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Unloveable Shell, the Goddess of Oil

For a century, Shell has explored the Earth to make our lives more comfortable. But in its wake, says Andrew Rowell, lies corruption, despoliation and death

The Queen and the Duke of Edinburgh went to the Shell Centre on the Thames riverside near Waterloo last Tuesday, to crown the company’s centenary celebrations. Critics claim the timing of the Queen’s visit was slightly unfortunate: it came just one day after the second anniversary of Ken Saro-Wiwa’s death in Nigeria: he was campaigning against Shell’s oil exploitation in the region.

The Shell Transport and Trading Company (STTC) has risen from its humble roots in a cramped office in the East End to become one of the most successful corporations of the century. What we collectively know as “Shell” is in fact more than 2,000 companies. Last year, the Shell Group’s profit was a record pounds 5.7 billion, the proceeds from sales of pounds 110 billion. “Were our founder, Marcus Samuel, to reappear today, I do not think he would be displeased with what has grown from his efforts,” says Mark Moody-Stuart, STTC’s chairman.

As part of the centenary celebrations, the cream of the City were invited to a reception at the Guildhall. There is also to be a commemorative book. Whilst it may mention the Shell Better Britain Campaign, and even the controversy over Brent Spar, not everyone will agree with the authorised biography’s version of Shell’s history. Here is a less authorised approach.

After it merged in 1907 with its rival Royal Dutch, the Royal Dutch Shell company was formed; its first chairman was the Dutchman Henri Deterding. By the 1930s, Deterding had become infatuated with Adolf Hitler, and began secret negotiations with the German military to provide a year’s supply of oil on credit. In 1936, he was forced to resign over his Nazi sympathies.

During the early 1940s, as the world waged war, Peru and Ecuador had their own armed border-dispute – over oil. Legend in Latin America says that it was really a power struggle between Shell, based in Ecuador, and Standard Oil in Peru. The company left a lasting reminder of its presence in the country: a town called Shell. Activists in Ecuador are seeking to get the town renamed Saro-Wiwa.

In the post-war years, Shell manufactured pesticides and herbicides on a site previously used by the US military to make nerve gas at Rocky Mountain near Denver. By 1960 a game warden from the Colorado Department of Fish and Game had documented abnormal behaviour in the local wildlife, and took his concerns to Shell, who replied: “That’s just the cost of doing business if we are killing a few birds out there. As far as we are concerned, this situation is all right.”

But the truth was different. “By 1956 Shell knew it had a major problem on its hands,” recalled Adam Raphael in the Observer in 1993. “It was the company’s policy to collect all duck and animal carcasses in order to hide them before scheduled visits by inspectors from the Colorado Department of Fish and Game.” After operations ceased in 1982, the site was among the most contaminated places on the planet, although Shell is now trying to make it into a nature reserve.

At Rocky Mountain, Shell produced three highly toxic and persistent pesticides called the “drins”: aldrin, dieldrin and endrin. Despite four decades of warning over their use, starting in the 1950s, Shell only stopped production of endrin in 1982, of dieldrin in 1987 and aldrin in 1990, and only ceased sales of the three in 1991. Even after production was stopped, stocks of drins were shipped to the Third World.

Another chemical Shell began manufacturing in the 1950s was DBCP, or 1,2 -Dibromo-3-Chloropropane, which was used to spray bananas. This was banned by the US Environmental Protection Agency in 1977 for causing sterility in workers. In 1990, Costa Rican workers who had become sterile from working with the chemical sued Shell and two other companies in the Texan Courts. Shell denied that it ever exported the chemical to Costa Rica and denied that it exported it to any other country after the ban in 1977. The case was settled out of court.

Just as people had begun to question Shell’s products, so they began to challenge its practices. In the 1970s and 1980s, Shell was accused of breaking the UN oil boycott of Rhodesia (now Zimbabwe) by using its South African subsidiary and other companies in which it had interests. Shell, singled out by anti-apartheid campaigners for providing fuel to the notoriously brutal South African army and police, responded by hiring a PR firm to run an anti-boycott campaign.

