Oil giant Shell may be facing a hefty fine due to an oil spill from one of their exploration vessels off the coast of Nigeria early last year. It is estimated that the spill by Shell Nigeria Exploration and Production Company, who were managing the vessel, amounted to around 40 000 barrels of oil – making the fine equal to over $100 000 per barrel.
The fine has not yet been approved by the Nigerian House Committee on the Environment, but if the recommendation is accepted, Shell will be forced to hand over the money to the Nigerian government. This may have significant consequences for other oil companies with a history of similar spills, if a precedent is set for such high sums per barrel.
In last year’s Gulf of Mexico oil spill, one of the most environmentally damaging oil spills in history, oil company BP released almost 5 million barrels of oil into the Gulf. A fine with a similar charge per barrel to the shell incident would cripple the company. However, BP is currently expected to face only a charge of around $1000 per barrel spilled, or a maximum charge of $4300 per barrel if the accident is found to be due to the company’s negligence.
Another company that may be in trouble is Chevron, which spilled 3000 barrels off the coast of Brazil last year. Chevron is looking at a fine of around $10 000 per barrel at this time, but is also facing criminal and civil charges as a result of the incident.
If the fine amount is agreed upon by Nigerian authorities, it will be the largest fine that Shell has ever had to pay out, and the highest price per spilled barrel in history.
Shell, however, is not going to pay the fine without a fight. The company has argued that there is no legal precedent for the hefty fine, and have claimed that they reacted promptly and appropriately to limit the environmental impact of the spill, which occurred in the Bonga region of Nigeria. Despite their best efforts, however, crude oil did end up on the Western Niger coastline.
According to the Nigerian National Oil Spill Detection and Response Agency, who have been investigating the effects of the incident, the spill spanned an area of 950 square kilometers and caused great environmental damage, as well as impacting on the livelihood of the many fishermen in the area.