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THE NEW YORK TIMES: Shell Gets Nigerian Deadline for $1.5 Bln Damages

Shell Gets Nigerian Deadline for $1.5 Bln Damages

Published: May 20, 2006

Filed at 1:28 p.m. ET

LAGOS (Reuters) – A Nigerian court has given Royal Dutch Shell (RDSa.L) a Monday deadline to pay $1.5 billion in damages for pollution in the oil-producing state of Bayelsa, the energy giant said on Saturday.

Shell said it had appealed against the order by Justice Okechukwu Okeke, who in February upheld a resolution by parliament that the firm should pay the money to ethnic Ijaw communities in Bayelsa in the Niger Delta, which produces all of Nigeria's output of 2.4 million barrels of oil per day.

“The court ordered that we pay the money into an escrow account by Monday, while the case continues. We have filed an appeal against the judgment,'' said a spokesman for Shell, Nigeria's biggest producer.

The order on Friday by the Federal High Court in the oil city of Port Harcourt was the latest installment in a long-running case. The appeal will lead to further lengthy procedures before the case is determined for good.

Shell, which is the operator of a joint venture in which state-run Nigerian National Petroleum Corporation holds 55 percent, argues that the government will be liable to pay the lion's share of the money should the judgment succeed.

Shell holds 30 percent in the joint venture, French giant Total (TOTF.PA) 10 percent and Italy's Agip (ENI.MI) 5 percent. They would also be liable to contribute their respective percentage share of any judgment sum, the Anglo-Dutch firm argues.

Nigeria's senate approved the fine in August 2004 after it was presented to the lower House of Representatives in 2003 and reviewed by an independent legal advisory panel set up by the lower chamber.

Communities often accuse Shell of allowing its oil to spill into the rivers and swamps of the Niger Delta, spoiling crops and driving fish away.

Shell says most spills are caused by saboteurs trying to steal the oil for sale by international criminal syndicates on the world market.

The payment of $1.5 billion to Ijaw communities is one of several demands made by a militant group that has hit a quarter of Nigerian oil exports in a five-month campaign of sabotage and kidnapping against the oil industry.

Decades of living alongside the multibillion dollar oil industry have brought few benefits to the estimated 20 million people who live in the delta, mostly in extreme poverty.

The perceived injustice of this fuels militancy, sabotage, oil theft and kidnappings, and this in turn draws sometimes brutal actions from the military.

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