By the 1980s criticism of Shell’s operations was spreading. From Inuit in Canada and Alaska, to Aborigines in Australia and Indians in Brazil, indigenous communities were affected by Shell’s operations.

In the Peruvian rainforest, where Shell conducted exploration activities, an estimated 100 hitherto uncontacted Nahua Indians died after catching diseases to which they had no immunity. Shell denies responsibility, and says that it was loggers who contacted the Nahua. By the end of the decade, the company’s image was suffering in the US and UK, too.

In April 1988, 440,000 gallons of oil was discharged into San Francisco Bay from the company’s Martinez refinery, killing hundreds of birds. The following year, Shell spilt 150 tons of thick crude into the River Mersey, and was fined a record pounds 1 million.

But by now, the company was responding to growing international environmental awareness. “The biggest challenge facing the energy industry is the global environment and global warming,” said Sir John Collins, head of Shell UK, in 1990. “The possible consequences of man-made global warming are so worrying that concerted international action is clearly called for.”

Shell joined the Global Climate Coalition, which has spent tens of millions of dollars trying to influence the UN climate negotiations that culminate in Kyoto next month. “There is no clear scientific consensus that man-induced climate change is happening now,” the lobbyists maintain, two years after the world’s leading scientists agreed that there was.

At the same time, the company has taken its own preventive action on climate change and possible sea-level rise by increasing the height of its Troll platform in the North Sea by one metre. By 1993, as Shell’s spin-doctors were teaching budding executives that “ignorance gets corporations into trouble, arrogance keeps them there”, 300,000 Ogoni peacefully protested against Shell’s operations in Nigeria. Since then 2,000 have been butchered, and countless others raped and tortured by the Nigerian military.

In the summer of 1995 there was the outcry over the planned deep-sea sinking of the redundant oil platform Brent Spar, and in November Ogoni leader Ken Saro-Wiwa was executed, having been framed by the Nigerian authorities. At the time Shell denied any financial relationship with the Nigerian military, but has since admitted paying them “field allowances” on occasion. This year in Nigeria, the three-million-strong Ijaw community started campaigning against Shell, leading to another military crackdown.

“The military governor says it is for the purpose of protecting the oil companies. The authorities can no longer afford to sit by and have the communities mobilise against the companies. It is Ogoni revisited,” says Uche Onyeagucha, representing the opposition Democratic Alternative. In Peru, Shell has returned to the rainforest. It acknowledges “the need to consider environmental sustainability and responsibility to the people involved”, but the move is still criticised by more than 60 international and local environmental, human-rights and indigenous groups.

“Shell has not learnt from its tragic mistakes,” says Shannon Wright from the Rainforest Action Network, which believes there should be no new fossil-fuel exploration in the rainforest: “They continue to go into areas where there are indigenous people who are susceptible to outside diseases.” Meanwhile, Shell publicly talks of engaging “stakeholders”.

It hopes that we, as consumers, will continue to give it a licence to operate. However, for each barrel produced, the ecological and cultural price increases exponentially. Everyone knows we need to reduce our consumption of oil: but Shell’s very existence depends on selling more of it. Senior executives are said to be “girding our loins for our second century” because “the importance of oil and gas is likely to increase rather than diminish as we enter the 21st century”. Can we let that happen?


via The Guardian: Unloveable Shell, the Goddess of Oil – Royal Dutch Shell plc .com.

1/3 of UK Ministers Linked to Big Oil and Finance

On both sides of the Atlantic, politicians are intricately linked to the oil industry.

Last Thursday, OCI revealed that the 5 cosponsors of the latest pro-Keystone XL bill have received, on average, over $662,000 in fossil fuel-related campaign contributions in their careers.

