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Shell to resume talks on Niger Delta oil spills


guardian.co.uk,June 2013 17.19 BST

Oil company Shell will resume talks next week in London with lawyers representing 15,000 of the poorest people in the world who are claiming millions of pounds’ compensation for oil spills on the Niger delta. But Martyn Day, of Leigh Day law firm which is acting for the communities, said the case could still go to a full high court trial in London in 2014.

The Shell petroleum development company of Nigeria (SPDC) has admitted liability for two spills from a pipeline in the Niger delta in 2008, but the company disputes the quantity of oil that was spilled and the damage that was done to livelihoods and the environment near the coastal village of Bodo in Rivers State. Oil spill experts working for the communities estimate that nearly 500,000 barrels leaked from the company pipeline over several months, Shell claims it was far less.

The legal action, represents the first time Shell or any oil company has faced claims in the UK from a community from the developing world for environmental damage. “We have agreed to negotiate over the next two to three weeks. Probably the talks will go on into the autumn when a deal will become more likely,” said Day.

The legal development came as Netherlands National Contact Point(NCP), which oversees the implementation of OECD guidelines on the human rights and environmental records of multinational companies, broadly backed claims by Amnesty International and Friends of the Earth International that Shell’s repeated assertions that sabotage is responsible for most of the oil spilt in Nigeria is based on flawed investigations which rely on information provided by the company itself. The two organisations offered NCP video evidence of “serious flaws” in the system used by Shell for investigating oil spills.

NCP accepted there were problems in the spill investigation system but criticised Shell. “Shell management should have had a more cautious attitude about the percentage of oil spills caused by the sabotage. The data they are based on is not absolute,” it said.

But FoeI and Amnesty said today that NCP should have gone much further in its criticism of Shell. “Sabotage is a problem in Nigeria, but Shell exaggerates this issue to avoid criticism for its failure to prevent oil spills,” said Audrey Gaughran of Amnesty International. “The oil companies are liable to pay compensation when spills are found to be their fault but not if the cause is attributed to sabotage – but it is effectively the company that investigates itself. This is clearly a system open to abuse.”

Shell replied that oil companies did not devise the investigation system and that they had acted within the Nigerian law. “Any spill is a serious concern, and SPDC staff and contractors are working hard to eliminate operational spills. Unfortunately the high incidence of oil theft and illegal refining in the Niger delta exacerbates the problem and has a devastating impact on the environment. This criminality is the real tragedy of the Niger delta. SPDC regrets that some NGOs continue to take a campaigning approach rather than focusing on on-the-ground solutions that bring societal benefits,” said the Shell spokesman Jonathan French.

Shell’s 2012 sustainability report states that 95% of the 26,500 barrels of oil spilled from Shell facilities in Nigeria which were as a result of sabotage. Of the 173 oil spills over 1.5 barrels from SPDC facilities, the company said 80% were caused by illegal activity.

via Royal Dutch Shell plc .com.

Shell under fresh pressure over reports of the size of its Niger Delta oil spills


Jun 19th, 2013 by John Donovan.

…an independent investigation into how the Organisation for Economic Co-operation and Development’s guidelines are enforced found ‘discrepancies’ between Shell’s story and other accounts of the size and cause of spills… urged Shell to publish all investigations carried out prior to 2011, potentially exposing the company to multi-million pound lawsuits…

ROYAL DUTCH SHELL

 

Royal Dutch Shell’s claims to be reducing the amount of oil it spills in Nigeria have been undermined by a report into how it publishes data on environmental disasters.

The Anglo-Dutch firm has been at pains to show that most spills in the Niger Delta are the result of thieves hacking into pipelines, a crime known as ‘bunkering’.

But an independent investigation into how the Organisation for Economic Co-operation and Development’s guidelines are enforced found ‘discrepancies’ between Shell’s story and other accounts of the size and cause of spills.

Holland’s National Contact Point for the OECD told the oil giant to ‘be prudent’ when publishing spill investigation data.

It also called on Shell to publish figures from before January 2011, when the company began putting information about leaks on its website.

