This class project explored the complex negotiations process between the leaders of the Bodo Community in Nigeria and the Shell Oil Company over adequate reparations for the environmental devastation caused by oil spills.

1. The Negotiation Process Around the
Shell Oil Spills of 2008 in the Bodo
Community, Nigeria
Hilda Esedebe & Rodney Trapp
M.Sc International Business
Development & Consulting
Professor Patrick Germain-Thomas:
Negotiations Dossier
May 22nd, 2014

2. Introduction
• In August and December 2008, two major oil
spills disrupted the lives of the 69,000 or so
people living in Bodo, a town in Rivers State,
Nigeria, in the Niger Delta. Years later, the
prolonged failure of the Shell Petroleum
Development Company of Nigeria (Shell), a
subsidiary of Royal Dutch Shell, to clean up the
oil spill, continues to have catastrophic
consequences for the Bodo community. A class
action law suit against Shell was launched and is
still ongoing. The negotiation process of this suit
is the subject of this dossier.
2

3. Structural Context
Political and Socio-Economic Situation in Nigeria:
3
GDP of $ 510 billion – largest economy in Africa
Instability: ethnic disputes, religious differences, poverty & unemployment,
terrorism
Endemic/systemic corruption
Under-development i.e. education system, hydro and electricity,
transportation & infrastructure, policing and legal system

4. Structural Context
Oil Industry in Nigeria and its history with Shell:
4
•Oil was discovered in Nigeria in 1956 in the Niger Delta after half a
century of exploration. The discovery was made by Shell-BP.
•Crude oil production of 2 million bpd
•$95 Billion USD in petroleum exports
•98% of total exports revenue
•Shell is Nigeria’s oldest energy company since it was first given the
license to prospect for oil by the Nigeria government in 1937
•Business activities in Nigeria include exploring and producing oil and gas
onshore as well as offshore and gas sales and distribution
•$467 Billion USD in revenue, 2012
•Past law suits include; four Nigerians & Friends of the Earth Netherlands
at the Hague Court, 2008
• CSR – promote cooperation with the Nigerian government and
transparency to avoid resource exploitation

5. Structural Context
The Bodo Community:
5
•In Rivers State, Nigeria, in the Niger Delta
•Population ~69 000 – mostly fisherpersons
The Bodo Creek and Mangroves: economic backbone for the local
inhabitants, providing fish, shrimp, crabs, wood, honey and traditional
medicine. Mangrove bark is used for coloring cloth, net preservation and glue
production, and its branches are used as net mending sticks and handles for
axes. Estimated economic value of mangrove forests to the local community
is in the range of US$27,264–35,921 per hectare (ha) per year
•The environmental impact of the 2008 spills have been catastrophic to the
mangrove forest and waterways
•Most of the Bodo community lost their livelihood and now suffer from
poverty and health issues
•Some with the means have moved away from the area to seek better lives
elsewhere or commute great distances to fish

6. Structural Context
6
http://www.youtube.com/watch?v=yQ_iN
WcJIoA
Video

7. Actors
7
Shell
Interests/Stakes
& Goals:
•Access to oil
•Renewal of
contracts with the
government
•Negative
Publicity
•Minimize
financial fallout
i.e. bags of rice
and beans
Power Balance &
Power Resources:
•High power
balance
•Nigerian
Government
BATNA:
UK courts
determine that
3rd party
intervention is
primary cause
of problems and
rules in their
favor
Personality Traits &
Relationships:
•Good indication
previously provided
•Trust issues with
regards to who is
actually part of the
Bodo community and
which lawyers
represent which parties
•Claims of sabotage by
third parties
•Security issues at sites
impede progress

8. Actors
8
Bodo Community (11,000-
15,000) represented by Martyn
Day, Leigh Day & Co based out
of London, England
Interests/Stakes
& Goals:
•Cleanup oil spill
and restore the
environment
•Improvement to
community,
health and
livelihoods
restored
•Fair
compensation for
losses sustained
by the Bodo
community
Power Balance &
Power Resources:
•Low power
balance
•Non-
governmental,
Human Rights
Organizations
•The Bodo
Council of Chiefs
& Elders
BATNA:
Proceed with
law suit in UK
in hopes of a
positive ruling
Personality Traits &
Relationships:
•Leigh Day 1987: Taking
on David and Goliath
legal struggles for justice
•The injured or those
treated unlawfully by
others
•Martyn Day: Senior
Partner & founder
specializing in
international,
environment and
product liability claims,
often as group actions
•One of the UK’s most
powerful lawyers

