(Bloomberg) -- Shell Plc can't sell its onshore business in Nigeria until a court decides the company's appeal of a nearly $2 billion penalty for allegedly spilling oil in the West African country.
A federal appeal court in Owerri issued the order March 11, said Mohammed Ndarani Mohammed, a lawyer representing the plaintiffs. The three-judge panel also ordered Shell to deposit the judgment sum in an account controlled by the court within two working days, Ndarani said.
Shell has been selling onshore and shallow water licenses to Nigerian independent producers for more than a decade. Europe's largest oil company currently is trying to find a buyer for the rest of these assets so it can focus on deep-water projects, and it is considering bids from four companies.
Shell is “disappointed at this outcome,” a spokeswoman for its Nigerian onshore subsidiary said, confirming the court's ruling. “We have a strong belief in the merit of our case and will take immediate steps under the law to appeal and stay the execution of the decision until the appeal is determined,” she said. A hearing on the appeal is scheduled for May 5.
Phone calls to the courthouse weren't answered.
Members of the Ejalawa community in the southern Rivers state sued Shell and its joint venture partner, the state-owned Nigerian National Petroleum Co., in January 2020. A federal judge accepted in November 2020 that an abandoned flow line operated by Shell began spilling a “large volume of crude oil” in September 2019 that damaged their land and waterways.
The court said the 88 plaintiffs, who depend on farming and fishing, were entitled to 800 billion naira in compensation, and it ordered Shell to clean up. The sum is much larger than any damages previously awarded by Nigerian courts to residents of the crude-producing region for degradation of their land.
Shell and the NNPC deny that spills occurred on the alleged dates and say the claim against them is “unsubstantiated, vague and exaggerated,” according to the November 2020 ruling. They also argued that the judge shouldn't award damages because several required steps, such as a joint investigation of the alleged leak and an assessment of its volume, weren't carried out.
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