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Shell Declines to Pay Nigeria Damages Pending Appeal

Multinational oil company Shell, is set to defy a Nigerian court-ordered deadline to pay $1.5 billion in compensation damages to local communities in the Niger Delta. Shell's decision not to pay the damages pending an appeal is likely to incense militants who have attacked oil-and-gas facilities in the past six months.

Shell says it will wait for a decision on its appeal before considering a court order to pay $1.5 billion in compensation damages to ethnic-Ijaw communities in the Niger Delta.

A federal high court in the oil city of Port Harcourt last Friday ordered Shell to pay the money by Monday. The money is to be deposited into an escrow account with the Central Bank of Nigeria.

Environmental activist and lawyer, Oronto Douglas, says it is in Shell's interest to comply with the court order.

"The attitude and conduct of those who had taken them to court is in accordance with the rule of law," he said. "Because if they had gone the other way of militancy in trying to attack and demand for what they want, probably Shell may lose more than what they are supposed to pay. So, I think that essentially, they should go into immediate dialogue with the Ijaw aborigines of Bayelsa and come to some agreement as to the method they are going to adopt in paying the judgment debt."

Militant groups, led by the Movement for the Emancipation of the Niger Delta, or MEND, have attacked oil-and-gas facilities in the delta during the past six months that have cut about a quarter of Nigeria's daily oil output.

Most of the attacked facilities belong to Shell.

Douglas says Shell's refusal to pay could expose it to more attacks.

"I am aware that one or two groups have called on Shell to pay," he said. "MENDS for example, issued a statement that Shell should obey the judgment of the court and pay. So, it a matter of conjuncture to think that it can inflame passion, that such an international corporate organ will not want to respect the rule of law in a country because it is in the third world.''

Ethnic-Ijaw communities dominate the delta, an impoverished region with a population of about 20 million.

The local communities have long accused Shell, the biggest Western oil company operating in Nigeria, of responsibility for oil spills that have polluted waters and killed vegetation and fish in the area.

Shell has rejected the charge and said vandals who break pipelines to steal oil that they later sell have caused most spills in the region.