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Nigerian residents reject Shell settlement over oil spills

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    A man walks on slippery spilled crude oil on the shores of Bodo, a Nigerian village affected by oil spills in 2008, on June 24, 2010. (AFP/File)

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    Spilled crude oil floats on the shores of the Niger Delta swamps of Bodo, a village in the famous Nigerian oil-producing Ogoniland, which hosts the Shell Petroleum Development Company, on June 24, 2010. (AFP/File)

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    A man scoops spilled crude oil into a bottle from the waters of the Niger Delta swamps of Bodo, a village in the famous Nigerian oil-producing Ogoniland, which hosts the Shell Petroleum Development Company in Nigeria's Rivers State on June 24, 2010. (AFP/File)

Negotiations between Shell and Nigerian residents affected by two oil spills in 2008 failed to reach a compensation deal Friday, with residents' lawyers calling the oil giant's settlement offer "insulting."

Talks began on Monday in Port Harcourt, the oil hub in southern Nigeria's Niger Delta region, with representatives of about 15,000 residents from Bodo, a cluster of fishing communities in Rivers state.

Both the British-Dutch firm and the residents' lawyers said the talks had failed to reach a compensation deal and it was unclear when further talks would occur. Villagers rejected the offer unanimously, their lawyers said.

"We took part in this week's settlement negotiations with two objectives -- to make a generous offer of compensation to those who have suffered hardship as a result of the two highly regrettable operational spills in 2008, and to make progress in relation to clean-up," a Shell statement said.

"We haven't reached agreement on compensation, which is disappointing."

Shell said however that progress had been made regarding plans for a clean-up of the area.

Meetings have been set for September 26 and 27 to discuss how to proceed with a clean-up, with the talks to be overseen by the Dutch ambassador. The community and Shell have so far been unable to agree on the parameters for a clean-up.

Sources familiar with the talks said Shell proposed a settlement of 7.5 billion naira ($46 million, 35 million euros). Shell and lawyers for the community declined to discuss the total settlement amount.

However, Martyn Day, senior partner at London-based law firm Leigh Day, which represented Bodo residents in the talks, told AFP each individual would end up with around 275,000 naira (1,300 euros, $1,700) after subtracting a lump sum to be paid to the community.

He said the community met on Friday morning and unanimously rejected the settlement offer.

"Our clients know how much their claims are worth and will not be bought off cheaply," Day said in a statement.

"The settlement figures, which we assume Shell had determined prior to these talks, are totally derisory and insulting to these villagers."

Lawyers for the villagers say the local environment was devastated by the two spills, depriving thousands of subsistence farmers and fishermen of their livelihoods.

According to Leigh Day, experts estimate the spills to be between 500,000 and 600,000 barrels. Shell admitted liability for the spills in 2011 but disputes the amount of oil spilled and the extent of the damage.

If a compensation agreement is not reached, the case may go to trial in Britain.

The litigation involves the Shell Petroleum Development Company of Nigeria (SPDC), a joint venture that also includes Nigerian state firm NNPC, Total and Agip.

Nigeria is Africa's biggest crude producer, but much of the Niger Delta oil region remains deeply impoverished.

Decades of spills have caused widespread pollution in the region.

Shell, the biggest producer in Nigeria, says sabotage and oil theft are the main causes of spills, but activists allege the firm has not done enough to prevent such incidents and clean them when they occur.