Background on the 2011 OPL 245…

Shell’s 2018 profits soar to four-year high...

“We welcome today’s decision by the Milan Tribunal. We have always maintained that the 2011 settlement was legal, designed to resolve a decade-long legal dispute and unlock development of the OPL 245 block. At the same time, this has been a difficult learning experience for us. Shell is a company that operates with integrity and we work hard every day to ensure our actions not only follow the letter and spirit of the law, but also live up to society’s wider expectations of us.”

Background on the 2011 OPL 245 settlement (the Resolution Agreement)

In 2011, Shell reached an agreement with the Federal Government of Nigeria and Eni to settle litigation and arbitration dating back nearly a decade related to OPL 245. This was an unprecedented situation, where the Federal Government of Nigeria had separately allocated the same block to two different parties: Shell and Malabu.

The 2011 Resolution Agreement, which was negotiated at the highest levels of the relevant government departments, aimed to resolve the long-standing disputes over the block and enable its development, generating economic activity and revenues that all parties would benefit from. Unfortunately, the block remains undeveloped.

Business integrity at Shell

Business integrity is one of our core values. We continue to work hard to raise standards in this area, with an ongoing focus on embedding an ethical mindset and culture, as well as maintaining rigorous controls that we review and benchmark regularly. We recognise that society’s expectations of how we behave continue to grow and evolve and we need to respond.

To help achieve this, we have increased resources over the past decade, quadrupling our anti-bribery and corruption (ABC) team, creating a dedicated internal screening team and introducing regional subject-matter experts. We have also introduced a range of new initiatives, from a dedicated ABC Committee to a mandatory ethical leadership programme for all senior managers. We have developed a framework to help our staff make values-based, ethical judgements regarding significant business decisions. We asked a panel of independent experts to review this initiative and their recommendations are now being incorporated as this framework is rolled out and embedded internally.

Notes to editors (including background to the Milan proceedings; the history of the OPL 245 block; other legal investigations and proceedings; and ethics and compliance at Shell): 

  1. Milan proceedings: On December 20, 2017, the Judge of the Preliminary Hearing of the Tribunal of Milan in Italy remanded the Company and four of its former employees for trial for alleged offences related to Oil Prospecting Licence (OPL) 245 in Nigeria. The Company has defended these charges, maintaining that there is no basis to convict the Company or its former employees. This was the conclusion of a detailed investigation led by the international law firm, Debevoise & Plimpton LLP.
  2. Other legal investigations and proceedings: In October 2019, the U.S. Department of Justice (DoJ) notified us that it has closed its inquiry into Shell in relation to OPL 245. We understand that this is based on the facts available to the DoJ, including ongoing legal proceedings in Europe. In April 2020, the U.S. Securities and Exchange Commission notified us that it has closed its inquiry into Shell in relation to OPL 245.

    In December 2018, the Federal Republic of Nigeria (FRN) filed a civil claim against Royal Dutch Shell plc in the English High Court, in relation to OPL 245. In May 2020, the English High Court declined jurisdiction and ruled that the FRN is not entitled to bring these claims in England. In September 2020, the Court of Appeal denied the FRN’s request to be allowed to appeal against the High Court’s ruling.

    In Nigeria, we continue to defend charges in relation to OPL 245.

    There is no update available to share on the Dutch Public Prosecutor’s investigation into this matter.

  3. The history of the OPL 245 block: Additional detail on the history of the OPL 245 block licence and the litigation which led to the 2011 Resolution Agreement can be found here and in the Company’s Responsible Investor Day briefings.

    Shell has accurately reported on the OPL 245 settlement in our annual reports since 2011. The payment by Shell Nigeria Ultra Deep Limited, made to the Nigerian government as part of the 2011 Resolution Agreement, was disclosed to the Nigeria Extractive Industries Transparency Initiative (NEITI) in 2012. In Q2 2020, we took the decision to impair the economic value of the OPL 245 license and associated activities. This was one of a number of impairment losses.

  4. Ethics and compliance at Shell: Shell has clear rules on anti-bribery and corruption and these are included in our Code of Conduct for all staff. This is available on our website, as is our Ethics and Compliance Manual which provides practical advice on how to comply with laws and regulations. All employees are expected to comply with the Code of Conduct and failure to do so will result in consequences up to and including dismissal. Internal investigations confirmed 252 substantiated breaches of the Code of Conduct in 2020. As a result, we dismissed or terminated the contracts of a total of 54 employees and contract staff. We have reported these numbers in our Sustainability Report for more than a decade. Note: most Code of Conduct violations are unrelated to anti-bribery and corruption matters, but related to protection of assets, conflicts of interest and harassment. To put these numbers in context, we have around 80,000 employees excluding contractors.