(Bloomberg Businessweek) -- In better times, Wir-Le Agbaalor worked his family’s small farm every day—weeding, watering or harvesting his cassava. But for more than a year now, he’s had little to show for his efforts because his fields have been covered in a thick, sticky coat of black crude oil.
A section of the Trans-Niger pipeline lies hidden in a copse about 100 feet from his land in the Niger River Delta. Built by Royal Dutch Shell Group in 1965, the link can transport 180,000 barrels a day and has been the source of countless spills over the years.
Agbaalor says two incidents in 2023 fouled his farm and the stream that his community, a settlement of tin-roofed shanties called Ebubu, relies on for drinking and bathing—just as leaks from pipelines and other equipment have done in hundreds of other nearby villages over the past several decades.
Agbaalor’s family earned about 95,000 nairas ($57) a week selling its produce at the market in nearby Port Harcourt, some 280 miles southeast of Lagos, Nigeria’s commercial capital. But this year, Agbaalor, 46, didn’t bother planting because there’s little chance of harvesting anything. “When our soil is destroyed, it’s gone forever,” he says as a car emblazoned with Shell’s logo passes by.
He blames the damage on the company—more specifically Shell Petroleum Development Co. Nigeria, or SPDC, a subsidiary that operates a joint venture which is 55% owned by a Nigerian state-owned company and 30% by Shell. He doesn’t have the resources to sue, and, considering how Shell Plc has fared in past cases heard in Nigerian courts, he feels it would be as useless as planting cassava in an oil-soaked field. (Shell says SPDC cleans up areas affected by spills originating from its facilities regardless of the cause.) For any future spills, Agbaalor and other potential claimants risk a tough slog. In January, Shell announced the sale of SPDC to a local consortium called Renaissance Africa Energy Co. for $1.3 billion.
Shell has cited divestments as key to its efforts “to become a net-zero energy business by 2050.” And the company says it can simplify its portfolio by exiting onshore oil production in the Niger Delta—among Shell’s most emissions-intensive operations, according to consulting company Wood Mackenzie Ltd.
Civil society watchdogs and attorneys who’ve faced Shell in court see something else at work: Getting the subsidiary off the parent company’s books could absolve Shell of future liability for malfunctions at SPDC’s installations. And the costly task of decommissioning infrastructure that’s no longer profitable—but still dangerous—may instead fall to Renaissance.
Representatives of Renaissance and Shell declined to provide details of the finances, citing the confidentiality of the deal, and it’s not clear if the consortium has the funds. “This sale is a big rip-off,” says Iniruo Wills, an attorney and the former commissioner for the environment in Bayelsa, the state at the mouth of the Niger Delta.
Shell says that the deal with Renaissance is intended to focus its operations in the region on offshore assets and that it doesn’t absolve SPDC of responsibility for any eventual cleanup or remediation of damage caused by the unit before the sale. Shell is still poised to profit from the operations through provisions written into the agreement: The company will maintain stakes in assets belonging to Renaissance via sales of natural gas to a company that’s 25% owned by another Shell subsidiary.
The World Wildlife Fund says the oil spilled in the first five decades of production—by Shell and dozens of others—in the Niger Delta equaled one Exxon Valdez disaster every year. Shell says most of the spills in its operations are caused by criminals tapping into the pipelines to steal oil; locals counter that the company doesn’t sufficiently secure its equipment, bury pipelines or install leak detectors. “Our farmland is being destroyed by the oil, and when we try something else, like fish farming, we can’t pump water to the ponds because there’s oil floating on top,” says Peace Ejor, a farmer in Bodo, a few miles from Ebubu.
The effects of the pollution go far beyond farmland and waterways. In the US journal Proceedings of the National Academy of Sciences, Swiss researchers in 2019 wrote that oil spills from various operators in the region double the neonatal mortality rate, resulting in the deaths of as many as 16,000 babies a year. These outcomes were felt regardless of the family’s socioeconomic status and persisted for years.
Nigerian law requires oil companies to maintain equipment in adherence to relatively stringent US standards, but the environmental group Friends of the Earth and others say they routinely fail to do so. Shell was hit with its first lawsuits over operations in the region as early as the 1970s, and it has faced hundreds of millions of dollars in settlements, fines and court-ordered cleanups by Nigerian, UK and Dutch judges. (Shell says that “SPDC operates in accordance with all applicable Nigerian regulations.”)
