* Case closely watched by oil firms, environmentalists
* Dispute over two spills in Niger Delta in 2008
* Talks to take place in Port Harcourt
Compensation talks will begin in Nigeria on Monday between lawyers for Royal Dutch Shell and for 15,000 Nigerian villagers who say their livelihoods were destroyed by oil spills from pipelines operated by the company.
The Nigerians launched a suit against Shell at the High Court in London in March 2012, seeking millions of dollars in compensation for two oil spills in 2008 that polluted the waterways of the Bodo fishing communities in the Niger Delta.
The legal action is being closely watched by the industry and by environmentalists for precedents that could have an impact on other big pollution claims against oil majors.
A vast maze of mangrove swamps and creeks, the Niger Delta is home to communities of subsistence farmers and fishermen living alongside the multi-billion-dollar oil industry.
"They want to be fairly compensated for their losses from the time the spill took place until the oil is cleaned up and the Bodo Creek is returned to its natural state," said Martyn Day of the Nigerians' London law firm Leigh Day.
A Shell spokesman confirmed that talks would begin on Monday between Leigh Day and lawyers for the Anglo-Dutch firm. They will take place in Port Harcourt, the main city in the Delta, and will be attended by representatives of the Bodo communities.
The region has been plagued by a range of problems including sabotage, kidnappings of oil workers for ransom, theft of crude from pipelines, armed rebellions, and conflict between communities over clean-up contracts or compensation deals.
Shell accepts responsibility for the Bodo spills but the two sides disagree about the volume spilt and the number of local people who lost their livelihoods as a result. A previous round of compensation talks broke down in 2012, before the lawsuit.
"We're hopeful that an acceptable agreement can be reached with the Bodo community," the Shell spokesman said. "Such an agreement would provide fair compensation, as well as a way forward on cleaning up the entire area affected by oil spills, whether caused by the two 2008 operational incidents, or by criminal activity."
Citing independent experts, Leigh Day says up to 600,000 barrels of crude were spilt, which would make it one of the worst spills in history. The volume spilt in Alaska in the 1989 Exxon Valdez disaster was put at 257,000 barrels.
But Shell, citing a report by a joint investigative team not controlled by the firm, puts the volume spilt in the two original incidents at just 4,100 barrels.
Shell accepts that a significantly higher volume of oil was spilt later but says this was due to other factors including sabotage. It has also complained that its clean-up teams were at times denied access to sites by local groups.
A Shell spokesman said the talks would focus on the number of people affected, the actual financial loss suffered, and the amount of time for which those affected should be compensated.
The Bodo case is particularly troublesome for Shell because the area is in Ogoniland, a part of the Delta that was the scene of one of the company's worst public relations disasters.
In 1995, nine Ogoni activists including the environmentalist Ken Saro-Wiwa, who had been campaigning against Shell's activities in his homeland, were tried on trumped-up charges and hanged by the then military government of Sani Abacha.
Although Shell was not directly responsible for the Ogoni deaths, it was widely blamed for cooperating with Abacha's brutal and corrupt administration.