The Nigerian state has seized the shellfish oil field due to unpaid damages

The oil field, which is managed by the Nigerian unit of Royal Dutch Shell plc, was seized by one of the state governments due to a dispute over an oil spill that occurred several decades ago.

The government of the state of Rijeka in the Niger Delta closed a base called Kidney Island on Wednesday at the Port Harcourt oil hub, according to a statement he emailed to Kelvin Ebiri, a spokesman for Governor Nyes Wike. The facility and Shell’s 30 percent stake in a nearby block, known as Oil Mines Lease 11, “were legally purchased at a public auction ordered by the court,” he said.

Shell “dismissed the alleged takeover” of Kidney Island and OML 11, arguing in a statement that the verdict is still the subject of appeals the company has filed with a local court in Rivers State. The announcement of the state government is “premature and harmful,” she said. The transfer of the oil license requires the approval of the Nigerian Federal Minister of Petroleum Resources, which has not been granted, the statement said.

State Oil Service spokesman Timipre Sylva did not immediately respond to a request for comment on the OML 11 dispute. It will be difficult for Rijeka to take control of Shell’s share of the license because the federal government is “very unlikely” to sign the transfer. said Menas Associates Ltd., a London-based strategic and political risk advisor, in a note released Nov. 30.

Shell is embroiled in a protracted legal battle with the local community in Rivers State that has successfully sued the company for millions of dollars in damages for land pollution. Last year, the regional government claimed it had acquired interest in Shell for the oil block at the center of the case and a nearby support base after a court approved the sale of the firm’s assets to enforce the verdict.

According to the words, the state offered 150 million dollars for those two properties, it is stated in the statement. The government also paid 1 billion naira ($ 2.6 million) to the Eyama-Ebubu community, which filed a lawsuit against Shell, while the funds were used to buy on deposit, it said.

In 2010, a federal court ordered the Hague-based Nigerian branch of the oil major to pay 17 billion naira to the Eyama-Ebubu community to compensate for the damage caused by the rupture of one of the company’s pipelines fifty years ago. Shell does not accept responsibility for the spill, blaming “third parties” during the 1967-1970 civil war, and says the affected areas have been cleared.

Although Shell has repeatedly challenged the decision, all appeals have been dismissed, most recently by the Nigerian Supreme Court late last month. In March, a judge in a related court case said that, with accrued interest, Shell’s debt since January 2019 amounted to almost 183 billion naira – an estimate that the company disputes.

According to Shell’s statement, the federal court issued an order prohibiting any further execution of the basic debt of the verdict at least until the hearing scheduled for mid-January 2021. The river state government should “allow legal action,” she said.

© 2020 Bloomberg LP

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