Shell hit with damages claim by 11,000 Nigerians in UK High Court

More than 11,000 residents of Nigeria’s oil-producing Niger Delta have filed a claim for compensation against Shell at the High Court, London, in a long-running court case set to test multinational companies’ responsibility for environmental damage overseas.

The claim from members of the Ogale community adds to one brought by members of the Bille community in 2015, and brings the total number of villagers seeking compensation from Shell to 13,652, Leigh Day, the UK law firm representing the plaintiffs, said on Thursday.

The two communities claim that oil spills resulting from Shell’s operations in the region have contaminated drinking water, harmed air quality and destroyed farm land and fishing stocks.

The case follows a ruling by the UK’s Supreme Court in 2021 that UK-listed Shell exercised significant control over its Nigeria subsidiary and could be held legally responsible in a British court. Shell had argued that the case should be heard by courts in Nigeria.

The claims, expected to come to trial next year, are the latest in a string of court cases against Shell over its environmental record in Nigeria. They could establish precedent for the responsibility of international oil and gas companies for past pollution, particularly as many seek to divest older assets as they shift to cleaner forms of energy.

Shell has been central to the development of Nigeria’s oil industry, setting up its first venture in the country in 1936 and drilling its first successful well in 1956 in Oloibiri, about 100km west of Ogale.

Through its local subsidiary Shell Petroleum Development Company of Nigeria, or SPDC, Shell produces almost 40 per cent of Nigeria’s oil and operates 6,000km of pipeline and more than 1,000 producing wells. But it has struggled to manage community relations and deal with oil spills, theft and the sabotage of its assets, particularly in the restive Niger Delta.

“The Niger Delta was and remains a highly complex operating environment,” Shell said in an emailed response to the Financial Times. “We believe litigation does little to address the real problem . . . oil spills due to crude oil theft, illegal refining and sabotage, with which SPDC is constantly faced and which cause the most environmental damage.”

The United Nations Environment Programme concluded in 2011 that the contamination of drinking water in Ogoniland, a region that includes the Ogale community, represented an “immediate danger to public health” and called on SPDC to conduct a huge clean-up operation.

Shell ceased oil and gas production in Ogoniland in 1993 amid community protests over environmental damage but SPDC pipelines still cross the region. A billion-dollar clean-up project funded by Shell and Nigeria’s national oil company has since begun but has been mired in allegations of corruption and mismanagement.

Shell told the FT that SPDC “has and will continue to clean up and remediate areas affected by spills from its facilities”. However, the company argues that it cannot be held responsible for environmental damage because of attacks on its infrastructure or oil theft. Shell also says, among other arguments in its defence, that it cannot be held responsible for spills that occurred more than five years before the claim was made because of restrictions under Nigerian law.

The energy major is now seeking an exit from its onshore operations in the country but has paused the divestment process pending its appeal against a separate $2bn penalty awarded by a Nigerian court for an alleged oil spill in a different case.

Dan Leader, a partner at Leigh Day, said Shell appeared to be seeking to leave the Niger Delta “free of any legal obligation to address the devastation caused by oil spills” from its infrastructure over many decades.

“At a time when the world is focused on ‘the just transition’, this raises profound questions about the responsibility of fossil fuel companies for legacy and ongoing environmental pollution,” he said.