And it repeated UN concerns that investigators are ‘at the mercy of the oil companies’ when assessing the size and severity of spills. The report follows a complaint by Friends of the Earth and

Amnesty International, which submitted evidence of spill investigations it said were heavily influenced by the company.

‘Shell has repeatedly stated operational spills are going down and sabotage is going up. This is all based on a process where the investigator is being investigated,’ said Audrey Gaughran, of Amnesty.

She called for more independent assessment to offset weakness in local regulation.

Shell has pointed to improvements in the way it reports spill information since 2011.

But Gaughran urged Shell to publish all investigations carried out prior to 2011, potentially exposing the company to multi-million pound lawsuits.

Shell (up 15p to 2118p) said that its Nigerian subsidiary SPDC ‘has been found to be in compliance with the OECD Guidelines for Multinational Enterprises’.

via Royal Dutch Shell plc .com.

Shell exploration manager Roland Spuij – deluded or ignorant?


Shell exploration manager Roland Spuij – deluded or ignorant?

Printed below is a deluded article written by a Shell exploration manager – Roland Spuij (person on the right) – who apparently is totally ignorant of Shell’s track record of giving a higher priority to production and profits than to the safety of its offshore workers. Either that, or he is trying to deliberate mislead New Zealanders?  Same applies to his comments about Shell’s conduct in Nigeria. Has he forgotten that in 2009 Shell paid $15.5 million (£9.7m) as an out-of-court settlement in a case accusing it of complicity in human rights abuses in Nigeria. 17 pages of correspondence between Shell and the Nigerian Police – authentic exhibits from the litigation – prove Shell supplied arms and ammunition to the Nigerian police force (part of a corrupt murderous regime)

Otago Daily Times

Shell proud of its safety record

It’s good to see Rosemary Penwarden outlining her concerns and for Shell to have the right to respond, something we were unable to do in our recent meeting in Dunedin brought to a halt by other protesters.

Shell welcomes any discussion, including on climate change, so long as it has a chance to present its views. Whether there is oil or natural gas present in any basin is not determined by us or any opponents, but by nature. We have strong scientific evidence, including information from wells previously drilled in the Great South Basin, that we can expect to find gas there, with some associated liquid gas ”condensate”; the chance of finding oil is very low. The first step is to prove the presence of hydrocarbons as part of the exploration phase. It is too early to talk about options for future development concepts, assuming the presence of hydrocarbons is proven.

Shell did not leave anything off the table with our Environmental, Social and Health Impact Assessment.

At the earliest opportunity we were presenting some of the preliminary findings in order to get feedback. Rafting birds were indeed identified as potentially being affected in the very unlikely case of an uncontrolled release of gas and condensate. Much research was included on the feeding and migratory patterns of rafting birds, including albatross and shearwaters.

Shell operates under detailed processes, using the latest equipment and technology to minimise any credible risk a drilling spill could have on birds and marine life, particularly whales and dolphins. If we proceed to drilling, we will have a complete range of responses to deal with the consequences of any spill, however unlikely.

The video footage acquired by Niwa’s research vessel Tangaroa under contract to Shell does indeed indicate there is little marine life apparent on the surface seabed at the potential drilling site. Shell received the video footage only a few days before the meeting and chose to share it. Our preliminary conclusion is that drilling a single exploratory well over a month would have very limited impacts. We are open to further input.

Shell does not take lightly its often stated commitment to environmental and personal safety. We are a major player worldwide and publish our performance on environmental metrics on an annual basis. The number and volume of operational spills has steadily reduced over recent years but we continue to learn from all our incidents to improve our performance further in the future.

For the record, we were not involved in the 2010 Horizon disaster in the Gulf of Mexico, or the Elgin platform gas leak in the North Sea. We agree that the health and safety record for New Zealand is poor across all industries compared with Britain and other countries. The head of Shell New Zealand, Rob Jager, is at present chairing the Government’s Independent Taskforce on Workplace Health and Safety.

