Jul 22, 2021 News
– subsidiary ordered to pay US$200M
Kaieteur News – A Nigerian court has ordered Nigerian National Petroleum Corp. (NNPC) and Mobil Producing Nigeria Unlimited (MPNU), which is a subsidiary of Exxon, to pay 82 billion naira (US$199.5 million) in compensation to the Ibeno community of Akwa Ibom State for a series of oil spills occurring between 2000 and 2010. The lawsuit had attempted to directly include MPN’s parent company, ExxonMobil. However, the court disagreed.
According to media reports, the Plaintiffs’ contention was that ExxonMobil Corporation (EMC), though an American-based company, presides over or “holds itself” out as the parent organisation of Mobil Producing Nigeria Unlimited (MPNU), a Nigerian company that engages in crude oil exploration and production in Nigeria. According to the Plaintiffs, MPNU is a shell company and an appendage of EMC and as such EMC should bear joint liability for the tortuous claims of the Plaintiffs against NNPC and MPNU. The Plaintiffs further contended that the unlimited liability status of MPNU renders it incapable of satisfying any corporate debt that may accrue to the Plaintiffs in the event of a successful determination of the lawsuit in their favour and, therefore, EMC “being the parent company should be compelled to bear whatever liability that may arise from the Suit”.The defendant in its arguments contended that ExxonMobil is not resident in and has no presence in Nigeria and consequently is not subject to the territorial jurisdiction of Court. In terms of physical residence, the EMC occupies no physical address in Nigeria, “whether as owner, lessee or licensee” of the said space. The defense also argued that ExxonMobil holds no shares whatsoever in the Nigeria’s state owned Petroleum Company. In its judgment delivered on 21 June, 2021, the Court agreed completely with the defendant’s submissions and held that MPNU is not a subsidiary of EMC and that the Plaintiffs’ action as it relates to EMC was speculative. The court held that MPNU is capable of defraying the judgment that may arise from the Suit against it, and also found that in any case the NNPC should share the liability with the MPNU and not the EMC. On the basis of the findings and reasoning, the Court held that the EMC was not a necessary party to the Suit and was accordingly struck out.
This in effect served to afford ExxonMobil a reprieve from the finding of the Abuja Federal High Court that the two companies had been negligent in how they responded to oil spills in the community, and consequently had to pay the damages within 14 days. Failure to do so would result in accumulated interest added to the amount, at a rate of eight percent per year.
Nigeria’s Youths and Environmental Advocacy Centre (YEAC) welcomed the court finding and indicated that the ruling aligns with the recent case against Shell, from the Ejama-Ebubu community, in Eleme, Rivers State. Also reacting to the development is the Executive Director of The Environmental Rights Action/Friends of the Earth Nigeria, Dr. Godwin Uyi Ojo, who described it as a landmark judgment on the long walk to environmental justice and protection of the environment and livelihoods.
“The judgment is significant because payment of compensation to victims of oil pollution will impact positively on the lives of the people of the Niger Delta suffering under the heavy burden of oil spills pollution and destruction of their livelihoods,” he said.
Ojo stated that this and other recent judgments in the Netherlands in favour of Goi and Ogale communities in Rivers State, Oruma in Bayelsa State, Ikot Ada Udo in Akwa Ibom State against Shell in London would galvanise communities to redouble their efforts at holding all polluters accountable for their deleterious actions.
An Exxon representative had stated that “[MPN], operator of the joint venture with [NNPC], agree with the decision of the court dismissing [ExxonMobil] from the case. We disagree, however, with the court’s holding that MPN is liable for damages and we are considering next steps.”
This judgment is the latest amongst a series of apparent judicial determinations to hold polluters accountable for their actions, and comes on the heel of a recent finding by the Minister of Environment that the country has suffered almost 5000 spills and has lost over four trillion barrels of oil to theft from 2015 to present. At a town hall meeting in early July organised by the Ministry of Information and Culture, on protecting oil and gas infrastructure, Mohammad Abubakar, the Minister of Environment disclosed that according to the National Oil Spill Detection Agency’s (NOSDRA) data, Nigeria recorded 4,919 oil spills between 2015 to March 2021 and lost 4.5 trillion barrels of oil to theft over the past four years.
“Nigeria also lost approximately 4.75 trillion on oil activities in the four years between 2015 and 2018, as estimated by the Nigeria Natural Resources Charter and several statistics have emphasized Nigeria as the most notorious country in the world for oil spills, losing roughly 400,000 barrels per day. Attacks on oil facilities have become the innovation that replaced agitations in the Niger Delta region against perceived poor governance and neglect of the area.”
The Minister also added that, “The impacts of vandalism of oil facilities have not only caused pollution of the environment, but had consequences on the local people, the national economy and security” and that the government had undertaken adequate mitigation measures, including enforcement of relevant laws, regulations and guidelines, such as the Environmental Impact Assessment (EIA) Act which sought to ensure that measures were put in place to assist in the reduction of the negative effects and enhancement of the positive effects on the ecology, health and social wellbeing of communities in project areas.
“It is in the light of this fact that over 1,300 oil and gas projects in Nigeria have been subjected to EIA process under the supervision of the Ministry,” Abubakar had said. He further stated that the Ministry held periodic interactive sessions with oil and gas operators, focused on the continued degradation of the environment, fatalities and loss of revenue, attributable to the regular and incessant vandalism of oil facilities, particularly pipelines.
In light of the aforementioned, commentators have recommended that the Government of Guyana take account of the experience of Nigeria’s Oil and Gas industry and seek to minimise the repetition of conditions and factors that have resulted in the deteriorating state of the industry in Nigeria. Both countries are already classified as petro-states, a term attributed to an oil producing country in which wealth, economic and political power are deemed to be in the hands of small portion of the country and in which the institutions are deemed to be widely ineffective or corrupt.
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