9. Actors
9
The British
Court
Interests/Stakes
& Goals:
•To reach an
agreement
Power Balance
& Power
Resources:
• Power to
issue ruling
Personality
Traits &
Relationships:
•Objectivity

10. Actors
10
Bert Ronhaar -
mediator, Dutch
ambassador to
Nigeria
Interests/Stakes &
Goals:
•To facilitate
negotiation process
•Contribute to better
representation of
Dutch companies in
Nigeria
Power Balance
& Power
Resources:
• Support from
the Dutch
Government
Personality Traits &
Relationships:
•Neutral mediator
•Supporting and
encouraging
business
cooperation
between Nigeria &
the Netherlands
•Recently retired

11. 11

12. Zone of Possible Agreements - ZOPA
$20
millon $200
millon
12
What Shell is willing to offer
What Bodo is willing to accept
ZOPA

13. 13
1958 1993 2008 2008 2008 2009 2009 2012 2013
c22013
2nd
pipeline
rupture in
Bodo Bia
Barma Dec 7
SPDC clamps
oil spill, Nov 7,
2008
SPDC stops
production in
Ogoni land
Council of
Elders alert
SPDC of oil
spill Sept
2008
Various
government
agencies request
SPDC address the
spillage issue
Jan – March 2009
CEHRD
publishes
report about Oil
Spillage in
Bodo Creek,
Oct 10, 2008
Shell-Bodo Case
Timeline
Key Facts
 First Oil Spill lasted for 72 day
 Second Oil Spill lasted for 79 days
 SPDC initially offered the community 50 bags of
rice, beans, garri, cartons of sugar, cartons of milk
powder, tea, tomatoes and tins of groundnut oil.
 SPDC’s second offer was twice as much in food
supplies.
 The oil spills virtually destroy the bioavailability of
the Bodo Creek Area and the livelihoods of the
region’s fishermen and farmers.
SPDC starts
operation in
Ogoni land
Council of
Chiefs alert
SPDC of oil
spill Dec 9
Leigh Day files
court paper in
London, March
23, 2012
Council of
Chiefs
reject offer
1st
pipeline
rupture in
Bodo Creek
Aug 28, 2008
SPDC
clamps 2nd
oil
spill, Feb 19,
2009
SPDC offers 50
bags each of
food supplies,
May 2, 2009
SPDC gets
serious about
negotiations
SPDC goes to
the negotiation
table Sept 7-14
Bodo
Community
goes to
negotiations
table Sept. 9-14

14. Four Sub-processes of Negotiation
(Walton and McKersie, 1965)
Distributive
Bargaining
Integrative
Structuring
Attitudinal
BargainingIntra-organizational
Bargaining
14
Shell wants:
• Provide Compensation
Commensurate with
Nigerian Quality of
Life Standards
• Begin clean-up and
remediation without
3rd party intervention
Bodo wants:
• Fair compensation
for losses from 2008
• Restoration of land
and water to natural
state & use experts in
the clean up process
Shell & Bodo agree to:
• Dutch Mediation
• Clean up environment
• Compensation for loss
• Both want Shell
Operations in Nigeria
• Improved relations
with Local and
National Government
• Decrease in illegal
activity
• Access to the land, but
for different reasons
Shell
• Partnership with FGN
• Practicing CSR/
Sustainability
Development
• Addressing issues
raised by UNEP
Report 2011
• Clean water projects
with Rivers State
government
Bodo
• Filing court case in
UK
• Begin clean-up and
remediation
Shell
• Has licensing
agreements with
Nigerian Govt (FGN)
• SPDC must answer to
its parent company
Bodo
• Martyn Day has to
answer to Council of
Chiefs and Elders
• Independent Reports
by CEHRD, UNEP
• Relies on
distribution of oil
proceed from FGN