While Shell has prevailed in some lawsuits in Nigeria and abroad, it has frequently delayed others through procedural maneuvers and appeals, and many complainants have died while their cases were being adjudicated. A suit concerning a 1960s spill remained unresolved until 2020 when the Nigerian Supreme Court refused to hear further Shell appeals. In a separate case, the company argued that if it could identify any pollution from other sources that affected any part of the area in question, all of the thousands of other claims in the case would fail. (The court rejected that argument on appeal.)
In recent years, activists have shifted strategy, suing the company in its home countries of the Netherlands and the UK—with greater success. In 2015, Shell paid £55 million ($70 million) to settle a case brought in London by Nigerians seeking compensation and remediation of a spill near Ejor’s farm. In 2021 a Dutch court ruled Shell was liable for pollution of two communities, paving the way for a €15 million ($16 million) settlement. And in November 2023 a UK court ruled that 13,000 people seeking compensation after a spill could bring claims against Shell, opening the door to what could be the most costly result yet.
In that case the company sought to require claimants to link their damages to individual incidents, a notion the judge rejected in October. “The idea that someone would have records from 2011 to 2013, when the spills occurred, and be able to calculate which of potentially hundreds of spills and leaks impacted them, is just completely unrealistic,” says Matthew Renshaw, an attorney with law firm Leigh Day representing the Nigerians. The case is still being heard.
Unlike Shell, Renaissance—based in Nigeria—can be sued only in the country, where oil spill litigation is restricted to federal courts. And there are only two of those in the delta, which are chronically short-staffed, according to local and international attorneys. Top Nigerian lawyers are often in the employ of the oil companies, and few of those who aren’t can afford the vast expert evidence that’s often required to successfully argue a case. And many attorneys say there’s a better chance of getting justice in the UK or the Netherlands than at home.
After a sale, Shell would remain liable for previous events, “but new spills? That’s a tricky one,” says Tom Bolster, an attorney with London firm Hausfeld who’s worked on litigation involving Nigeria’s oil sector. Winning a judgment against Shell would require proving responsibility dating to the time the parent company owned the operation in question, he says.
The delta is littered with abandoned infrastructure sold off to locals that hasn’t been safely shut down and remediated, as Nigerian companies often struggle to maintain equipment, clean up spills and decommission outdated installations. For instance, a nonproducing well in Bayelsa state that SPDC sold to a Nigerian concern in 2015 blew out in 2019, spilling for six days, and again in 2021—for almost six weeks, according to Wills, the state’s former environmental commissioner.
Attorneys for current litigants and watchdog groups such as the Centre for Research on Multinational Corporations, an Amsterdam nonprofit, worry Renaissance would be little different. Shell’s provision of as much as $1.2 billion in loans on completion of the deal “to cover a variety of funding requirements,” according to Shell, suggests Renaissance is exhausting its funds to buy SPDC.
Furthermore, the complex structure of Renaissance—it’s a special purpose vehicle with five partners, one of which is a part owner of one of the others, while another is owned by a shell company that’s itself nestled inside another group of companies—could hinder the payout of any damages even if a case is successful in Nigerian courts, according to the Amsterdam group.
Under Nigerian law, sellers of aging oil infrastructure must put substantial sums in escrow to cover decommissioning. But Audrey Gaughran, executive director of the Amsterdam group, says she sought some confirmation of such money being set aside. “We asked everybody, and we couldn’t find any evidence that that’s actually happening,” she says. Shell declined to say whether it had done so. Shell says additional financing of $1.3 billion is intended to help Renaissance supply natural gas to another Shell affiliate and pay for decommissioning, but neither company was clear on how much of that would be earmarked for that purpose.
Agbaalor, meanwhile, has become a community activist and is now pushing SPDC to do more to prevent spills whether they’re caused by operator neglect, equipment failures or vandalism. He says that waiting for old equipment to malfunction, or failing to install proper leak detection equipment or otherwise secure assets, and then hoping cleanup work will be sufficient is like “building from the rooftop instead of the foundation.”
This story was supported by Journalismfund Europe.Read next: The Deadly Mining Complex Powering the EV Revolution
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