Shell sues Nigerian villages

Shell is a dominant player in the Nigerian economy

By Sola Odunfa in Lagos

Shell, the Anglo-Dutch oil company, is suing two villages in Nigeria for alleged damage to equipment during an attack by militant youths in September.

Shell is very sensitive to the welfare and well-being of host communities

Company statement to the court

The High Court in the Nigerian state of Benin is expected to begin hearing the case on Monday

Shell is suing the two Niger Delta communities for $25m in damages as well as more than $800,000 per day in lost production since the 27 September attack.

The case against the Olomoro and Oleh communities has been described as the first such action by a multi-national company against a local community.

Shell, Nigeria's largest oil producer, has been the target of local militants who demand a greater share of the country's wealth.

Turmoil

There have been frequent attacks on oil companies in the Niger Delta amid allegations of environmental degradation and economic neglect by both the oil companies and the Nigerian government.

Shell is suing for damage to equipment and lost production

Shell says the September attack wiped off 40,000 barrels per day of its crude oil production.

In a statement filed to the court, the company said it had been "very sensitive to the welfare and well-being of host communities".

Shell said it had implemented several projects to enhance local living standards.

But the statement said it had suffered constant harassment of staff and extensive destruction of equipment.

Explosion

In September, Shell alleges armed youths took over the Olomoro flow station and tried to shut it down.

But then a build-up of pressure in the surge tanks caused the explosion, which put the facility out of use and spilled crude oil over several hundred square metres of woodland around the station.

Shell produces about half of Nigeria's total daily output of oil - about 800,000 to 900,000 b/d of a daily total of just over two million barrels.