Dutch Body Indicts Shell Over Obelle Fire …Declares Royal Dutch Shell Liable for Actions of SPDC, Orders SPDC To Improve It’s Community Conflict Policy

Continued efforts by Shell Petroleum Development Company Limited, SPDC, Nigeria's giant multinational oil prospector, to easily brush off negative

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Scene from recent oil spill, November, 2019

Continued efforts by Shell Petroleum Development Company Limited, SPDC, Nigeria’s giant multinational oil prospector, to easily brush off negative impacts of its activities in Niger Delta communities met strong resistance in Obelle Community in Rivers State. For 20 years, the community repeatedly tried to make the oil company acknowledge its errors and provide some form of compensation to the people following the destruction of parts of their land as a result of a fire that erupted in a Shell facility there in 1998.
The dogged refusal to let Shell escape justice by a committed socio-cultural pressure group from the community, members of Obelle Concerned Citizens, OCC, who in 2017 renewed calls for a release of the Environmental Impact Assessment report by a team of experts led by Prof Bel-Gam (an environmental expert consulting for SPDC) as well as remediation and compensation for their destroyed land, which they took to the Dutch National Contact Point, NCP in accordance with OECD, finally earned for Shell, an indictment and a demand that the parent company, Royal Dutch Shell should help it fine tune its grievance mechanism in line with international standards. The NCP said Shell’s conflict resolution mechanism fell far below international practice.
When OCC first notified the Dutch Contact Point of its grievances, SPDC claimed it had a local mitigation organ, the Community Grievance Mechanism which both parties tried to explore but, the community group soon found the process unsatisfactory with Shell not showing transparency and honesty. It reported back to NCP and SPDC later withdrew its consent for the Dutch body to settle the conflict. In line with set rules for OECD, NCP had to issue a Final Statement on the matter finding Shell wanting.
Linking SPDC to its parent body, Royal Dutch Shell, RDS, the NCP stated, “Shell Petroleum Development Company of Nigeria Ltd, SPDC is the operator of a Joint Venture Agreement (called: SPDCJV) involving the Nigerian National Petroleum Corporation, NNPC, which holds 55 per cent, Shell 30 percent, Total Exploration and Production Nigeria Ltd (TEPNG) 10 per cent and Nigeria Agip Oil Company Ltd (NAOC), 5 per cent.
“SPDCJV is owned for 30 per cent by a company in the Shell Group, whose parent body, RDS, a multinational enterprise is headquartered in the Netherlands. The NCP established that there seems to be a link between SPDC’s activities and the issues raised in the specific instance by the complainant. The NCP is of the opinion that RDS has a substantial amount of leverage in SPDCJV due to 30 per cent ownership.
“The NCP…has initially concluded that this case was sufficiently materialized and substantiated, taking into account that matters concerning this notification were being discussed within the CFM of SPDC. The NCP has taken into account the following considerations:
“The specific instance concerns the impacts on local communities as a consequence of a gas fire eruption that 20 years ago, emanated from a well of SPDC in Feb. 1998.The complaints state that past efforts to raise this complaint have been made in 2008 by some members of New Wave, a socio-cultural association that was active in Obelle at the time but, the issues at stake were not resolved. According to SPDC, there seemed not to have been any contact (representatives) of the Obelle clan SPDC and RDS between 2008 and 2017 on the issues raised in the notification.
“The NCP noted that it ‘was unable to determine whether or which actions were taken by OCC to make the complaint known to SPDC in the period between 1998 and 2018 and if SPDC made itself known to the people in the area as the constructor of the operations”.
The NCP noted the complaints of lack of co-operation by SPDC reported by OCC
“Also, the NCP was not able to determine the parties. OCC complained of attempts by SPDC to thwart meetings to resolve the issues and alleged attempts to manipulate minutes of their joint meetings”.
“In a bid to dialogue and resolve this matter, we moved on. However, it is becoming clearer that SPDC is not sincere; rather defensive and deceiving. Our discussions yielded no result, nothing was offered as palliative; other issues disregarded after their initial response. No agreement on all the issues by both parties; SPDC is only acting smart”, OCC stated in a feedback report to NCP in the course of waiting on the body for resolution of the crisis.
“According to the socio-cultural group, there was a lack of transparency and information from SPDC towards OCC. The group requested for the environmental impact assessment report of Prof Bel-Gam several times which SPDC first stated not to be aware of and later stated not to be able to share. OCC also turned directly to RDS to request the reports.
“Furthermore, OCC claims not to have been consulted about the different environmental studies conducted by SPDC (both Prof Bel-Gam’s report and the more recent Environmental Evaluation headquartered in the Netherlands. Therefore, the Dutch NCP could assess the alleged breaches by SPDC”, NCP stated.
