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Last Updated: Thursday, 2 December, 2004, 10:04 GMT
Nigerian senators threaten Shell
Shell flowstation in Nigeria
The resolution against Shell's unit is not backed by law
Nigeria's Senate is to consider sanctions against a unit of oil company Shell for failing to pay a $1.5bn (775m) pollution penalty.

The firm had been told to make the payment by 23 November for alleged environmental damage caused by oil spillage in the Niger Delta region.

The Senate is now to examine recommendations for penalties.

A letter from Shell rejected the compensation order, describing it as "flawed", Senator John Brambaifa said.

The payment resolution was issued by the Senate in August, but does not have force of law.

It was approved following a petition by residents of the oil-rich state of Bayesla.

In response, Shell said it did not believe the correct legal process had been followed.

"We believe that the order to pay $1.5bn in compensation has no legal basis, and, in our view, such disputes can only be decided by a court of competent jurisdiction," a spokesman for Shell told the BBC.

Strongly contested

The Shell unit, Shell Petroleum Development Corporation, is a joint venture with the Nigerian National Petroleum Corporation, Agip, and Elf.

Shell has said in the past that it had "strongly contested" the pollution claims and that it was important to note an earlier resolution from Nigeria's House of Representatives did not endorse the penalty.

Mr Brambaifa, who chairs the Senate committee on the Niger Delta, accused the firm of "effrontery", and said it was challenging Nigeria's sovereignty.

He added that his committee would recommend measures against Shell's Nigerian subsidiary in the next couple of weeks.

"The committee is not very happy with the way Shell has treated the national assembly and so anything can happen," he told BBC News.

He said the committee was also investigating Shell's activities in Nigeria in the past four decades, and its impact on the Niger Delta.

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