Nigeria has fined Royal Dutch Shell $5.0 billion over an oil spill late last year at an offshore field, but the oil giant told AFP on Tuesday there was no basis for the fine.
But the head of the state-run National Oil Spill Detection and Response Agency, Peter Idabor said the ‘administrative penalty‘ on Shell Nigeria Exploration and Production Company (SNEPCO) was in line with international industry practice.
The National Oil Spill Detection and Response Agency (NOSDRA) told a parliamentary committee on Monday that although last year’s spill, estimated at around 40,000 barrels, was contained offshore, there was a serious environmental threat.
The large penalty comes at a time of heightened concern over the safety of offshore oil production, following BP PLC’s disastrous Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010. Shell is currently facing intense scrutiny from U.S. authorities and environmental groups as it prepares to drill for oil offshore Alaska.
Shell reacted angrily to the recommendation. “Neither do we believe that Shell has committed any infraction of Nigerian law to warrant such a fine.”
The prospect of Nigeria trying to impose the fine is troubling for Shell, which has been producing oil in the west African country since the 1950s.
Most previous oil spills in Nigeria – one of the world’s biggest oil producers – have been onshore. Many have been caused by sabotage or militant attacks.
Last year, a UN report into spills in Ogoniland found that the region could take 30 years to recover.