Tag Archives: Royal Dutch Shell

6,000 km Pipelines, How Many Lawsuits against Shell, Nigeria

shell company logo--always a Shell, image from wikipedia

A Dutch appeals court ruled on December 18, 2015 that Royal Dutch Shell can be held liable for oil spills at its subsidiary in Nigeria, potentially opening the way for other compensation claims against the multinational. Judges in The Hague ordered Shell to make available to the court documents that might shed light on the cause of the oil spills and whether leading managers were aware of them.  This ruling overturned a 2013 finding by a lower Dutch court that Shell’s Dutch-based parent company could not be held liable for spills at its Nigerian subsidiary.

The legal dispute dates back to 2008, when four Nigerian farmers and the campaign group Friends of the Earth filed a suit against the oil company in the Netherlands, where its global headquarters is based.  “Shell can be taken to court in the Netherlands for the effects of the oil spills,” the court ruling stated on Friday. “Shell is also ordered to provide access to documents that could shed more light on the cause of the leaks.”  The case will continue to be heard in March 2016.  Judge Hans van der Klooster said the court had found that it “has jurisdiction in the case against Shell and its subsidiary in Nigeria”….

“There are 6,000km of Shell pipelines and thousands of people living along them in the Niger Delta,” he said. “Other people in Nigeria can bring cases and that could be tens of billions of euros in damages.”  In a separate case, Shell agreed in January to pay out £55m ($82 million) in out-of-court compensation for two oil spills in Nigeria in 2008, after agreeing a settlement with the affected community in the Delta.

Excerpt from Dutch appeals court says Shell may be held liable for oil spills in Nigeria, Guardian, Dec. 18, 2015.

Shell in Nigeria: the Attitude

Shell and the Nigerian Government

Why Shell Violates the Law: Arctic Pollution

shell stock

Royal Dutch Shell Plc (RDSA) agreed to pay $1.1 million for violating permits regulating air pollution from its oil-exploration fleet in the Arctic Ocean last year.  The settlement announced by the US Environmental Protection Agency said that vessels scouting for oil in Alaska’s Beaufort and Chukchi seas for two months in 2012 didn’t use all mandated pollution-control or monitoring equipment. The EPA had set the requirements as a condition for issuing a permit for Shell’s Arctic exploration.

“Based on EPA’s inspections and Shell’s excess emission reports, EPA documented numerous air permit violations for Shell’s Discoverer and Kulluk drill ship fleets,” the agency’s Seattle office said in a statement late yesterday. Shell suspended its Arctic operations after a series of mishaps in 2012 as it sought oil off Alaska’s North Coast. In December, the drill ship Kulluk broke free of a tow boat in a storm and was stranded on an uninhabited Alaska island. In September, a containment dome designed to cap spills had difficulty getting certified and was damaged during tests.

The air permit violations are a separate from the failed tow and containment device. The fines are $710,000 related to the Discoverer and $390,000 for the Kulluk, the EPA said.

Excerpt, Mark Drajem, Shell to Pay U.S. $1.1 Million for Arctic Air Pollution, Bloomberg, Sept 6, 2013

See also The Arctic Challenger

Fictitious Deals: Who Pays for the Unregulated Oil Market

futures market oil

The European Commission declared that it feared oil companies had “colluded” to distort benchmark prices for crude, oil products and biofuels. Royal Dutch Shell, BP, Norway’s Statoil and Italy’s ENI  all said that they were co-operating with the commission. The competition authorities also called on the London offices of Platts, a subsidiary of McGraw Hill, an American publisher and business-information firm, which sets reference prices for these commodities.

The volumes of oil and products linked to these benchmark prices are vast. Futures and derivatives markets are also built on the price of the underlying physical commodity. At least 200 billion barrels a year, worth in the order of $20 trillion, are priced off the Brent benchmark, the world’s biggest, according to Liz Bossley, chief executive of Consilience, an energy-markets consultancy. The commission has said that even small price distortions could have a “huge impact” on energy prices. Statoil has said that the commission’s interest goes all the way back to 2002. If it is right, then the sums involved could be huge, too.

The authorities are tight-lipped about their focus, but they seem to be examining the integrity of benchmark prices. Each day Platts’s reporters establish a reference price by following the value of public bids and offers during a half-hour “window” before a set time—4:30pm in London, for example. This “Market-on-Close” (MOC) method is based on the idea that using published, verifiable deals to set the price is more reliable than having reporters ring around their pals, who might be tempted to talk their own books.  Platts keenly defends the MOC method. It points out that it ignores bids, offers and deals that are anomalous or suspicious. “We are not aware of any evidence that our price assessments are not reflective of market value,” it says, before declaring that it stands behind its method.

Yet such price-setting mechanisms have come in for criticism. The International Organisation of Securities Commissions (IOSCO), a grouping of financial regulators, said last year that the potential for false reporting “is not mere conjecture.” Total, a French oil giant…told IOSCO that benchmark prices were out of line with the underlying market “several times a year”.

Nobody knows what, if anything, the present investigation will find. The authorities should be scouring firms’ books for trades within the half-hour window that are offset in the futures markets. Perhaps they will find deals used in Platts’s assessment that are quietly unwound by the oil companies in private. They should also check shipping registers to see that cargoes have actually changed hands, or whether deals are fictitious. If any of these tricks could distort the benchmark by even a few cents, it might create a handy profit on contracts that are priced off it.

Oil consumers have been quick to rage at news of this week’s raids. The belief that oil companies rip off consumers is as unshakable as the idea that Rockefeller was good with money. “Our members…will be incandescent if what many have long suspected—that is price fixing—proves to be true,” said Robert Downes, of the Forum of Private Business, a British group that backs small firms. In fact, if there have indeed been price distortions, then these could as well have nudged prices down as forced them up—because oil traders make money on price movements, not just rises.

It is a complicated picture and the EU’s competition authorities are likely to take months or years before deciding whether they suspect any oil companies of having committed a crime. Meanwhile, a reform of the oil markets is unlikely to come anytime soon. Despite IOSCO’s fears of price distortion, it backed away from recommending changes—after fierce lobbying from the industry.

Trading in oil: Libor in a barrel, Economist,, May 18, 2013, at 77