Rejecting SPDC’s attempt to brush off community interference on how remediation on negative impacts of exploration activities on oil communities are determined, the NCP said they are stakeholders and so should be party to such decisions.
“The NCP stated that stakeholders should be involved in choosing how adverse impacts are remediated and in assessing the value of damages. Remedy may include apology, restitution, rehabilitation, financial or non-financial compensation, satisfaction and guarantees of non-repetition, modification in procedure, structure or communication.
“Enterprise or community established grievance mechanisms should not preclude access to judicial or non-judicial grievance mechanism, including National Contact Points for the OECD Guidelines”, the Dutch body stated.
It faulted SPDC’s grievance mechanism approach in this instance.
“In the absence of receipt of sufficient information on SPDC’s CFM procedures and their alignment with the OECD Guidelines and UNGPs, it is the assessment of the NCP that SPDC has failed to demonstrate that its grievance mechanism functions in a manner that can be considered to be consistent with the OECD Guidelines and the UNGPs”
The NCP said the RDS has a role to play in making Shell Nigeria respect international operational principles.
“Furthermore, as the NCO has already mentioned in its final statement regarding a specific instance notified by Amnesty International and Friends of the Earth Netherlands –concerning oil spills in the Niger Delta by RDS (21, March 2013), there is a role to play for the parent company when international governance standards require more than just compliance to local law. In this specific instance, under the OECD Guidelines, RDS cannot ignore its own ultimate responsibility and accountability concerning local operations of SPDC.
“Additionally, the NCP wants to bring forward that if a company is directly linked to an impact, for example in the role of a mother company, such as RDS, the company can be expected to take a role in remediation. For example, it should use its leverage to the greatest extent possible to stimulate its subsidiary to provide for remedy or participate in processes to provide for remedy (OECD Due Diligence Guidelines p.90).
On a final note, the NCP called for more transparency in and further review of SPDC’s grievance mechanisms in line with OECD standards.
“The HCP recommends that SPDC provides for more transparency regarding its CFM and further develop its grievance mechanism until it meets all relevant requirements as outlined in the OECD Guidelines and UNGPs.
“ Additionally, the NCP recommends that RDS, the mother company, use its leverage within the Joint Venture to further develop SPDC grievance mechanism and to ensure its full compliance with OECD and UNGPs as a matter of urgency.
It expressed hope that both SPDC and OCC will continue to dialogue through SPDC’s CFM until a solution that will do justice to the interest of the concerned parties has been reached.
Should both parties fail to arrive at an agreement, NCP recommended that RDS should for seek solution at a higher level in the company.
”If the parties at local level fail to handle this complaint within SPDC’s CFM in line with relevant requirements of the OECD Guidelines and UNGPs and reach a joint solution within a measurable amount of time (after the publication of this Final Statement), the NCP recommend that RDS, as the parent company, takes its responsibility under the OECD Guidelines and seeks ways to find solutions at a higher level in the company.
An evaluation will be conducted one year after the publication of the Final Statement through a separate meeting with SPDC and OCC which outcome will be published in the NCP website.
The role of the National Contact Point, NCP is to further the effectiveness of the OECD Guidelines. The Dutch government chose to establish an independent NCP responsible for its own procedures and decisions in accordance with the Procedural Guidance section of the Guidelines. Royal Dutch Shell, RDS, parent company of Shell Petroleum Development Company Limited, Nigeria, SPDC, is a Dutch company.
Coordinator of Center for Media, Environment and Development Communications, Chief Constance Meju described the NCP Final Statement as a victory for oil host communities.
“We salute the doggedness of Obelle Concerned Citizens who saw the need to revisit the Obelle fire incident which destroyed farm lands and endangered the lives and livelihood of community members without any positive reaction from Shell. We commend the Dutch National Contact Point for the ruling that Shell failed in its grievance mechanism and we support the recommendation that the company should review its system to fall in line with international standards as well as the statement that parent companies are liable for the negative impact of the operations of their companies.
“It is a call for mother companies of IOCs to ensure their organizations practice due diligence which will both make community environments safer and relationship between operators and locals, harmonious. CEMEDEC calls on SPDC to set in motion necessary machinery for a quick and final resolution of the Obelle matter”.