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An oil site operated by Royal Dutch Shell Plc’s Nigerian unit was seized by one of the country’s state governments due to a dispute over an oil spill that occurred decades ago.
The Rivers state government in the Niger delta isolated the base, called Kidney Island and located in the Port Harcourt oil center on Wednesday, according to an emailed statement by Kelvin Ebiri, a spokesman for the Governor Nyesom Wike. Shell’s installation and 30% stake in a nearby block, known as Oil Mining Lease 11, was “legally acquired through a public auction ordered by the court,” he said.
Shell “rejected the alleged acquisition” of Kidney Island and OML 11, saying in a statement that the ruling is still subject to appeals by the company to a local court in Rivers State. The state government’s announcement is “premature and damaging,” he said. The transfer of the oil license requires the approval of Nigeria’s federal minister of petroleum resources, which was not granted, according to the statement.
A spokesman for the Minister of State for Petroleum Resources Timipre Sylva did not immediately respond to a request for comment on the dispute over OML 11. It will be difficult for Rivers State to take control of Shell’s share of the license because the federal government is “Highly unlikely” to approve the transfer, Menas Associates Ltd., a London-based political and strategic risk consultancy, said in a note published on November 30.
Shell is involved in a long legal battle with a local community in Rivers State, which successfully sued the company for millions of dollars in damages for polluting its land. Last year, the regional government claimed to have acquired Shell’s stake in the oil block in the center of the case and on the basis of close support after a court approved the sale of the company’s assets to enforce the sentence.
Rivers State offered $ 150 million for the two assets, according to the statement. The government also paid a billion naira ($ 2.6 million) to the Ejama-Ebubu community, which opened the case against Shell, while the funds used for the purchase are in custody, the agency said.
In 2010, a federal court ordered a Nigerian subsidiary of the Hague-based oil company to pay 17 billion naira to the Ejama-Ebubu community to make up for the damage caused by the rupture of one of the company’s pipelines fifty years ago. Shell is not responsible for the leak, which it attributes to “third parties” during a civil war that lasted from 1967 to 1970, and claims that the affected sites have been cleaned up.
Although Shell has repeatedly contested the decision, all appeals have been dismissed, most recently by the Supreme Court of Nigeria last month. In March, a judge in a related court case said, with accrued interest, Shell’s debt was almost 183 billion naira in January 2019 – an assessment the company is contesting.
A federal court issued an order restricting any further execution of the underlying trial debt until at least one hearing scheduled for mid-January 2021, according to Shell’s statement. The Rivers state government must “allow due process,” he said.
– With the help of Elisha Bala-Gbogbo
(Updates the fourth paragraph with comments)