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Nigeria and the International Oil Pollution Compensation Fund 19 Sep 2025

In 1967, the world woke up to the black tide of the Torrey Canyon disaster off the coast of Cornwall, England. Over 100,000 tonnes of crude oil gushed into the sea, staining beaches across the UK, France, and Spain. Governments scrambled, victims suffered, and the shipowner’s liability insurance fell woefully short of the colossal costs. It was a sobering lesson: oil pollution from tankers was not merely an environmental tragedy; it was also an economic catastrophe.

That single incident would plant the seeds for an international legal response: the International Convention on Civil Liability for Oil Pollution Damage (CLC) of 1969. For the first time, the world imposed strict liability on shipowners for pollution damage and required them to carry insurance. But it quickly became clear that this first layer of compensation was inadequate, especially when damages exceeded what insurers could cover.

And so, in 1971, states came together again to establish a complementary mechanism: the International Oil Pollution Compensation (IOPC) Fund. It was a novel idea – the oil industry itself, through levies on companies receiving crude oil and heavy fuel oil, would finance an international fund to step in when shipowner liability ran out. This was not philanthropy but pragmatism: protecting coastlines and economies ultimately served the interests of both oil importers and exporters.

Evolution of IOPC

Over time, the original conventions were strengthened. The 1971 fund proved too limited, both in scope and in compensation caps. By the late 1980s, major incidents like the Amoco Cadiz off the coast Brittany, France and the Exxon Valdez in Alaska underscored that oil tankers could wreak havoc on scales never anticipated.

In 1992, the conventions were overhauled. The 1992 Civil Liability Convention (1992 CLC) and the 1992 Fund Convention became the new backbone of the regime. Together, they created a two-tier system: the shipowner pays first (with limits tied to tonnage), and the IOPC Fund provides a second tier of compensation.

But again, disasters outpaced policy. In the late 1990s and early 2000s, incidents like the Erika oil spill  (1999) and the Prestige oil spill (2002) showed that even the 1992 frameworks could be overwhelmed. France and Spain, battered by billions in damages, pressed for higher ceilings. The answer came in 2003 with the Supplementary Fund Protocol, which entered into force in 2005. This created a third tier, raising the total available compensation per incident to SDR 750 million – equivalent to $1.06 billion.

Today, the “IOPC family” consists of the 1992 fund (still the core system) and the Supplementary Fund, for those states that choose to join. The old 1971 fund has since been wound up.

Where Nigeria Stands

Nigeria acceded to the 1992 CLC and the 1992 Fund Convention in 2002, with effect from 2003. This was a milestone. It meant that if a major oil spill from a tanker occurred in Nigerian waters, victims could tap into the international pool of compensation. The Nigerian Maritime Administration and Safety Agency (NIMASA) now serves as the national focal point, hosting the NSC-IOPC Fund Secretariat to liaise with the funds in London.

But there is a crucial caveat: Nigeria has not joined the Supplementary Fund. That means our maximum available compensation remains capped at the 1992 level, about SDR 203 million (circa $290 million), depending on the ship size and incident. For a nation whose economy and ecology are so tightly bound to oil, this is a glaring gap.

Worse still, even under the 1992 Fund, Nigeria has struggled with the basic obligation of reporting oil receipts – the tonnages of crude and heavy fuel oil received annually at Nigerian ports and refineries. These figures determine the levies owed to the IOPC. Delayed or incomplete reporting has been flagged repeatedly, raising questions about the country’s compliance and credibility.

Why This Matters Now

Nigeria today speaks boldly of a revival of the Nigerian National Shipping Line (NNSL), of strengthening cabotage, and of building indigenous vessel ownership. These are laudable ambitions. But ambition must be matched with protection.

Imagine the scenario: a Nigerian-owned tanker, plying the West African coast under our cabotage regime, suffers a catastrophic spill near our shores. The claims run into hundreds of millions of dollars in fisheries, mangroves, coastal communities, and clean-up costs. If Nigeria is not in the Supplementary Fund, victims may hit a ceiling far below their actual losses. The rest would fall to our already strained national budget – or worse, go unpaid. Investor confidence in our maritime renaissance would collapse overnight.

This brings the situation in the oil-producing Niger Delta region to mind. While many of the spills in the area arise from pipelines and sabotage (outside the IOPC scope), tanker-related incidents have occurred and will occur again. The tragedy is that much of the bitterness, protests, and distrust that now define oil-community relations might have been mitigated if robust compensation mechanisms had existed decades earlier.

The Path Forward

The question is not whether Nigeria should act – it is how fast. A credible action plan could look like this:

1.    Accession to the Supplementary Fund: The Ministry of Marine and Blue Economy must take leadership here, working with the Ministry of Foreign Affairs to deposit the instrument with the IMO.

2.    Strengthening NIMASA’s role: As flag administration and fund focal point, NIMASA must build a transparent, verified register of contributing oil receivers, enforce timely oil-receipt reporting, and ensure industry compliance.

3.    Inter-agency collaboration: The National Oil Spill Detection and Response Agency (NOSDRA), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Ports Authority (NPA), and Nigeria Customs Service all hold data critical to reconciling oil receipts. Their cooperation is imperative.

4.    Claims readiness: Nigeria should rehearse – yes, rehearse – the claims process with IOPC guidance, ensuring that in the event of a spill, victims are paid promptly and fairly.

A Clarion Call

The IOPC funds represent not just an international obligation, but a lifeline for nations that live with the daily risk of oil transportation. For Nigeria, the largest oil producer in Africa, the largest population in Africa, and a nation seeking to reassert itself as a maritime power, standing halfway inside the regime is no longer defensible.

We must join the Supplementary Fund. We must enforce reporting. We must prepare for the day when – inevitably – the sea tests our resolve.

In maritime law, as in life, the time to prepare for disaster is before it comes, not after.

Joy Dimka is Senior Legal Officer at the Nigerian Shippers' Council.