in London, not by company staff in Lagos or Port Harcourt.
Faced with such corporate arrogance and indifference, the communities have sought justice for decades, trying to hold Shell to account. Back in 2009, Shell agreed to settle “Wiwa Versus Shell,” paying a total of $15.5 million to the plaintiffs, who had sued over the oil giant’s complicity in the murder of the Ogoni 9. Although this was a significant amount of money to the plaintiffs, for the company, the payout was small change, and it walked away without admitting liability.
Other court cases have been brought against Shell. In 2002, one widow, Esther Kiobel, sued Shell in the United States, where she had been granted asylum. Over ten years later, the U.S. Supreme Court ruled that it did not have jurisdiction over the case, meaning U.S. courts never got to examine the facts of the case.
Before settling, Shell made repeated attempts to get the case thrown out, in part arguing that US courts did not have jurisdiction – using its complicated corporate structure as a way of trying to avoid liability.
In 2017, Esther Kiobel and three other widows, Victoria Bera, Blessing Eawo, and Charity Levula, brought a new legal case against Shell in the Netherlands. In a significant initial legal victory, the court did accept legal jurisdiction against the Shell parent company, based in the Netherlands.
At a hearing, witness after witness told the Dutch court Shell had bribed them to frame the Ogoni 9, including Ken Saro-Wiwa. Shell, of course, strenuously denied the allegations. Mark Dummett, Amnesty International’s Head of Business and Human Rights, was there:
he said he knew who they were because he spoke to them for over any hour. also their car had the Shell logo on the side
— Mark Dummett (@MarkDummett) October 8, 2019
"They said, they will surely give us cash and they promised us job and they said because Shell is involved they will give us contracts with Shell"
— Mark Dummett (@MarkDummett) October 8, 2019
In 2022, in a soul-destroying verdict for Esther and the other widows, the court eventually sided with Shell. Part of the reason for the court’s decision seems to be that the court ruled that the claimants could not prove “conclusively to Shell involvement.”
It is hard enough to get Big Oil in court. It is even harder when Big Oil delays proceedings for years, so memories begin to fade. Finally, it appears it is even harder to have the level of proof that the court was requiring. For it seems it was demanding a criminal level of proof in what was a civil case.
A year earlier, in May 2021, the District Court of the Hague held Shell liable for causing dangerous climate change. As a result of legal action brought by Friends of the Earth Netherlands (Milieudefensie) together with 17,000 co-plaintiffs and six other organizations, the court ruled that Shell must reduce its CO2 emissions by 45% within ten years.
It was seen as a historic verdict with huge ramifications for Shell and other big international polluters. The judgment surely reverberated all the way back to the company’s boardroom in the Hague. But companies like Renaissance, based in Nigeria, will be immune from Dutch prosecution.
The judgment meant that its Nigerian operations, so long a headache for the company, now could affect the whole Group’s bottom line. Something had to give. After this case, Shell sped up the process of trying to offload the entirety of its onshore production assets.
Meanwhile, the legal cases kept coming. In January 2023, Shell paid 15 million euros to communities in Nigeria affected by multiple oil leaks. Once again, it had been a long fight for justice, with four farmers suing Shell in 2008. And once again, Shell walked away having settled – without actually paying liability.
Shell is also subject to lawsuits in the UK. In 2014, Shell settled a case for £55 million against 15,600 claimants from Bodo, after a massive oil spill there. In November last year, the high court in London ruled that 13,000 farmers, fishermen, and women could bring human rights claims against Shell, including over chronic oil pollution of their water sources and destruction of their way of life
Matthew Renshaw, the communities’ lawyer from law firm Leigh Day, said: “This ruling is a significant moment in the eight-year battle by the Ogale and Bille communities to get Shell to take responsibility for the oil pollution that has blighted their land.” He added, “During this time, Shell has repeatedly resorted to using technicalities to block and delay our clients’ claims.”
Since the sale was announced, Leigh Day has issued a statement saying that “While details of the proposed sale and its implications for SPDC’s future are unclear,” their “clients are concerned about how the proposed sale could affect their claims.”
Furthermore, the plaintiffs are “worried that the sale could affect SPDC’s ability or willingness to fulfill the terms of any judgment which may be made against it, including in relation to orders to clean up and remediate the polluted areas.”
The law firm is also aware of “many other Niger Delta communities suffering as a result of oil spills from Shell’s operations who will be concerned about how the sale of SPDC will affect them.”
The law firm added that “it would be unconscionable for Shell to pack up its onshore operations in Nigeria without cleaning up its mess and paying compensation …. We consider that Shell, having made billions of pounds over decades from extracting oil resources from Nigeria, should fulfill its legal responsibilities and not leave behind an environmental catastrophe as it seeks to exit the Niger Delta.”
This month’s sale seems another technicality by Shell to try and avoid legal liability. The corporation’s onshore Nigerian business is still profitable. It is worth remembering that instead of spending decades fighting those who wanted justice for the Ogoni 9 and decades fighting pollution cases, the oil giant could have admitted liability. It could have prevented so much heartache and anguish. But it chose profits over people, arrogance over reconciliation.
The timing is also coincidental, according to Shell-watchers in Nigeria. After a recent ruling by the President, Shell and its partner ENI are now set to exploit the controversial but lucrative offshore oil block, OPL 245, which has been subject to corruption allegations for over a decade. Nigerian activists have concerns that this is a predatory deal that will not benefit the country.
Other critics of Shell also reacted angrily to the news of the reported sale, with civil society in Nigeria calling on the government to stop the sale until Shell cleans up its mess.
Nnimmo Bassey, Executive Director of Nigerian advocacy group Health of Mother Earth Foundation, said: “Shell must own up to its responsibility. This means full payment for the remediation and restoration of the polluted areas as well as reparations to the host communities. They cannot walk away from the virtually irreparable harm they have caused.”
Long-term climate activist Cindy Baxter, who has campaigned against the oil industry for decades, added: “Nearly 30 years after Ken Saro-Wiwa and eight others were hung for protesting Shell’s pollution, the Ogoni people are still fighting it in the courts. Before this corporation leaves the country, it must clean up – and pay for its environmental crimes.”
So, the mirage that Shell wants you to believe, is that it is no longer connected to its controversial Nigerian subsidiary. That is false. As long as Shell’s loans to the business’s new owner Renaissance exist, a direct line of liability remains there for years. It’s hidden, but it’s there. Lawyers in London and the Hague should take note. Because there is still a long way to go for the communities in Nigeria to finally achieve the justice they deserve.
Andy Rowell and James Marriott – together with Lorne Stockman – are co-authors of ‘The Next Gulf – London, Washington & the oil conflict in Nigeria’. See also ‘Crude Britannia – how oil shaped a nation’ by Marriott & Macalister.