But it is not just in America where Dirty Energy Money clouds the political system. Great new research by the World Development Movement has revealed that one third of Ministers in the UK government are linked to the finance and energy companies driving climate change.

This “energy-finance” complex as WDM calls it is “at the heart of government is allowing fossil fuel companies to push the planet to the brink of climate catastrophe, risking millions of lives, especially in the world’s poorest countries.”

The three most important Government’s Ministers including Prime Minister David Cameron, Foreign Secretary William Hague and Chancellor George Osborne are all embroiled in the nexus of money and power fuelling climate change.

WDM argues that “If we are to move away from a high carbon economy, the government must break this nexus and regulate the finance sector’s investment in fossil fuel energy.”

And its not just the House of Commons, either. The House of Lords is also home to dozens of people linked to either big Finance or big Energy. An investigation has recently revealed that a sixth of Lords have remunerated links to the financial sector.

Let us not forget that Big Finance and big Energy are intricately linked in a complex web of personal and funding. Between 2010 and 2012, the UK’s five biggest banks underwrote £95.5 billion in corporate bonds for fossil fuel companies and another £74.5 billion in new share issues.

All five British banks have people on their boards who are linked to the fossil fuel industry.

Beyond Hague, Cameron and Osborne, other members of the British Cabinet are also deeply linked to the oil industry: Let’s look for a moment at Vince Cable, The Liberal Democrat who is the Business Secretary who is also the “Minister for Shell”. And where did Vince once work? Shell.  As WDM point out Vince’s “past at Shell, where he worked for seven years between 1990 and 1997, is well known.”

I once phoned Vince up to ask him about persistent rumours that he had been part of a team from Shell who had “negotiated” with the Nigerian Government over the imprisonment and potential release of Ken Saro-Wiwa in the weeks before the writer’s death in November 1995.

Vince flatly denied the accusations and even phoned me back after having spoken to his diary Secretary: No he hadn’t been in Nigeria in the weeks before Saro-Wiwa’s death, he said. There was no substance to the rumours, at all, he maintained. In the years since we spoke, nothing has come to light to challenge Vince’s version of events.

But years later the fact that Shell’s ex-senior economist is now in government as a Minister, including being the “Minister for Shell” has somehow escaped the scrutiny and outrage that it should have done.  In part this is because the intricate web of politics and oil and finance has become so normalised that it nearly goes with comment or criticism.

That is why WDM’s report and wonderful Infographics are brilliant and another useful tool in the growing tide of evidence about the desperate need to separate oil and state, and about getting Dirty Energy Money out of politics.

Because until we do, the climate crisis is just going to get worse.

via 1/3 of UK Ministers Linked to Big Oil & Finance – The Price of Oil.

via 1/3 of UK Ministers Linked to Big Oil & Finance – The Price of Oil.

Resistance to Shell Oil in Galway City

Galway S2S and Rossport Solidarity Camp members challenged the head of SEPIL, Michael Crothers, to answer for the crimes Shell has commited.

The Managing Director of Shell E&P Ireland, Michael Crothers, came to the NUI Galway Energy Night on the evening of Feb 28th. He was part of a PR delegation that promoted Shell’s progress in attempting to bring the Corrib Gas Project on-stream. A group of local Galway Shelltosea activists and Rossport Solidarity Camp members with ethical objections to the Gas Project staged a peaceful protest to express their concerns. Shell has been allowed to remove 125,000 tonnes of peat bog from an area directly including, and surrounded by, EU Special Areas of Conservation. The Irish government has failed in its legal duty to protect the natural habitats upon which Shell are currently working. In relation to the negative environmental consequences of the CGP, Crother’s response was to praise Shell’s environmental record as “exemplary”.

Protesters raised their banners in solidarity with all of the global communities that have been, and still are, subject to Shell’s immoral and illegal activities, be they environmental, social or economic. Shell and partners have been subjecting the community of Erris, North County Mayo, to the building of an experimental & highly dangerous gas pipeline for the past 13 year experimental.

