Oil company Shell has agreed to a $US84 million ($NZ108 million) settlement with residents of a community in Nigeria for two oil spills.
A picture taken in March 2013 shows gas flare at Shell Cawtharine Channel in Nembe Creek in the Niger Delta. Photo: AFP
It reached the out-of-court settlement after a British law firm took up the case in London, the BBC reported.
The deal is said to be the largest of its kind in Nigeria, and ends a three-year legal battle.
Lawyers for 15,600 Nigerian fishermen say their clients will receive $US3300 each for losses caused by the spills.
The remaining $US30 million will be left for the community, which law firm Leigh Day said was "devastated by the two massive oil spills in 2008 and 2009".
They said the spills affected thousands of hectares of mangrove in south Nigeria.
The settlement was announced by the Anglo-Dutch oil giant's Nigerian subsidiary SPDC.
"From the outset, we've accepted responsibility for the two deeply regrettable operational spills in Bodo," its managing director Mutiu Sunmonu said.
Shell has said that both spills were caused by operational failure of the pipelines.
However, the company has maintained that the extent of environmental pollution in the area is caused by "the scourge of oil theft and illegal refining".
It also suggested that earlier settlement efforts had been hampered "by divisions within the community".
The law firm representing the Nigerian fishermen and their community, Leigh Day, described it as one of the largest payouts to an entire community after devastating environmental damage.
The deal, which ends a three-year legal battle, is the first of its kind in Nigeria, it added.
Leigh Day also said that Shell had pledged to clean up the Bodo Creek over the next few months.
Price hikes and health problems - Amnesty International
An Amnesty International report into the effects of the oil spills in Bodo, a town in the Ogoniland region, said that the spills had caused headaches and eyesight problems.
The price of fish, a local staple food, rose as much as tenfold and many fishermen had to find alternative ways to make a living, the report added. A separate UN study said local drinking water sources were also contaminated.
The two spills came from the same pipe on the Trans Niger Pipeline, operated by Shell, which takes oil from its fields to the export terminal at Bonny on the coast. It carries about 180,000 barrels of oil per day.