As for Nigeria, as recently as last week, the US Supreme Court refused to hear a case attempting to link Shell with claims of human rights abuses in the Niger Delta – claims that Shell has always strongly denied. Shell remains firmly committed to supporting fundamental human rights, including those of peaceful protest. Shell acknowledges improvements can be made to our operations there and has made significant progress in reducing spills and gas flaring in recent years. It is important to note that the vast majority of spilt oil in Nigeria is caused by rampant criminality – oil theft and illegal refining. This leads to widespread environmental damage and is the real tragedy of the Niger Delta.

Shell shares concerns about climate change and we see gas as a clean and affordable energy source. Wind, solar and bio fuels are some 1% of the energy mix today and they will have an important role to play beyond 2030. Over the past five years, we have spent US$2.2 billion on developing alternative energies, carbon capture and storage, and other CO2-related R&D.

But industry will need to see more technology development to make renewables cost-competitive with hydrocarbons and less reliant on subsidy; we are working on that for the long term. We do not have coal reserves. Our 2012 total production was split almost equally between oil and gas. Given that natural gas has around half the carbon emissions of coal and about a third that of diesel, this should provide some common ground for discussions on how we address climate change in a world with ever-increasing energy demands. We remain committed to debating all these issues and urge anyone with an interest in New Zealand’s energy future to engage constructively with us.

– Roland Spuij, Shell’s New Zealand exploration manager.

via Royal Dutch Shell Plc .com.

via Royal Dutch Shell Plc .com.

‘A Revolution We Can All Dance To’ (Part 2)


In this two part interview Andrew Robinson introduces the political philosophy of Gilles Deleuze. In this second part we moved from political imaginary to political strategy; discussing Deleuzian alternatives to democratic-centralism for implementing revolutionary change.

Deleuze presents us with an exhilarating political imaginary, but to what extent is such an imaginary a means for attaining itself? Particularly given that, as you write, desire is expressive rather than instrumental? Doesn’t the success of a revolutionary movement partly depends on its ability to maintain its unity and discipline against the dangers of fragmentation and division—a kind of regimentation of desire that Deleuze opposes?

The argument you’re advancing here makes a certain sense, because the rhizomatic movements of the last few decades have suffered from a great decline over the last decade or so.  But really, there isn’t much evidence of organised parties doing much better.  The fashion for disciplined, united, democratic-centralist parties largely followed from the success of the Bolshevik Revolution—and then later, various guerrilla-led revolutions.  But the applicability of this model is questionable.  Firstly, has this model served well in other contexts?  There are dozens of groups trying to reproduce this model in Britain, Europe, America, all over the world in fact, and they all seem to end up either as groupuscles or mainstream parties.  It’s very noticeable that the big upsurges in struggle for the last half-a-century haven’t really stemmed from these groups at all.  Secondly, did the Bolsheviks really “win”?  The regime ossified into authoritarianism pretty quickly, and ultimately deformed back into capitalism.  This happened repeatedly with regimes which went the same way.

Why do you think that was?

I think there are two explanations for this.  Either the communist model is not really a pursuit of liberation in a Deleuzian sense to begin with—it seeks to replace an “illegitimate” domination with a “legitimate” domination, one which authentically represents instead of misrepresenting, which represents a true essence instead of a false one, and which thereby simply reproduces renunciation, repression and the state, through its structural isomorphism with the way in which capitalism/statism already works.  Or the communist model is a pursuit of genuine liberation, but seeks it by means of its opposite—using the state to bring about the withering-away of the state.  If the latter, then the question arises, does the state really wither away when a revolution is achieved this way?  Is there, for that matter, an egalitarian society or a sustainable society?  It fails because ultimately, the party model reproduces the structure of alienation: the separation between leaders and led, intellectual and manual workers, specialists in revolution and non-specialists reduced to a follower role.  I think these questions have been asked within communist movements, in which certain fractions—the Italian autonomists for instance, and the Zapatistas—have moved towards a more Deleuzian model.

What is the Deleuzian a model of political organisation?

There are various models of political organisation in Deleuze and Guattari—the war-machine, the band or pack, the rhizome, the subject-group.  War-machines are taken from Clastres‘ work on Amazonian bands, who form war-parties when they are aggrieved.  According to Clastres, this is a way to prevent any group from concentrating too much power in its own hands. Packs or bands are small groups with limited numbers, unstable connections, and an avoidance of fixed hierarchy.  The band detaches things from their usual connections or territories, bringing them into new combinations. Rhizomes are networks which connect different points without a central trunk or hierarchy.

