Compensation for environmental damage

Nigeria’s senate is reportedly to ask a Shell division to pay $1.5 billion (Ј835 million) compensation to oilfield communities for environmental damage. The resolution is said to follow a petition by members of the Ijaw tribe, based in the southern Bayelsa state, where Shell and other multinationals have operations. It operates through a joint venture in Nigeria, in which it owns 30 per cent while state-run Nigerian National Petroleum Corp owns 55 per cent. The petition was initially presented to the lower House of Representatives last year and reviewed by an independent legal advisory panel set up by the lower house. According to the reports, the resolution says Shell is expected to pay $1bn (Ј556m) now and the balance of $500m (Ј278m) in equal instalments over the next five years. Shell in London said the senate resolution had not been communicated to the company. Meanwhile, Shell has announced an increase in capital investment for 2004 in European exploration and production (E&P), as it looks to recover from an earlier reserves scandal, by Ј84m to Ј1bn in a total capital investment of Ј8.35bn for 2004, informs Scotsman. According to Forbes, Royal Dutch/Shell Group announced Wednesday that it would spend US$1.8 billion on exploration and production in the North Sea, including building a pipeline to transfer gas from Norway to Britain. Shell said the North Sea remained a strategic heartland. "We have invested around 8 billion pounds (US$14.3 billion) in technology, manpower and infrastructure in the past 10 years," he said. "We are not going to walk away from that investment." One of the fields likely to receive part of the additional investment is Ormen Lange in Norway, which was among oil fields subject to last year's controversial reserves downgrades by the company. Earlier this week, the oil giant and the U.S. Securities and Exchange Commission announced a formal settlement of an SEC inquiry into the overstatement of Shell's oil and gas reserves. The alleged role of individuals in the scandal remains under investigation by the SEC, and Shell also faces a separate probe by the U.S. Justice Department. In the SEC deal, Shell agreed to pay a US$120 million fine. The world's third-largest publicly traded oil company also agreed to spend US$5 million on an internal compliance program. Royal Dutch/Shell neither admitted to nor denied wrongdoing in the settlement but did agree to refrain from future violations of SEC laws. In addition, the Anglo-Dutch company agreed to pay 17 million pounds (US$30 million) to settle related allegations by Britain's Financial Services Authority. The settlement reached by the Royal Dutch/Shell Group with the U.S. and UK regulators could worsen the beleaguered Anglo-Dutch oil giant's reserves misery rather than help ease it, analysts said. The U.S. Securities and Exchange Commission and the UK's Financial Services Authority have formally agreed on the 150 mln usd fine imposed on Shell in July for misleading the market. Although both agreed to end the probe on the group's misconduct, the pact does not prevent the agencies from looking at other aspects of the reserves issue, including the role of current and former executives in the scandal, analysts think. The fine will be a disappointment to investors, say sector followers, who also believe that the regulators' findings could be used by angry shareholders to support their class action lawsuits in the U.S.,informs News Factor Business.

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Author`s name: Editorial Team