During a Q&A session, one person asked Crother’s about Shell’s activities in Nigeria. It has been well documented that in the mid 1990’s Shell colluded with the Nigerian Military in the murder of environmental activist Ken Saro-Wiwa and eight other activists? Crothers was asked to comment on a 2009 court settlement in New York; relating to the murder of the Saro-Wiwa, in which Shell agreed to pay $15.5m in compensation to the relatives of Ken Saro-Wiwa. To many objective observers, this was a clear admission by the Shell corporation that it is guilty of murder and human right violations? Crothers claimed to be unaware of what has happened to Saro-Wiwa in Nigeria and wouldn’t, even though the case made international headlines at the time. The protest was successful because it prevented SEPIL from presenting an inaccurate and in many cases, totally untrue, account of Shell’s activities in Ireland and in other parts of the world.

via Resistance to Shell in Galway City – Indymedia Ireland.

via Resistance to Shell in Galway City – Indymedia Ireland.

Shell, the Supreme Court, and Corporate Liability

Royal Dutch Shell (NYSE: RDS-A) is the respondent in a landmark case currently before the U.S. Supreme Court. The outcome of Kiobel v. Royal Dutch Petroleum will have significant implications for the oil and gas sector, and potentially for other extractive companies operating in sensitive regions.

This, among other factors, could signal a new era of costly corporate liability for human rights and environmental violations around the world. The days of corporate impunity are drawing to a close, and companies that hope for sustained access to critical resources must deal better with the communities where they operate. Investors would do well to pay attention.

What’s this all about, precisely?

Here are the two questions at the heart of Kiobel v. Royal Dutch Petroleum, according to the official Supreme Court docket:

Whether the issue of corporate civil tort liability under the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, is a merits question, as it has been treated by all courts prior to the decision below, or an issue of subject matter jurisdiction, as the court of appeals held for the first time.

Whether corporations are immune from tort liability for violations of the law of nations such as torture, extrajudicial executions or genocide, as the court of appeals decisions provides [sic], or if corporations may be sued in the same manner as any other private party defendant under the ATS for such egregious violations, as the Eleventh Circuit has explicitly held.

In plain English, the court is considering whether it has jurisdiction to hear lawsuits regarding international law violations on foreign soil, and whether corporations can be sued for those violations in the same way that individuals can be.

The curse of the black gold

Like many oil companies, Shell has operations in the ecologically and politically sensitive Niger River Delta. The Niger River Delta exists in a complicated landscape of political instability, ethnic conflict, extreme poverty, and rich biodiversity. Ed Kashi, a photojournalist and National Geographic contributor, says the discovery and exploitation of oil in the region has only exacerbated its problems. A common refrain is that the Niger River Delta has suffered “the curse of the black gold.” Mr. Kashi actually wrote a book with co-author Michael Watts entitled, “Curse of the Black Gold, 50 years of Oil in the Niger Delta.”

When Shell entered the region more than half a century ago, the company did little to obtain the support of the local communities. To be fair, no other companies considered local communities’ needs in their extractive projects in those days either. This is changing. In modern times, we have a concept called “social license to operate,” and it is at the heart of why Shell is now the defendant in a landmark human rights case.

Social license to operate

Generally speaking, a company has a social license to operate when the communities its project affects accept its presence; feel that their needs and concerns have been understood and addressed; perceive that they benefit from the company’s operations in some way; and welcome the company’s continuing operations. Let’s be honest: While this is essential, it’s also incredibly difficult to achieve. Imagine trying to earn community consent when the stakes are high, and the affected parties come with widely varied concerns and agendas.

What we are seeing now, though, is that the cost of failure to obtain community consent is higher than previously understood, and may be growing considerably. This theme is turning up repeatedly around the world across various extractive sectors, from oil to mining to – most recently – agribusiness. Companies’ ability to manage this issue will increasingly affect their bottom line.

