Royal Dutch Shell is ready to pay up to 30 million pounds (HK$396 million) in compensation for two oil spills in Nigeria in 2008, but lawyers said it may face a far bigger pay out after a London court ruled it could be liable for damages.
Around 15,000 residents of the Bodo community in the Niger Delta represented by law firm Leigh Day appealed in 2011 to a London court for more than 300 million pounds in compensation.
Claimants say that the two spills resulted in the leakage of 500,000 barrels of oil but Shell estimated the volume at around 4,000 barrels.
Shell has already offered some compensation for the spills.
In a preliminary hearing ahead of a trial which will take place in May next year, London’s High Court ruled that Shell’s Nigerian subsidiary could be liable if it were proven that it did not take reasonable steps to protect and maintain the pipeline from thefts that have plagued the key African oil producer.
“Short of a policing or military or paramilitary defence of the pipeline, it is my judgement that the protection requirement involves a general shielding and caring obligation,” the judge said in a ruling.
Leigh Day argued that under the Nigerian Oil Pipelines Act anyone who suffered from an oil spill can claim compensation if they can show a company was guilty of neglect in failing to “protect, maintain or repair” its pipeline.
The lawyer representing the claimants on Friday rejected Shell’s offer.
“Shell have consistently sought to underestimate the damage whilst paying only lip service to an apology. These spills, which are some of the largest oil spills in history, have devastated a community of many thousands of people and ravaged the environment,” Martyn Day said in a statement.
“The offer of 30 million pounds has been offered before and has been flatly refused by our clients who found it insulting and derisory, nothing has changed this view.”
Shell urged the claimants to reach a settlement before the May trial that is expected to last three months.
“From the outset, we’ve accepted responsibility for the two deeply regrettable operational spills in Bodo,” Mutiu Sunmonu, Managing Director of the Shell Petroleum Development Company of Nigeria, said in a statement.
“We hope the community will now direct their UK legal representatives to stop wasting even more time pursuing enormously exaggerated claims and consider sensible and fair compensation offers,” Sunmonu said.
Thousands of oil spills have occurred in Nigeria since the 1970s as a result of oil theft, many of which have yet to be cleaned up.