Shell in Messy Oil Theft Scandal

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SWITZERLAND, FEBRUARY 15 – Long accused of being corrupt and perpetuating grievous crimes, Shell, one of the world’s largest oil companies and Nigeria’s largest oil producing company, is currently in trouble and may be made to pay for decades of oil theft and environmental degradation in the country. Nigeria’s Department of Petroleum Resources (DPR) has indicted the oil giant for stealing over 2 million barrels of oil between June 2016 and July 2018 through unapproved metering system, which it used to misappropriate crude and shortchange local operators. Shell itself has reportedly admitted taking out huge amounts of crude oil from the country, unaccounted for.

Also, the British Supreme Court has now declared that Nigerians can sue the oil giant in the United Kingdom for damages to their lands, barely a week after a court in the Netherlands compelled it to compensate Nigerian farmers for damages over 2004/2005 oil leaks.

The Missing Oil

Shell is the oldest international oil company in Nigeria, having started business in the country since 1937. It is also Nigeria’s largest producer, accounting for more than 21% of Nigeria’s total petroleum production at 629,000 barrels per day from more than eighty fields. These are just the official figures. Shell may have been taking oil in quantities far greater than this out of Nigeria, as recent revelations indicate. The reasons why this is possible is not farfetched. Huge pipelines are used to convey crude oil from the oil fields to the terminals, where it is fed to vessels and shipped off. It is from these terminals that most of the theft is allegedly taking place.

“I will like to use this opportunity to give a brief on how we will account for hydrocarbon in this nation. I think that will provide a better view for this committee as well as Nigerians. The process starts well because every crude oil comes from well, and you cannot drill a well without knowing the capacity of that well to produce,” Sarki Auwalu, Director/Chief Executive Officer of DPR, told the House of Representatives Adhoc Committee on Oil Theft recently.

“Most of the thefts are coming from land terminals because the land producers have to use pipelines to transport the crude into the terminals for export. In the process, you have a lot of third party interference; small volumes that account for the larger volume are being taken and they are being stolen,” Auwalu said.

Today’s Echo gathers from reliable sources that Shell itself has admitted to the taking more than its due of Nigerian oil. A letter from the oil giant to the DPR dated February 8, 2021, is captioned: “RE; REALLOCATION OF BONNY TERMINAL GROSS VOLUME FROM JUNE 2016 TO JULY 2018 BASED ON COMPARISON OF METERED GROSS VOLUME BETWEEN CORIOLIS METER AND LACT UNIT INSTALLED ON THE NTCL.”

Part of the letter reads: “We refer to your letter Ref: DMR/CTO/COA/COM/V.5/045 dated 28 January 2021 in respect of the above subject.

“We note your directives as contained in the above-referenced letter and wish to confirm that The Shell Petroleum Development Company of Nigeria Limited (SPDC) will implement the refund of the 2, 081, 678 barrels of crude oil from the Trans Niger Pipeline (TNP) injectors (SPDC, TEPNG, NDPR and WSPOL) to the Nembe Crude Trunk Line (NTCL) injectors (Aiteo, Belemaoil, Eroton and Newcross) over the period from end of January 2021 till November 2021 in accordance with schedule III as contained in the Department of Petroleum Resources (DPR) letter Ref: DMR/CTO/COA/COM/V.5/230 dated 14th December, 2020….”

Meanwhile, both Shell and the DPR have denied the allegations despite the exchange of letters between the two indicating otherwise. In a text message to the News Agency of Nigeria (NAN), Paul Osu, Spokesman of DPR, stated that there was no such thing.

“There is absolutely nothing like that, kindly disregard,” Osu said.

Also, Mr Bamidele Odugbesan, Media Relations Manager at SPDC in a telephone chat with journalists, dismissed the report as false and malicious and irresponsible and urged NAN to cross-check with the DPR.

 “The claims are baseless and without any iota of truth,  it is totally false and malicious and lacks substance. “SPDC was not under any probe by the DPR. SPDC had never admitted to underreporting its crude production to DPR or any authority,” Odugbesan said, according to NAN

A History of Deceit, Inconsistencies

This will not be the first time Shell has been found to be sneaky, corrupt and malevolent in its dealings with the Nigerian government and local oil producers.

 In November 2013, Amnesty International said it had uncovered proof that Shell conceals the amount of oil it spills in Nigeria’s Niger Delta region. Shell maintains most of the oil it loses is due to theft, not to slipshod operations and management.

In December 2020, Dutch television documentary programme Zembla, together with Dutch environmentalist organisation Milieudefensie, reported in a documentary that “multiple witnesses declared that SPDC staff, had deliberately caused oil leaks to make money from subsequent clean-up initiatives. The findings of the Dutch activists were unveiled in an article on Aljazeera.

According to sources, Shell employees profit from these intentional oil leaks by pocketing money from clean up budgets,” Zembla said in a press release summarising an 18-month investigation of various leaks between 2010 and the present day.

Zembla added the SPDC, along with the Dutch embassy in Nigeria, were aware of the accusations but had failed to address them.

Shell has also admitted to its own inconsistencies in the past. In 2004, Bloomberg announced in a report that the international oil giant announced that it had overestimated the size of its “proved” oil and gas reserves by an astounding 20%.

Victory for the Niger Delta

Shell’s presence in Nigeria has brought significant revenue to the Nigerian government but has also caused untold hardship to host communities in Nigeria’s Niger Delta through extensive environmental pollution occasioned by irresponsible oil production activities and a gross lack of accountability.

Although blessed with abundant petroleum resources, the region has not derived enough benefits from the wealth that sits under its land over the years. Decades of oil exploration has not yielded the desired prosperity for the region, partly due to Shell’s oppressive exploitation. Yet, there is good news as the United Kingdom’s Supreme Court ruled recently that a group of 42,500 Nigerian farmers and fishermen can sue Royal Dutch Shell in English courts after years of oil spills in the Niger Delta contaminated land and groundwater there.

Members of Nigeria’s Ogale and Bille communities allege their lives and health have suffered because repeated oil spills have contaminated the land, swamps, groundwater and waterways and that there has been no adequate cleaning or remediation.

“(The ruling) also represents a watershed moment in the accountability of multinational companies. Increasingly impoverished communities are seeking to hold powerful corporate actors to account and this judgement will significantly increase their ability to do so,” said Daniel Leader, partner at Leigh Day, the law firm representing the Nigerian farmers.

Also, in a landmark Dutch ruling two weeks earlier, an appeals court held Shell responsible for multiple oil pipeline leaks in the Niger Delta, which is at the heart of the Nigerian oil industry, and ordered it to pay unspecified damages to farmers, in a victory for environmentalist.

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