What advantages do horizontal formations have over traditional, hierarchical parties?

A number of advantages. They can’t be “beheaded” the way parties can—the way the Black Panthers were, for example.  They can incorporate a far wider diversity of groups and perspectives.  They have a certain resilience against repression, because they can regroup on the band level.  Ultimately – and this is recognised for instance by Arquilla and Ronfeldt , on behalf of the US state—rhizomes defeat trunks in prolonged conflicts.  The recent cases of quasi-Leninist revolutions occurred because forces such as the Vietcong, the Algerian FLN, and the Maoists adopted an organisational model with certain rhizomatic traits.  The state and capital have had to adapt by adopting rhizomatic tactics themselves (while keeping the core hierarchy intact, of course).

And this issue is also very contemporary.  I’ve written elsewhere on the politics of the excluded, on emergent forces of resistance appearing at the margins of capitalism. There are a lot of these forces, many of which are barely known about in the North, and some of them are remarkably successful in carving out autonomous zones, creating new practices of living, even defeating states in particular localities.

Such as…

Groups like the Zapatistas , MEND , KRRS , Abahlali and similar groups, the MST , the Mapuche resistance , Argentine piquetero groups , La Ruta Pacifica , APPO; movements such as the Cochabamba uprising, the ‘gas war’, the Kabylie uprising , the Arab Spring; and ongoing struggles in places like El Alto, the Andes, the Amazon, the Himalayas, and the Caucasus. Some of these groups and movements are rhizomes or war-machines, some of them are hybrid groups combining elements of the rhizome with elements of the Leninist party or the guerrilla cell.  They either use the informal small-group model, an inclusive network model, or some kind of general assembly.  They arise out of, and remain densely connected to, local knowledges and forms of life specific to each setting, which actualise non-capitalist living through practices such as land occupation, subsistence farming, and indigenous rituals.  And the basis for this phenomenon is that a lot of people, in a lot of the world, live in rhizomatic ways in at least some parts of their lives.  I think of these groups as autonomous social movements, similar in certain respects to the groups in the North discussed by people such as Katsiaficas .  But the numbers and power of these movements are on a scale unlike anything in the North.  Even where revolutionaries still use state-forms, these forms depend crucially on movements of the excluded—a Chavez, Morales, Thaksin, or Aristide can only take and hold power by channelling such movements, or even stimulating them if they don’t already exist.

So we have good reasons to be optimistic? I must admit the last three decades in Britain haven’t filled me with optimism.

There is pressure in the UK or US to feel hopeless, because the state is deploying huge resources to smash movements before they develop any momentum.  But on a global scale, the system seems to be fraying round the edges, falling apart in places, or hanging by a thread.  If we think also about groups which use a rhizome or war-machine model, but with a reactive or hierarchical goal, then we can see a strong parallel between this model and a tendency towards state collapse in the most peripheral areas—places like Afghanistan, Somalia, Northeast India, the Niger Delta.  In these kinds of spaces—termed ‘black holes’ by the state—the nomadic war-machines are actually stronger than the states.  Of course, these kinds of situations frequently become quite nasty, because the force which is unleashed is at least as much reactive as active.  The Zapatista situation, where localised state collapse is simultaneously a progressive move, is still quite rare.  But the potential is there, and certainly seems more likely than a Leninist revolution or a new social-democracy.  If there’s a new social-democracy, it will emerge because the system needs to contain revolt.

The criticism that sometimes comes from socialists is that hierarchies develop in ostensibly horizontalist group formations anyway and without any formalised procedures to recognise this and hold power to account hierarchies can become much more oppressive. Indeed much of the inspiration for Deleuze comes from Nietzsche who developed his political philosophy precisely as a rejection of attempts to bound power around certain reified *universalist* principles.

Can you clarify if you’re criticising Deleuze for being universalist, or for being anti-universalist?

