2 March 2006 Edition

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International: Oil giant forced to compensate local communities

Shell found guilty in Nigeria

A Nigerian court has found Anglo-Dutch oil corporation Shell guilty of polluting the Niger Delta and told it to pay a fine of $1.5 billion (€2.5 billion) in damages to the Ijaw people of Bayelsa state.

Judge Okechukwu Okeke upheld a National Assembly resolution that Shell should pay the money to ethnic Ijaw communities in Bayelsa, in the impoverished Niger Delta, which produces all of Nigeria's 2.4 million barrels of oil daily, in compensation for the environmental damage caused by oil operations in the area. The local communities decided to proceed with the case because the company had ignored an order from the Nigerian senate to pay the money back in 2004.

However, Shell has already announced its intention to appeal the fine. Shell contends that the pollution of the waters and farmland in the Delta region is a result of sabotage and that it is therefore not responsible. However, Shell's arguments are contradicted not only by the rulings of the Nigerian National Assembly and the High Court in Port Harcout, but also by a verdict of the Federal Court in Benin City which last November ordered Shell to immediately cease gas flaring. This followed a complaint filed by seven Ijaw villagers who said they were suffering from severe respiratory ailments. The court decided that flaring was a "violation of fundamental rights and dignity which were guaranteed under the constitution". Shell also appealed this ruling and continued gas flaring, provoking a fresh suit on 16 December 2005.

The Ijaws have been aided in their fight by various local and international bodies, including Environmental Rights Action and the Nigerian branch of the environmental group Friends of the Earth.

In a report published this year Friends of the Earth found that Shell continues with an approach that in 1995 caused the execution of Ogoni activist Ken Saro Wiwa, and activities that violate every environmental and human rights code.

In January 2005, Shell stated that it may miss its 2008 deadline for ending gas flaring, already an illegal practice. From the company reaction to the Benin court ruling, it does not seem anxious to do so either.

In February 2005, members of the Odioma Cummunity in Bayelsa, protested against Shell constructing an oil flow station without preparing an environmental impact assessment. At least 15 people were killed and many others injured when soldiers from the Joint Task Force attacked the town of Odioma during a military operation aimed, according to officials, at reducing tensions between communities. Many houses in the town were also torched during the army operation, leaving scores of people displaced.

In more bad news for Shell last week, a report commissioned by the European Bank for Reconstruction and Development (EBRD) said on Friday, 24 February that Royal Dutch Shell PLC's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. The EBRD is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project, which involves pumping gas from giant fields off the north coast of Sakhalin island and transporting it down the narrow island via pipeline, across more than 200 rivers and water courses.

Environmentalists and fishermen fear the crossings may damage spawning grounds for salmon, on which the island economy heavily relies. The application could be turned down if the bank decides the project fails to meet its environmental rules.

The report by the University of Birmingham, said there was a lack of specialist input into Shell's strategy and that it was "unfortunate that numerous river crossings have already been completed ahead of agreement of the RXR (River crossings report) with interested parties."

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