Oil spills and murdered activists

Oil has leaked from Shell’s pipelines into the ground and water of Ogoniland, the Niger River Delta region at the forefront of the Supreme Court case. Experts reviewing aerial footage of Ogoniland estimate that the spilled oil volume rivals that of the notorious Exxon Valdez spill of 1989, when 10 million gallons of oil gushed along the Alaskan coastline. Until 2011, Shell had estimated the impact at less than 40,000 gallons. While Shell now discloses spill volume in Nigeria, the company makes no public estimates of cleanup costs.

We’re talking here about numerous small spills in Ogoniland, not one massive spill as in ExxonMobil‘s  (NYSE: XOM  ) Valdez case. The causes vary. Shell has long asserted that the majority of spills are caused by theft and sabotage, even as it acknowledges that some are the result of operational failures, accidents, or corrosion. This strikes me as a distinction without a difference. If sabotage is at play, then it necessarily implies Shell’s failure to maintain good relations with local communities, and reveals the cost of that failure. Ultimately, the company is responsible for securing its supply chain.

The environmental devastation these spills have caused is hard to overstate. Local fisheries have been destroyed, groundwater has become unsafe to drink, communities have collapsed, and people have sunk even further into poverty. They are aware that someone is profiting handsomely from the oil on their land, but it’s not them. They are angry, and they have been for a while.

Some have turned that anger to activism. Nigeria’s first mass protest against the oil industry originated in Ogoniland with writer Ken Saro-Wiwa and his Movement for the Survival of Ogoni People. Nearly half the Ogoni population rallied in 1993 to support Saro-Wiwa’s movement. The backlash was so significant that Shell pulled out of Ogoniland in 1993, leaving behind only pipelines moving oil from other areas. That is what it looks like to lose social license to operate. It’s not good for people, and it’s not good for business.

The Nigerian government was so alarmed by Saro-Wiwa and others’ activities – and the threat they posed to oil revenues – that it arrested Saro-Wiwa and some of his colleagues and subjected them to a trial that was widely viewed as a sham. The trial concluded with the public hanging of Saro-Wiwa and eight others in 1995. The world reacted with horror, and the name Ken Saro-Wiwa has come to be synonymous with gross injustice.

Many believe that Shell was complicit in the proceedings. Shell denies this. It’s up to courts of law to settle the matter, but public perception that Shell had a hand in the activists’ murder has stubbornly endured.


Bringing us back to the present, you may have noted earlier that Ken Saro-Wiwa was among nine people executed in 1995. One of the others was named Dr. Barinem Kiobel, and his wife brought the current case against Shell all the way to the Supreme Court. The outcome is likely to be significant not just for Shell, but for all other extractive companies.

The Center for Constitutional Rights summarizes the lawsuit as seeking “… relief for crimes against humanity, including torture and extrajudicial executions, and other international law violations committed with defendants’ assistance and complicity between 1992 and 1995 against the Ogoni people.”

The Supreme Court is currently deliberating as to whether it has jurisdiction in this case, and a decision is not expected until next year.

Then there is the environmental side of things. In 2011, the United Nations Environment Programme (UNEP) released a blistering report on the damage that oil companies have done in Ogoniland, and what they must do to rectify the situation. UNEP estimates that the cleanup will take 25-30 years, and recommends that it begin with a $1 billion cleanup reserve for Ogoniland, to be funded by the government and oil companies. Shell said at the time that it would comply fully with the recommendations, but a Reuters investigation one year later found little evidence of progress.

Corporate liability

Activists have sought legal relief in various jurisdictions. Beyond Kiobel v. Royal Dutch Petroleum in the U.S. Supreme Court, Shell has been sued in the Netherlands, the United Kingdom, and Nigeria. In October 2012, four Nigerian farmers and the Dutch arm of environmental group Friends of the Earth filed suit against Shell in a Dutch court in mid-October. The plaintiffs in that case seek compensation for damage from oil spills, as well as a thorough cleanup. It is the first time that a Dutch firm has been sued in a Dutch court over damage that took place abroad. Radio Netherlands says that a verdict in this case is expected at the end of January 2013.

