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A Systemic Appraisal of Nigeria's Vessel-Source Compensation Regimes for Spill Victims

Document Cited in Related
Vincent
Date01 August 2016
Author
Pages406-419
DOI10.3366/ajicl.2016.0161
Published date01 August 2016
INTRODUCTION

The Nigerian oil industry has a long history dating back to 1956 with oil discovery and the first commercial production of crude oil by the Shell Corporation in 1958.1 It is Africa's largest producer of crude oil, with a production capacity of about 2.53 million barrels per day (bbl/d) as of 2011 estimates. However, the United States Energy Information Administration (EIA) believes that Nigeria could well produce more than 3 million bbl/d, given the right environment, considering its vast oil and gas reserves. Indeed the country is estimated to have close to 37.2 million barrels of proven oil reserves, which is mostly concentrated in the Niger River Delta, the Bight of Bonny, the Bight of Benin and the Gulf of Guinea. With its vast oil and gas wealth, the country depends heavily on hydrocarbons for revenue, which contributes up to 95 per cent of its export earnings, and 75 per cent of all government revenue in 2011.2

Nevertheless, Nigeria's oil industry has been beset by frequent and incessant oil spills emanating from several different sources, including sabotage and operational errors. Other issues that have afflicted the industry are oil tanker accidents, corrosion of pipelines and oil storage tanks.3 In fact oil has also been a source of violent and sometimes catastrophic conflicts in the country, perpetrated by the ‘Nigerian Armed forces, ethnic and youth militias, armed gangs and their networks, pirates, cultists and robbers’, resulting in daily theft of oil in the region of 100,000 bbl/d, estimated to amount to $2.8 million.4 In real terms, sabotage now accounts for about 60 per cent5 of all spills in the country, although some estimates indicate the amount to be either 28 per cent6 or a number closer to one-fifth.7 In all, close to 1.5 million tons of oil has been spilled in the last several decades in the Niger Delta Region (NDR), contaminating the land and rendering most of it unproductive.8

Unfortunately, in spite of its long history in the oil industry, the development of a viable national crude oil tanker transportation system has been lagging behind, together with a lacklustre legislative uptake. This legislative stalemate is mostly due to the fact that the principal modal of oil transportation within the country has been through the use of pipelines which criss-cross the Niger Delta Region (Abia, Delta, Bayelsa, Akwa Ibom, Cross River, Imo, Edo, Ondo and Rivers states). The establishment of this mode of oil transportation has come at a great cost to those in the region whose livelihood has been impacted by current pipelines, corroded pipelines and abandoned pipelines that are potentially hazardous to life.9 Therefore, compensating victims in the different communities for losses and damages related to environmental, social and economic distress emanating from oil spills is critical.

 THE CONTEXT OF OIL SPILLS IN NIGERIA

Oil activities in Nigeria constitute a huge source of pollution in the country since land, water and air are all polluted by oil spill and gas flaring activities. Oil spill data comprises information from several different channels including vessel-source (oil vessel tankers), pipelines and oil platforms. Various reports of 6,744 spills with 2,369,470 barrels of oil lost in the period between 1976–2001,10 or lower numbers of 4,647 incidents which resulted in 2,369,470 barrels spilled between 1976 and 1996 have been compiled. Of this quantity, an estimated 1,820,410.5 barrels (77 per cent) were lost to the environment, while a total of 549,060 barrels of oil, representing 23.17 per cent of the total was recovered.11 On the whole, there has been an unprecedented number of oil accidents in the Niger Delta Region with minimal clean-up efforts undertaken by multinational oil companies whose oil installations proliferate the area. These concerns are buttressed by findings of the Niger Delta Region (Ogoniland), undertaken by the United Nations Environment Programme (UNEP) which confirmed already established suspicions that the area has been rendered wasteland by massive contamination from oil activities, with drinking water contaminated with benzene 900 times the World Health Organization's (WHO) limits.12 This situation is further complicated by reports that it would take at least 25–30 years to clean up the contaminated environment and cost an estimated $1 billion to carry out those activities in the first five years alone.13

Oil spills can have wide-ranging environmental to physical and socio-economic impact on people and their property. Oil spills contaminate not just water and lands in the Niger Delta, but also negatively affect aquatic and terrestrial creatures and, incidentally, lead to both joblessness and homelessness.14 Reports of the presence in the region of high levels of Total Petroleum Hydrocarbons and Polycyclic Aromatic Hydrocarbons (PAH), way beyond the limits set by the Department of Petroleum Resources (DPR), is testament to the urgency of intervention needed to mitigate its impact on the livelihood of the inhabitants, and arrest both food shortages and socio-cultural dissonance in the community.15 PAH is also known to be responsible for bladder, skin and lung cancers.16

Moreover, pressures put on the environment as a result of oil accidents is especially glaring in the Nigeria Delta Region where the United Nations Environment Programme (UNEP) has embarked on a massive venture with the Nigerian government to develop plans to clean up the region damaged by decades of irreverent oil practices by multinational oil companies. It is thought that the environment has now been rendered useless, with mangroves, water courses, fish and other valuable ecosystems severely impacted by years of pollution.17 Furthermore the health implications of oil, which have been elaborately documented, highlight issues such as kidney, osteoporosis, osteomalacia, renal dysfunction, normochromic anaemia as well as bone deficiency. These anaemic and bone deficiency issues are mostly prevalent among post-menopausal women as a result of massive toxicity from the carcinogens.18

Since most inhabitants of these oil communities are farmers and fishermen, there has been a loss of fishing boats, farmlands, fishponds and many other sources of sustenance and other basic socio-economic resources such as homes, property and livelihood. In addition, a 2011 study conducted of 50 women aged 19–70 in the Niger Delta Region revealed that their lives were affected negatively through the loss of fishing boats, farmlands, soaring unemployment, general poverty, kidnappings and a drift towards teenage pregnancies and prostitution.19 Internal displacement and huge pressures on neighbouring villages’ amenities have been implicated in oil accidents. Educational systems are also compromised through disruptions in secondary institutions and adult literacy endeavours.20 Worse still, the gross indifference of multinational oil companies to people and their property, something which is unimaginable in the United States, is considered as part of the cost of doing business in the Niger Delta.21 On the whole, oil activities have put huge pressures on both the physical environment and its inhabitants, yet compensation for those affected has not matched the level of damage caused by these spills.

 VESSEL-SOURCE OIL SPILL COMPENSATION REGIMES AT THE GLOBAL ARENA

The number of oil accidents that occurred during the middle of the twentieth century – notably the Torrey Canyon in 1967,22 Amoco Cadiz in 1978 and Exxon Valdez in 1989 prompted legislative intervention in an attempt to halt the environmental disaster and...

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