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Shell (SHEL) Faces Human Rights Claims in UK Over Oil Pollution

Shell plc SHEL has been operating in the Niger Delta for more than 60 years. During that time, there has been thousands of oil spills and leaks from Shell's pipelines and equipment. The pollution has contaminated the environment and caused widespread health problems among the people of the Niger Delta. The villagers are alleging that Shell's pollution has breached their human rights. They are arguing that Shell has violated their right to a clean and healthy environment.

Let’s delve into the recent ruling, Shell's response and the implications for both the affected communities and the fossil fuel giant.

The Legal Landscape

Entitlement to Human Rights Claims: Mrs Justice May's recent ruling affirms the entitlement of more than 13,000 individuals to bring legal claims against Shell. The villagers allege breaches of their right to a clean environment, a claim substantiated by the Nigerian constitution and the African Charter on human and people’s rights. Notably, claims under these rights have no limitation period, adding weight to the villagers' pursuit of justice.

Shell's Response: Shell, through its Nigerian subsidiary, the Shell Petroleum Development Company of Nigeria), acknowledges responsibility for the spills it caused. However, it denies a direct duty of care to the claimants. The company emphasizes adherence to relevant Nigerian regulations, including compensation and remediation efforts for spill-affected areas. The recent judgment raises questions about the identification of specific spills causing damage, a point contested by Shell.

Eight-Year Legal Battle: The ruling marks a significant moment in the eight-year legal battle between the Ogale and Bille communities and Shell. Matthew Renshaw, the international team partner at Leigh Day, representing the villagers, emphasizes the repeated use of technicalities by Shell to delay the claims. The judgment holds potential implications for Shell's defense, particularly under Nigerian constitutional law, which limits arguments against responsibility for pollution occurring more than five years ago.

Historical Context

Supreme Court's Previous Ruling: Three years ago, the Supreme Court unanimously acknowledged a "good arguable case" that Shell plc, the UK-based parent company, is legally responsible for the pollution caused by its Nigerian subsidiary. Despite this, the legal battle has persisted, marked by ongoing disputes between Shell and the claimants.

Shell's Stance on Oil Theft: Shell contends that oil theft on an industrial scale in the Niger Delta is a main source of pollution, attributing the majority of spills in the Bille and Ogale claims to this criminal activity. The company underscores its commitment to cleaning up and remediating areas affected by spills, irrespective of the cause.

Shell's Future in Nigeria: The recent ruling prompts considerations of Shell's future in Nigeria. The company reiterates its intent to remain in Nigeria, expressing a focus on reducing involvement in onshore oil production while maintaining positions in deepwater and integrated gas ventures within the country.

The Road Ahead

The ruling sets the stage for the claimants to prepare for a trial, scheduled for 12 and 13 December, where further legal arguments will be revealed. The decision holds the promise of a thorough examination of the claims, providing an opportunity for the affected communities to seek redress for the environmental damage and the disruption of their way of life.

Conclusion

The recent high court ruling signifies a critical moment in the protracted legal battle between Shell and the Nigerian communities affected by chronic oil pollution. The entitlement of more than 13,000 individuals to pursue human rights claims underscores the gravity of the situation. As the legal proceedings progress, the spotlight remains on Shell's responsibility, the identification of specific spills and the broader implications for the company's operations in the Niger Delta.

Zacks Rank and Key Picks

Currently, SHEL carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Liberty Energy Inc. LBRT sporting a Zacks Rank #1 (Strong Buy), Oceaneering International, Inc. OII and USA Compression Partners, LP USAC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Liberty Energy is valued at $3.33 billion. LBRT currently pays a dividend of 20 cents per share, or 1.01% on an annual basis.

LBRT is a leading provider of hydraulic fracturing and other auxiliary services to North American onshore exploration and production companies.

Oceaneering International is worth approximately $2.11 billion. In the past year, its shares have risen 45.5%.

The company provides engineered services and products, and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries worldwide.

USA Compression Partners is valued at around $2.37 billion. USAC currently pays a dividend of $2.10 per unit, or 8.71% on an annual basis.

USAC provides natural gas compression services. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.

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Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report

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