15. Three Steps in Negotiation Process
(William Zartman, 1978)
Pre-Negotiation Phase
Shell provides
modest food
supplies 2009
Shell agrees to oil
spill liability 2011
Bodo secures legal
representation
Search for Formula
Shell makes
compensation
offer
Bodo seeks fair
compensation and
remediation
Working out Details
Negotiations
Collapse
15
Turning Point
of Seriousness

16. Outcome
16
The Sept 2013 negotiations broke down with no agreements made
Bodo Camp –
▫ Shell’s low compensation offer was ‘derisory and insulting’
▫ Shell’s clean up efforts need to be managed by experts, not inexperienced locals.
▫ “One of the largest companies in the world is acting like the playground bully,
trying to batter local people, whose lives have been devastated, into submission.”
Shell Camp
▫ Expectations from solicitors to the community were too high and “disproportionate
to Nigerian standards
▫ Shell’s existing clean-up efforts have be thwarted by other oil spills caused by crude
oil theft and other illegal activities
▫ “We took part in this settlement negotiation with two objectives – to make a
generous offer of compensation to those who suffered hardship as a result of the
two highly regrettable operation spills in 2008, and to make progress in relation to
clean up,”

17. Next Steps
Plans for the Future
▫ Both parties are continuing
with legal proceedings in the
United Kingdom
▫ Shell welcomes continued
dialogue and involvement of
other interested Nigerian
parties and oil companies.
Our Recommendations
1. Shell should explore better ways to protect their
oil pipeline, even considering relocating them
underground
2. Shell needs to provide more security for their
remediation consultants and assessors
3. Shell should consider adding a Community
Benefits Agreement (CBA) to their offer. The
CBA would provide long-term supports and
services to the Bodo Community.
4. Shell should consider applying global CSR
standards and best practices to their operations
in Nigeria.
5. The Bodo Chiefs and Elders should implement
self-policing efforts to help deter oil theft and
equipment sabotage
6. The FGN needs to enforce existing laws and
regulations relating to the operation of oil
companies
17

18. References
Slide 2. http://www.youtube.com/watch?v=yQ_iNWcJIoA
Slide 4. http://www.nnpcgroup.com/NNPCBusiness/BusinessInformation
/OilGasinNigeria/IndustryHistory.aspx
http://www.shell.com.ng/
http://www.reuters.com/article/2013/01/30/us-shell-nigeria-lawsuit-
idUSBRE90S16X20130130
http://www.inasp.info/uploads/filer_public/2013/04/03/3_handout_4.pdf
Slides 5, 6 and 7. http://ezproxy.library.nyu.edu:3295/content/48/3/391.full
Slide 8. http://www.leighday.co.uk/
http://en.wikipedia.org/wiki/Martyn_Day
Slide 11. Steiner, R. (2008). Double Standards? International Standards to prevent and
control pipeline oil Spills, Compared with Shell practices in Nigeria. A report submitted to
Friends of the Earth, Netherlands.
18

19. References
19
Slide 12. UNEP (United Nations Environment Programme). Environmental Assessment
of Ogoniland. Nairobi: United Nations Environment Programme; 2011.
Slide 13. AI/CEHRD (Amnesty International/Center for the Environment, Human Rights
and Development). The True ‘Tragedy’: Delays and Failures in Tackling Oil Spills in the
Niger Delta. London: Amnesty International; 2011.
Slide 13. SourceURL: http://inhabitat.com/shell-finally-accepts-liability-for-nigeria-oil-
spills-requiring-1-billion-clean-up/nigeria-oil-spill-leigh-day/
Slide 14. SourceURL: http://mg.co.za/article/2013-09-10-nigeria-shells-debates-
compensation-with-bodo-people-five-years-after-oil-spill
Slide 15. SourceURL: http://businessnews.com.ng/2013/09/14/shellbodo-oil-spill-
negotiations-deadlock/
Slide 15. http://www.leighday.co.uk/News/2013/September-2013/Shell-to-Meet-with-
UK-Lawyers-of-oil-spill-victims
Slide 16. http://www.nationalnetworkonline.com/vol11n1/bodocommunity.html