I was suggesting that Nietzsche sees universality principles as a version of “slave morality”. So that would make it (to the extent that Deleuze is following Nietzsche) a criticism of Deleuze’s anti-universalism. Deleuze’s embrace of horizontalism could be construed as a universalist principle—but I think socialists would argue that unless this commitment is formalised into specific democratic procedures we are threatened with a situation in which a group pays lip service to horizontalism while in practice is quite oppressive.

Of course, this sometimes happens.  The question would be, why do horizontal groups revert to hierarchical forms?  Is there something inherent in human beings which makes us form hierarchies, however we try to live—so the best we can do is democratise the hierarchies?  This view seems to lead back to a conservative stance: human nature is fixed, people are basically bad, so conflict is inevitable, and the best we can do is civilise oppression a bit.

Alternatively, do hierarchies arise because the techniques for the maintenance of autonomy are so far insufficient, incomplete, or maybe forgotten?  Perhaps people in social movements have not overcome reactive desires after all.  Perhaps people revert to familiar, habitual relations even when trying to transcend them. In which case, the point is to develop better ways of locking-in horizontal relations.

I’ve seen this kind of dynamic (i.e. informal hierarchies) in social movements, and I think a lot of it comes down to personality types or communicative styles—some people have quite passive or dependent outlooks, whereas others come across as charismatic or knowledgeable, and get interpellated as leaders, or perhaps seek it. There are big gender and class differentials in which style people adopt, so this reinforces the persistence of gender and class dominance as well.

Wouldn’t democratic procedures ameliorate this?

I don’t think formal procedures or elected hierarchies solve the problem at all—because the same, dominant types of people then manage to get even more power.  They’ll be the loudest, most confident speakers in assemblies, and the most likely to seek and gain election in representative systems.  Actually, if anything, it’s mitigated a bit in small groups, because people who are less confident are less anxious about speaking.  To be honest, I don’t have a solution here, but I think the issue is probably a critical literacy issue—people need to be more reflexive about the relationships they’re in, some people need to become more assertive and gain a sense that they have valid knowledges and contributions, and some other people need to learn to listen and to situate their own perspectives as partial.

When thinking about social power, I’d suggest that there are actually at least two axes.  I’d think about concentrated and diffuse power on the one hand, and formal and informal power on the other.  The libertarian left has traditionally favoured diffuse formal power, such as local assemblies.  Occupy, and some of the social movements I talked about before (the Zapatistas and the MST for example), have diffuse formal power structures.  The assembly or the commune is the main site of power.  Formal state systems are based on concentrated formal power.  Leninists and social-democrats have traditionally sought to capture concentrated formal power so as to use it in more benign or authentically representative ways. The same problems come up with all of these approaches—diffuse formal power can slip into concentrated formal power, and concentrated formal power usually turns into dominance for the benefit of those in power.

If formality increases the risk of concentration, a Deleuzian ideal would be a diffuse informal power?

Yes. And I think Deleuze tries to sketch some of the structural conditions for diffuse informal power, particularly in relation to war-machines, bands and so on. He suggests that diffuse power can be mobilised to prevent concentrations of power, but it takes particular “affects”, particular zones of desire for it to work.

It’s interesting that you raise the question of universalism. Actually, there’s an influential critique of Deleuze—the critique coming from Alain Badiou , Slavoj Zizek and Peter Hallward for example—which maintains precisely the opposite—that Deleuze does have a universal, that he’s a closet universalist!  I think part of the reason for this is that Deleuze makes general claims about the qualitative basis of existence—that it is always based on becoming, it has virtual and actual aspects, it is based on active force, it is an expression of univocity and differenciation, and so on.  It doesn’t lead to an overarching normative position as to how everyone should live, but it has general implications.

Was I wrong to present him as an anti-universalist?

Deleuze is anti-universalist in the sense of being immanentist. He doesn’t believe traditional kinds of morality and ontology which suggest an additional dimension above the world, which judges or structures the world—like God in mainstream Christianity for example.  He doesn’t want some particular site to become the focus of power, integrating all the rest.  Part of the reason for this is that arborescent (tree-like) power necessarily produces hierarchies and inequalities.  Deleuze, like other poststructuralists, thinks that this kind of universalism isn’t really universal.  It always ends up as the perspective of some particular group, portrayed as universal to dominate other groups.  This is similar to Marx’s theory of ideology—what appear as moral absolutes are really particular interests of the bourgeoisie.

