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Shell, ERA Differ on Oil Spill Compensation for Bayelsa Communities

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  • Shell, ERA Differ on Oil Spill Compensation for Bayelsa Communities

Two years after an underwater oil leak discharged some 550 barrels of crude into Ogboinbiri River in Bayelsa, the Shell Petroleum Development Company says the incident has no adverse impact to warrant compensation.

On March 5, 2015, Shell confirmed an oil leak from its underwater line at its oil field in Ogboinbiri Community in Bayelsa.

The company said that the incident discharged some 550 barrels of crude into the Ogboinbiri River on Jan. 23, 2015.

A Joint Investigation (JIV) report had it that the leakage was caused by equipment failure, due to a ruptured pipeline.

Reacting to calls for compensation to communities affected by the leakage, the SPDC in a response on Thursday said the oil major was not liable and would never pay compensation.

Shell’s Spokesman, Mr. Joseph Obari, said the Seibou 2 oil spill, which occurred on Jan. 23, 2015, was adequately contained within Shell’s right of way and was cleaned up.

He said, “The National Oil Spill Detection and Response Agency has issued a certificate to acknowledge SPDC’s compliance with all clean-up standards.

“The JIV was monitored by the Bayelsa State Ministry of Environment and signed out by all parties establishing that the spill did not impact any third party.

“Since compensation was not applicable in this instance, SPDC supplied relief materials to communities that used its right of way for other activities.

“A further JIV conducted in neighbouring communities did not establish a subsequent claim by the Bayelsa State Ministry of Environment of impact to third parties.”

However, the Environmental Rights Action which participated in the JIV, disagreed with the stance of SPDC.

ERA insisted that the impact was evident during the site visit with SPDC and Bayelsa government officials.

The Head of ERA’s Field Office in Bayelsa, Mr Morris Alagoa, who was on the JIV team, expressed surprise at the turn of events.

He said, “ERA’s field monitoring endeavours reached up to Keme-Ebiama and photos and videos we took confirmed the spread and impact of the equipment failure related to seibou spill.

“It is unfortunate that the regulators are so dependent on the oil companies for almost everything that the term ‘regulatory capture’ connoting a connivance of operators and regulators against communities is so real, especially in this case.

“If the regulators are as competent and independent like environmental advocacy groups like ERA, they will swiftly and independently monitor the spill.

“Through the water current, heavy volumes of crude oil spread to Keme-Ebiama and beyond.

“This craftiness of Shell in trying to evade justice will make peace an illusion in their relationship with communities.

“I speak as ERA/FoEN field monitor, who visited Keme-Ebiama and the one who alerted the state’s ministry of environment via our field report and related photos and as one who went for the JIV in the commissioner’s team.

“It is shameful that the Bayelsa State Ministry of Environment does not have a Rapid Response Unit and they lack functional vehicles and marine crafts.

“It is hypocritical to engage a workman and deny him the requisite tools and equipment to do the job required of the workman.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

The Drop in US Crude Oil Inventories Boosted Oil Prices on Wednesday

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The Drop in US Crude Oil Inventories Boosted Oil Prices on Wednesday

Crude oil prices rose on Wednesday following a decline in US crude inventories last week.

The American Petroleum Institute (API) had reported that United States crude oil inventories declined by 5.3 million barrels in the week ended January 22, 2021, more than a reduction of 430,000 barrels predicted by a Reuters poll.

The unexpected decline, coupled with slowing new COVID-19 cases in China, the world’s largest importer of crude oil, boosted oil prices on Wednesday.

Brent crude, against which Nigerian crude oil is measured, rose by 41 cents or 0.7 percent to $56.32 per barrel.

The U.S. West Texas Intermediate (WTI) crude oil also gained 56 cents or 1 percent to $53.17 a barrel.

WTI is slightly firmer on the back of a larger-than-expected draw in US crude inventories reported by the API, which is offset by builds in gasoline and distillates,” said Vandana Hari, oil market analyst at Vanda Insights.

The data, however, showed petrol inventories grew by 3.1 million barrels in the week, more than experts projected.

Similarly, API data revealed that distillate fuel inventories that include diesel and heating oil, jumped by 1.4 million barrels, far higher than the 361,000 barrels decline predicted. However, refinery runs declined by 76,000 barrels per day.

Market participants are now in ‘wait and see’ mode, wanting to see how lockdowns evolve in the coming weeks and months, and how successful countries are in rolling out Covid-19 vaccines,” ING economics said in a note.

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Crude Oil

COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

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COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.

This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.

In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.

The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.

Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.

She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.

She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.

Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.

“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.

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Commodities

Crude Oil, Other Commodities Closing Price for Monday

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Crude Oil, Other Commodities Closing Price for Monday

Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.

Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.

The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.

Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.

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