Meanwhile, the British law firm of Leigh Day & Co. filed papers in March 2012 against Shell on behalf of 11,000 Nigerians of the Bodo community for compensation for oil spill damages. As in the Dutch case, Leigh Day says that this is the first time any oil company has faced a claim on U.K. soil for damage done abroad.

The Sustainable Investments Institute (Si2) conducted a recent study (link opens a PDF) attempting, among other things, to calculate a dollar amount for which corporations could be liable if they were held to account for the damage they’ve done in the broader Niger River Delta region. In the assessment, Shell would not be the only company at risk. Total (NYSE: TOT  ) , Chevron (NYSE: CVX  ) , and ConocoPhillips (NYSE: COP  ) all have significant interests in the region. Si2 concluded that “… total liabilities, excluding punitive damages, could range anywhere from $16 to $51 billion. With punitive damages, the costs could be far higher. For several of the companies analyzed, the potential costs of addressing oil spill damage in the Niger Delta could wipe out a significant portion of annual earnings—more than 40 percent of 2011 net income in some cases.”

Those are sobering numbers. Of course, the question is whether Si2′s estimates are likely to come to fruition. I asked Peter DeSimone, Si2′s co-founder and deputy director, to offer his thoughts:

In the short term, it’s very likely that some of these potential liabilities will be realized, especially those in connection with UNEP’s proposed $1 billion cleanup and remediation fund for Ogoniland. Beyond this time horizon, it’s difficult to tell. Continued violence, community organizing, government sentiment, spill activity, and the outcomes of pending lawsuits will all be variables in determining whether potential liabilities end up on companies’ books. … The upper end of our estimates uses the UNEP Ogoniland study as a proxy for the entire region, but investors and other key stakeholders will not know the true extent of the damage until a scientific assessment is made public. One element of certainty is that international attention to this issue is growing, as is anger over the spills in Nigeria. At the same time, all of the present operators have big plans to continue to develop assets in Nigeria. If they are going to maintain their licenses to operate there, I would put my money on many of these companies increasing cleanup and remediation activities and realizing these liabilities sooner rather than later.

Chickens coming home to roost

Global momentum for greater accountability is building. No matter what you think of BP (NYSE: BP  ) , the company’s proactive response to the Macondo spill drew attention to the comparatively dismal efforts of oil companies in other regions of the world. There are significant court cases playing out right now against various oil majors for poor management of their effects on the communities in which they operate. In a future article, I will cover the astonishing story of a case against Chevron for its actions in Ecuador.

Regardless of any single court decision, though, companies ignore their social licenses to operate at their own peril. You’ll note from Shell’s story that the company’s claim that much of the oil spilled in the Niger Delta was the result of sabotage. The community’s rejection of Shell is costing the company its primary resource. Consider the cost, too, of the necessary increase in security for company facilities and staff. Finally, severely eroded community relationships contribute to a real risk of resource nationalization, which can effectively sink the company’s entire investment.

Simon Billenness, president of the CSR Strategy Group and co-chair of the Business and Human Rights Group of Amnesty International USA, summed this situation up perfectly in a recent interview:

The result of Kiobel v. Royal Dutch Petroleum will have a major impact on Shell and other companies in extractive industries. Irrespective of the outcome of that one case, however, it is clear that the days of corporate impunity in remote regions of the world are coming to an end. Companies that wish to have ongoing access to critical resources will have to deal openly and fairly with the communities affected by their operations. Companies that fail to do so risk becoming shut out of opportunities to expand their reserves and increase their shareholder value.

via Royal Dutch Shell Plc .com.

via Shell, the Supreme Court, and Corporate Liability.

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