Does this make him hostile to grand totalising projects?

Deleuze isn’t in line with a lot of the Anglo-American poststructuralists who think it’s too dangerous to try to create a big political project.  He wants to change the general frame.  Certain structures are oppressive of desire as such.  These structures might be diffuse and capillary, but they also have a centralising logic, and an alienating logic.  In this sense, Deleuze is a revolutionary theorist.  He sees cumulative, capillary resistances, but he also sees them reaching a point of critical mass which will change the course of the world.  This isn’t a universalism in the sense of a philosopher-king delivering a truth to humanity.  But there’s a certain sense in it of humanity in general, or life in general—that on the whole, we’d live better without hierarchies than with them.

Doesn’t this make him an anti-universalist on universalist grounds?

Deleuze goes along with the Nietzschean idea of “beyond good and evil”, but if we read this closely, it doesn’t mean there are no values.  It means values are constructed starting from active power as “good”, and defining what’s “bad” in relation to it.  What’s “bad” is what blocks the power of active desire or active force.  This sometimes means things are only “bad” from one point of view, and “good” from another—if two active forces come into conflict.  But I think Deleuze also wants to say that some things are “bad” in general, because they run counter to the functioning of active force as such.  Hence he has a kind of general project of overcoming certain kinds of structural oppression which are counterposed to active force as such—the capitalist axiomatic, the state, bureaucracy, arborescence, striation of space, rigid segmentarities, unmarked terms and so on.  These are forces which block the emergence and expression of active force as such.  They aren’t just bad in relation to a particular desire.  In a sense, they’re ‘universally’ bad, because active force is ‘universally’ good (even though active forces can desire diverse, incommensurable things).  Part of the theoretical dynamism in Deleuze’s thought come from the attempt to maintain this kind of universalist anti-transcendence while also emphasising radical immanence.

Andrew Robinson is a political theorist and activist based in the UK. His book Power, Resistance and Conflict in the Contemporary World: Social Movements, Networks and Hierarchies (co-authored with Athina Karatzogianni) was published in September 2009 by Routledge.

via New Left Project | Articles | ‘A Revolution We Can All Dance To’ (Part 2).

via ‘A Revolution We Can All Dance To’ (Part 2).

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.

Kiobel

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.

Anglo-Dutch oil giant Shell to Appear in a Dutch Court


The Hague — For the first time in history, a European company, , will appear in a Dutch court to account for damage it caused abroad, Friends of the Earth International announced today.

The court case against Shell’s oil spills in Nigeria has been filed by four Nigerian plaintiffs in conjunction with Friends of the Earth Netherlands and supported by Friends of the Earth Nigeria.

Lawyers for both parties will plea at a key hearing in The Hague on 11 October at 9:30am. [1] The verdict is expected early in 2013.

“This court case will have groundbreaking legal repercussions for multinational corporations globally, and especially for European corporations,” says Geert Ritsema, globalisation campaign leader at Friends of the Earth Netherlands / Milieudefensie.

“Due to the poor maintenance of pipelines and factories, Shell let tens of millions of barrels of oil leak in the Niger Delta, with disastrous consequences for local people and the environment. The Anglo Dutch oil giant must now stop its pollution, compensate the damage and prevent more oil spills from happening,” he adds.

Geert Ritsema and Hans Berkhuizen, the director of Friends of the Earth Netherlands, will conduct a fact-finding mission in Nigeria from September 27 – October 2.

Nigerians have to sue Shell in The Netherlands to obtain justice. Meanwhile Shell uses the threat of legal action to attempt to silence legitimate protests, for instance the recent Greenpeace protests against Shell in Europe. They pollute with impunity, destroy livelihoods and block dissent. This is deplorable,” says Nnimmo Bassey, Executive Director of Friends of the Earth Nigeria and Chair of Friends of the Earth International.

via Royal Dutch Shell Plc .com.

via Royal Dutch Shell Plc .com.

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