* Rights group says 2008 Delta spills hurt rivers, farmland
* Shell says clean up operation hampered by sabotage, theft
* U.N. report in August proposed $1 billion clean up
(Adds details, background)
By Tim Cocks
LAGOS, Nov 10 (Reuters) - Royal Dutch Shell's failure to mop up two oil spills in the Niger Delta has caused huge suffering to locals whose fisheries and farmland were poisoned, and the firm and its partners must pay $1 billion to start cleaning up the region, Amnesty International said on Thursday.
A spokesman for Shell said the company and its partners had already acknowledged the two oil spills and started cleaning up, adding it had been hampered by oil theft, which was responsible for most spills in the Delta.
The report by the human rights group to mark the 16th anniversary of the execution of environmental activist Ken Saro Wiwa by Nigerian authorities said the two spills in 2008 in Bodo, Ogoniland, had wrecked the livelihoods of 69,000 people.
"The prolonged failure of the Shell Petroleum Development Company (SPDC) of Nigeria to clean up the oil that was spilled, continues to have catastrophic consequences," it said.
The SPDC is a Shell-run joint venture between the Nigerian National Petroleum Corporation (NNPC), which holds 55 percent, Shell, which holds 30 percent, EPNL 10 percent and Agip, with 5 percent.
Amnesty said the community's UK lawyers suggested the spill had leaked 4,000 barrels a day for 10 weeks, which would make it bigger than the 1989 Exxon Valdez spill in Alaska.
"Those who used to rely on fishing for a living have lost their incomes and livelihoods. Farmers say their harvests are smaller than before. Overall, people in Bodo are now much less able to grow their own food or catch fish," the report said.
Shell agreed in August that a Nigerian community affected by the spill can claim compensation in a British court, setting a precident for such claims.
The Amnesty report urged implementation of a United Nations Environment Programme (UNEP) report in August that was critical of both Shell and the Nigerian government for contributing to 50 years of pollution in Ogoniland, a region in the labyrinthine creeks, swamps and rivers of the oil-rich Niger Delta.
The UNEP said the region needs the world's largest ever oil clean-up costing an initial $1 billion and taking 30 years -- proposing that each of the partners of the SPDC pay its share, based on their stake in the operator.
Amnesty urged SPDC to set up a $1 billion clean up fund, citing Bodo as an example of a place needing urgent attention.
"Bodo is a disaster ... that, due to Shell's inaction, continues to this day. It is time this multi-billion dollar company owns up, cleans up and pays up," Aster van Kregten Amnesty International's Nigeria researcher said in a statement.
Shell stopped pumping oil from most of Ogoniland after a campaign led by Saro-Wiwa, a writer and activist, but it continues to be the dominant player in the Niger Delta.
"SPDC has publicly acknowledged that two oil spills that affected the Bodo community in 2008 were caused by operational issues," Shell spokesman Precious Okolobo said, adding Shell estimated the total size of the spill to be 4,000 barrels.
"The reality is that our efforts to undertake cleanup in Bodo have been hampered by the repeated impact of sabotage and bunkering spills," he added.
Oil is often spilled during sabotage attacks on facilities and bunkering -- tapping pipelines to steal crude. Okolobo said 150,000 barrels of oil are stolen each day in the Delta.
"If Amnesty really wanted to make a difference ... it would join with us in calling for more action to address this criminal activity, which is responsible for the majority of spills."
But Amnesty said even if some spills were caused by theft, "this does not justify a failure to clean up after an oil spill - all oil companies are required to do so, regardless of cause." (Editing by James Jukwey)