SHELL IN NIGERIA Yuchan Wang Jyrki Happo Business

SHELL IN NIGERIA Yuchan Wang & Jyrki Happo Business Ethics 51 E 00100 Tuesday 22 nd March 2016 1

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Structural Context Political and Socio-Economic Situation in Nigeria: GDP of $ 510 billion – largest economy in Africa Instability: ethnic disputes, religious differences, poverty & unemployment, terrorism Endemic/systemic corruption Under-development i. e. education system, hydro and electricity, transportation & infrastructure, policing and legal system 3

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SHELLBACKGROUND • Global Group • Energy and petrochemical Companies • Headquarters: The Hague, Netherland • CEO: Peter Voser • Parent Company: Royal Dutch Shell plc ( ENGLAND ) 5

Structural Context Oil Industry in Nigeria and its history with Shell: • Oil was discovered in Nigeria in 1956 in the Niger Delta after half a century of exploration. The discovery was made by Shell-BP. • Crude oil production of 2 million bpd • $95 Billion USD in petroleum exports • 98% of total exports revenue • Shell is Nigeria’s oldest energy company since it was first given the license to prospect for oil by the Nigeria government in 1937 • Business activities in Nigeria include exploring and producing oil and gas onshore as well as offshore and gas sales and distribution • $467 Billion USD in revenue, 2012 • Past law suits include; four Nigerians & Friends of the Earth Netherlands at the Hague Court, 2008 • CSR – promote cooperation with the Nigerian government and transparency to avoid resource exploitation 6

Structural Context The Bodo Community: • In Rivers State, Nigeria, in the Niger Delta • Population ~69 000 – mostly fisherpersons The Bodo Creek and Mangroves: economic backbone for the local inhabitants, providing fish, shrimp, crabs, wood, honey and traditional medicine. Mangrove bark is used for coloring cloth, net preservation and glue production, and its branches are used as net mending sticks and handles for axes. Estimated economic value of mangrove forests to the local community is in the range of US$27, 264– 35, 921 per hectare (ha) per year • The environmental impact of the 2008 spills have been catastrophic to the mangrove forest and waterways • Most of the Bodo community lost their livelihood and now suffer from poverty and health issues • Some with the means have moved away from the area to seek better lives elsewhere or commute great distances to fish 7

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Two men walk in an oil slick covering a creek near Bodo City. Photograph: Sunday Alamba/AP 12

Shell in Nigeria: did they deliver justice? • 15600 Farmers and fishermen got £ 2000 each as Shell paid £ 55 Million for pollution caused by oil spills during years 2008 and 2009 • This sum does not correspond with the environmental losses that included inhabitant’s fresh water, food and livelihood • The fight between a small fishing community and Shell Nigerian was long and imbalanced • Dutch Shell has claimed that illegal activities in Nigerian Delta by form of sabotage and tapping into pipeline was the cause of oil spillage Ref: http: //www. theguardian. com/global-development-professionals-network/2015/jan/09/nigeria-shell-oil-case-warningmultinational-companies 13

Court documents expose Shell’s false claims on Nigeria oil spills • Court documents revealed by Amnesty International today expose the fact that Shell has repeatedly made false claims about the size and impact of two major oil spills at Bodo in Nigeria in an attempt to minimize its compensation payments. The documents also show that Shell has known for years that its pipelines in the Niger Delta were old and faulty. • The irrefutable evidence that Shell underestimated the Bodo spills emerged in a UK legal action brought by 15, 000 people whose livelihoods were devastated by oil pollution in 2008. • The court action has forced Shell to finally admit the company has underplayed the true magnitude of at least two spills and the extent of damage caused. Ref: https: //www. amnesty. org/en/latest/news/2014/11/court-documents-expose-shell-s-false-claims-nigeria-oil-spills/ 14

A man scoops spilled crude oil allegedly caused by Shell equipment failure floating at the bank of B -Dere waterways in Ogoniland, Rivers State, on Aug. 11, 2011. The Bodo community in the oilproducing Niger Delta region sued Shell oil company in the United Kingdom, alleging that spills in 2008 and 2009 had destroyed the environment and ruined their livelihoods. Photographer: Pius Utomi/AFP/Getty Images 15

Shell Sued in U. K. Over ’Massive’ 2008 Nigerian Oil Spills • A unit of Royal Dutch Shell Plc, Europe’s largest oil company, was sued in Britain by 11, 000 Nigerians who say their land, rivers and wetlands were spoiled by two “massive” spills in the Niger River delta in 2008 • A leak in December of nearly 40, 000 barrels of oil at the company’s Bonga field off Nigeria’s coast. • Before and after the Bodo leaks, local people spilled oil during theft from the pipeline and sabotaged it to exaggerate the environmental damage, Shell spokesman Jonathan French said in a phone interview. The people have the “misguided belief that more oil spilled equals more compensation. ” 16

Disagreed statements by both parties • A joint team of Shell investigators and the Nigerian oil-spill regulator Nosdra visited the site and determined the total volume of oil spilled was about 4, 000 barrels, Shell spokesman Jonathan French said. • The two Bodo spills leaked oil onto 90 square kilometers of land, mangroves, creeks and streams and affected a coastline similar in size to that of BP Plc’s Deepwater Horizon spill in the Gulf of Mexico in 2010, the law firm said. • The Bodo community has about 49, 000 people in 35 villages and most of its people are subsistence fishermen and farmers, the law firm said. While Shell stopped oil extraction in the area in 1994, the company’s pipelines still traverse it, according to the complaint. • Shell continued pumping oil for weeks after learning of the spill, “causing increasing devastation to Bodo’s environment, ” Day said in the statement. The pipeline should have been shut immediately, he said. • Shell was unable to shut the pipeline quickly because its workers were physically blocked by local people from entering the area, French said. REF: http: //www. bloomberg. com/news/articles/2012 -03 -23/shell-sued-in-u-k-over-massive-oilspills-in-nigeria-in-2008 17

What are the learnings from case Shell Nigeria? • There was no winner • Dramatic case showing what can happen if neither firms nor governements are responsible • Shell lost revenues and image • Nigerian people lost fresh water and livelihood from those areas • The only winners might be the solicitors in various courts 18

Structural Context Video http: //www. youtube. com/watch? v=y. Q_i. NWc. JI o. A 19