Royal Dutch Shell will pay out 55 million pounds ($83.4 million) in compensation for two oil spills in Nigeria that occurred in 2008 after agreeing a settlement with the Bodo community in the Niger Delta.
The largest ever out-of-court settlement relating to oil spills in Nigeria is a step forward for the oil-rich Niger Delta region that has been hit by regular environmental damage, but it is tiny compared with the billions in compensation and fines BP had to pay after the Macondo rig disaster in the Gulf of Mexico in 2010.
Though significantly higher than the 30 million pounds Shell had previously said it would be willing to pay, its deal is a fraction of the 300 million pounds-plus originally sought by the community.
The payment will be split, with 35 million pounds shared evenly between 15,600 Bodo individuals and the remaining 20 million pounds set aside in a trust fund for projects such as health clinics and schools, said Martyn Day, senior partner at Leigh Day, the British law firm acting for the community.
The individuals will each receive about 2,200 pounds, equivalent to a little more than 600,000 naira ($3,249), in the first such case to pay compensation directly to individual community members, Day said.
Previous similar claims have tended to go through the Nigerian authorities, resulting in a disbursement to community chiefs, who were then expected to distribute the money.
“It’s very unusual to have thousands benefit, the money will go directly to their bank accounts and this will hopefully be a model for future claims,” Day told an online news portal.
Armed gangs tapping pipelines have often been blamed for leaks in the region, but Shell accepted that the Bodo spills were caused by corrosion.
“From the outset, we’ve accepted responsibility for the two deeply regrettable operational spills in Bodo,” said Mutiu Sunmonu, Managing Director of Shell Petroleum Development Co.