Nigerian farmer Nwale Nchimaonwi celebrated when he learnt that an oil law to overhaul the industry and improve the plight of communities living on crude-producing land had passed after two decades wait.

His Niger Delta region has long seethed with discontent as communities face a potent mix of poverty, crude pollution and state neglect despite the wealth pumped from the ground beneath them.

But Nchimaonwi's enthusiasm soon gave way to anger after it emerged that the law demanded oil companies contribute only 3 percent of operating costs to communities, far below the 10 percent they see as fair compensation.

Disappointment with the Petroleum Industry Bill is again testing patience in Nigeria's delta where many lost farming and fishing livelihoods to contamination even as foreign oil giants pumped crude from Africa's largest producer.

"How do you think three percent can clean the spills, provide potable water, roads, hospitals and jobs in the oil communities?, Nchimaonwi, a leader for the Movement for the Survival of Ogoni People (MOSOP) group, told AFP outside his home in Ejamah-Ebubu.

A decade ago, the Niger Delta was a hotbed of militants who abducted foreign oil workers and raided their installationsto push for more share of the oil wealth.

OPEC-member Nigeria's output was slashed before a 2009 amnesty finally restored peace.

For communities, the years since were spent waiting for lawsuits against foreign oil companies for environment damages to meander though the courts, but tensions are simmering again.

- Nearly 3,000 spills -

Ejamah and three villages make up the Ogoni community of Ebubu, which recently won a ruling for $111 million (97.3 million euros) in compensation from Shell.

Shell agreed to compensate the community over a 1970 spill that polluted over 225 hectares of their farmlands and fishing waters, though without acknowledging responsibility.

Shell says spills came during Nigeria's 1967-1970 civil war when oil infrastructure was damaged.

Acting Ogoni community ruler Emere Emmanuel Olako Oluji told AFP the money was a relief and could provide for the community and "put smiles on the faces of the people."

But other community leaders say the damage is vast.

Ejamah boasts 57 oil wells once operated by Shell before the Anglo-Dutch oil giant was forced to quit in 1993 because of the unrest.

While oil production has ceased, pipelines operated by Shell still traverse the land, creeks and waterways of Ogoniland.

Nigeria's state-run oil company NNPC recently took over the oil wells following a court order but Ogoni leaders vow to resist any resumption of production.

According to industry data, between 1976 and 1991, over two million barrels of oil polluted Ogoniland in 2,976 separate spills.

"Just take a look at this spill," MOSOP's Nchimaonwi said, pointing to large swath of blackened, dried ground left abandoned in the B-Dere area of Ogoniland.

"Saro-Wiwa died fighting for justice for his people," he said, referring to writer, environmental campaigner and MOSOP founder Ken Saro-Wiwa who was hanged along with eight Ogoni activists in 1995 after a trumped up murder charge.

He said frustrations were growing among the youth with few opportunities in the delta.

"Nigeria is sitting on a keg of gunpowder," he said.

- Major step -

President Muhammadu Buhari's government hopes the oil law will draw in more investment to Nigeria, whose petroleum industry has long been troubled by corruption, inefficiency, high costs and security concerns.

But officials said it should also provide for the host communities.

"My prayer is that the people would see this as a major step," Godswill Akpabio, the minister in charge of the Niger Delta told reporters.

"People are arguing about percentages, I am not interested in that. We could manage with this percent but the major thing is to use it well."

Tamaranebi Benjamin, president of Host Communities Organisation, applauded the new law's passage, but said a provision holding communities liable for sabotage in their areas should be removed.

"It's only by expunging the obnoxious provisions that lasting peace can be guaranteed."

For many like cassava farmer Gideo Loole, the law and its 3 percent compensation feels like an insult stirring up anger.

"We cannot farm and fish. Our people are suffering and all the government and oil companies could do is to give us a paltry three percent," he told AFP, brandishing a cutlass to show his anger.

"We are going to mobilise the youth to fight the government and take back our God-given resources."

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