Shell, Wike and OML 11 – reaching a compromise

A news story in The Sun newspaper of Friday November 27th, 2020 was trigger for this piece. The headline – “Supreme Court affirms Rivers purchase of OML 11, Kidney Island” seemed simple and innocuous enough but packed deep within those nine words was history, nostalgia, regret and even violence.

For those not apprised of the history and situation, OML 11 is comprised of 33 oil and gas fields as well as the contiguous Kidney Island which serves as operations and logistics support base for OML 11. The prolific OML 11 is estimated to produce 250,000 bpd at full capacity.

OML 11 is located within Ejama-ebubu community in Eleme local government area of Rivers state. One of the wells lies in Ogoni land and was the reason for the rise of Movement for the Survival of Ogoni People (MOSOP) led by writer and activist Ken Saro Wiwa who was judicially murdered in 1995.

The Ogoni and by extension the larger Ejama-ebubu community had filed a suit against Shell over unremediated pollution believed to have occurred at the tail end of the civil war in the early 70s. While Shell admits that there was indeed pollution and devastation it does not accept responsibility.

In an August 24, 2020 media release signed by Bamidele Odugbesan, Media Relations Manager and with the caption – “The Purported Sale Of Spdc’s Kidney Island Asset And Interest In OML 11” the oil company noted that “The root case has its origin in a spill caused by third parties during the Nigerian Civil War, a challenging period which resulted in significant damage to oil and gas infrastructure in the Niger Delta region. While SPDC does not accept responsibility for the spill, the affected sites in Ejama Ebubu community were fully remediated, and this was certified by the government regulator.”

Despite Shell’s attempt at remediation, a claim for N17billion as damages was brought by the Ejama-ebubu community against SPDC in 2001 in the Federal High Court of Nigeria. That same year, the court gave judgment against SPDC and awarded the claim.

SPDC filed an appeal and defended its action by noting that it was not “given reasonable opportunity to defend the facts of the case. Indeed, this case has focused too long on procedural issues and not on its merits – we have always been clear that we are ready to defend this case based on the available facts.”

The appeal was lost with N34bn awarded against Shell in 2010. Shell obtained an order to stay the execution of the judgment upon the provision of a bank guarantee issued by First Bank of Nigeria Limited in favour of the claimants.

The oil company went ahead to file another appeal at the Supreme Court in 2017. The appeal was considered then summarily dismissed in a judgment delivered by Justice B. Akaahs.

Following that legal victory, the community sought the court’s leave to enforce the judgment by taking over Shell’s assets in Nigeria and abroad. Attempts abroad were stymied by a UK court which, according to the same statement by Shell, described the judgment and award of claims by the Nigerian courts as a “‘breach of natural justice’ in the proceedings against Shell in Nigeria. The English court also found that the claimants had “materially over-stated” the value of the judgment which the claimants admitted was 34.716billion. The court therefore ruled that it would not be just and convenient for a Nigerian judgment to be enforced in the UK which the claimants acknowledge is “miscalculated”.”

But Shell was not giving in. In July 2019, it filed another suit at the Supreme Court asking the apex court to set aside its earlier judgement because according to Shell the Supreme Court did not fully consider the merits of their appeal before upholding the decision of the appeal court.

The Supreme Court in a unanimous decision delivered by Justice Samuel Oseji asserted that the suit filed by Shell was “frivolous and lacked merit”. It thereafter dismissed the suit declaring that it could not revisit or set aside its earlier decision because Shell’s appeal was incompetent and lacking in merit.

While this was still going on, a Federal High Court sitting in Abuja On Monday, March 2, 2020, had issued an order attaching the sum of N182billion in First Bank of Nigeria Limited’s statutory account with the Central Bank of Nigeria in favour of Ejama-ebubu community in Rivers State and Governor Nyesom Wike riding on the back of the Ejama-ebubu community’s victory issued a statement in September 2019 that the Rivers state government had bought over OML 11 in order to safe guard the interest of the Rivers people and not allowing the asset fall into the wrong hands. The sale was predicated on a bid of $150m which purportedly made the state government owner of 45% equity in OML 11 and Kidney Island.

Shell’s August 14, 2020 media release was to express disappointment that the Rivers State High Court affirmed the enforcement of the sale of SPDC’S assets in Kidney Island and specified interests in OML 11, to the Rivers State Government

The media release concluded by noting that Shell and “other parties affected by the March 2, 2020 order of the Federal High Court filed separate appeals, as well as applied to set aside the order and restrain its execution pending the appeal decision. In accordance with the spirit of fair hearing in the Nigerian judicial system, we remain of the view that until the

pending appeals are heard and determined, SPDC is not liable to make any payments, and therefore none of its assets or interest should be attached to satisfy the judgement.”

But with the Supreme Court judgement of Friday November 27, 2020 affirming the sale and purchase, Shell seems to have run out of options especially with the Ejama-ebubu community having rejected the company’s N7bn settlement offer.

What remains now is to find a compromise position. How do we keep OML 11 as a going concern which continues to produce and provide much needed revenue and employment for the people? It is also important to ensure that the Rivers state government recognizes the logistical imperative of keeping kidney island open as a support base not just for Shell and OML 11 but for other parties who require access to the Kidney island facility to facilitate their operations. These include Conoil, Amni, Oriental Energy, Moni Pulo and Century Energy Services.

A messy resolution could lead to shutting- in of wells as well as shut down of operations at Kidney island which would lead to loss of jobs and much needed revenue.

With the legal matter all but settled, all parties must seek for rapprochement that ensures the assets keep producing and the people, state and nation continue to benefit.

Compromise is the name of the game.

In accordance with the spirit of fair hearing in the Nigerian judicial system, we remain of the view that until the pending appeals are heard and determined, SPDC is not liable to make any payments, and therefore none of its assets or interest should be attached to satisfy the judgement