This once self-sufficient community suffered from the excesses of oil firms and corrupt officials. Now, the villagers are blamed for everything and the arms dealers are having a field day

Goi is now a dead village. The two fish ponds, bakery and chicken farm that used to be the pride and joy of its chief deacon, Barrisa Tete Dooh, lie abandoned, covered in a thick black layer. The village's fishing creek is contaminated; the school has been looted; the mangrove forests are coated in bitumen and everyone has left, refugees from a place blighted by the exploitation of the region's most valuable asset: crude oil.

Last Thursday, a long-awaited and comprehensive UN study exposed the full horror of the pollution that the production of oil has brought to Ogoniland over the last 50 years.

The UN report showed that oil companies and the Nigerian government had not just failed to meet their own standards, but that the process of investigation, reporting and clean-up was deeply flawed in favour of the firms and against the victims. Spills in the US are responded to in minutes; in the Niger delta, which suffers more pollution each year than the Gulf of Mexico, it can take companies weeks or more.

"Oil companies have been exploiting Nigeria's weak regulatory system for too long," said Audrey Gaughran of Amnesty International. "They do not adequately prevent environmental damage and they frequently fail to properly address the devastating impact that their bad practice has on people's lives."

Goi, 40 miles from Port Harcourt, is a typical case. Just a few miles from where Shell first found oil in Ogoniland in 1958, it is only 20 miles from Bane, the ancestral home of Ogoni writer and leader Ken Saro-Wiwa. People from Goi joined the great Ogoni protest march of 1994, when one in three people from the small kingdom of 900,000 rose peacefully against the company, preventing it from working any of its 30 wells in the area. Two years later, Saro-Wiwa and eight Ogoni leaders were tried on a fabricated murder charge and executed.

A quiet fishing community of fewer than 100 people, Goi was steadily weakened and then broken by a series of oil spills that, over 20 years, made the network of swamps, lagoons, rivers and creeks around it unusable. "People used to drink the water in the creek, fish, cook and swim in it. It was a perfect place," says Dooh. "We wanted for nothing, but the spills came, the tide washed in pollution from elsewhere and in 1987 a massive oil fire burned uncontrolled for weeks. By 2008, most people had left."

Dooh and the last people of Goi then finally gave up. "We kept being polluted. We could not stay any longer," says his eldest son, Eric. "Shell said they would fix things, but a contractor came and scooped some of the oil up and that was it. The spills just got bigger and bigger." In 2009, a third large spill made the last house uninhabitable.

Whether Dooh or anyone ever returns now depends on a court case in the Netherlands. Together with Friends of the Earth Netherlands, Dooh is suing Shell in The Hague for negligence. The Shell pipeline close to the village pumped 120,000 barrels of oil. It burst in 2004 with devastating consequences. The company claims that it was sabotaged by youths stealing oil to process in rudimentary home-made refineries – a process called bunkering. Dooh blames corrosion of the decades-old pipeline.

On Wednesday, Shell formally accepted responsibility in British law for two significant spills in nearby Bodo. Those were rare victories. More than 1,000 court cases have been taken against Shell for pollution in the last 30 years, but almost all are rejected, settled for a few dollars or remain mired in the legal system for years. Even when the courts rule against the company and fine it millions, it is possible for it to appeal, with legal delays draining communities of cash. One case against Shell taken by people in Goi is still in the courts after 14 years.

Ogoni chiefs admit that some spills have certainly been the result of bunkering by youths determined to cash in on the region's one natural asset. "It was the negligence of Shell which compelled people to steal," Groobadi Petta, the president of the Bodo city youth federation, told the Observer. "When livelihoods are destroyed, the youth go to places where they learn how to bunker. They are desperate. They learned from others to steal. It has been to survive." But corporate claims that Shell had been responsible for only 2% of the spills were an insult, he said.

The consensus on the delta is that bunkering and oil theft on a grand scale are condoned, protected and encouraged by a web of organised crime that colludes with government and political elites, the security services and people within the oil companies.

"This is a mafia. They have godfathers. There is no way so much oil could be stolen without protection. Communities get the blame for the spills and the thefts, but the top people are taking far more and are well aware of what is going on. The navy patrols the creeks and main rivers, so there is no way boats could get past checkpoints without their knowledge," says Kentebbe Ebiaridor, a field officer with the Port Harcourt-based Environment Rights Action group.

At the lowest level, villages throughout the delta have set up illegal DIY oil refineries. These rudimentary stills, consisting of a few old pipes and drums welded together, were first used for fuel in the Biafran war. However, they have become part of the survival strategy of many villages too poor to pay for electricity or transport. A few drums of crude are tapped off from old company manifolds, and the oil is boiled up in drums. The fumes are collected, cooled and condensed in a simple distilling process and the result is a low-quality diesel good enough for generators and some cars. But they often catch fire, pollute small areas and every so often are regularly identified and destroyed by the military – only to start up again in days. Government agencies condone them and take a small fee.

"The fact that these operations are proliferating in full view of the enforcement agencies is indicative, at best of a lack of preventative measures and, at worst, of collusion," said the UN Environment Programme report last week.

The brio with which the oil is stolen on a larger scale is breathtaking. Reports allege that top naval officers have private pipelines that serve as conduits through which they siphon crude oil, load on to vessels and ship to refineries in other countries such as South Africa. Last year, a Shell man was reportedly sacked after it was found he had set up a gang to destroy well-heads and then get his contacts to clean up the pollution. In 2003, the Nigerian tanker African Pride was impounded after being found carrying 11,000 barrels of stolen oil and was held in custody by the Nigerian navy. Within months it had mysteriously slipped away.

Organised crime now dominates the theft of Ogoniland oil, says Patrick Naagbanton, co-ordinator of the Amnesty International-backed Centre for Environment, Human Rights and Development. "The pollution has led to the proliferation of small arms, making the delta now one of the most dangerous places on earth. The arms come through porous borders. You can get AK-47s, Chinese, South African, Italian, German and Belgian arms."

Naagbanton conducts a regular survey on the availability of arms on the delta and receives regular death threats. "The arms trade in the delta is dominated by Ukrainian and Russian dealers who swap automatic weapons for illegal bunkered oil. It is driven by political ambition combining with an illegal economy and fed by oil bunkering, creating both direct and indirect drivers of violence in the Niger Delta region," he says.

"Every community now has a silent army. If the problems of proliferation are not addressed, the non-state armed and warlords operating in the region will undermine the region and turn it into a dangerous conflict zone where the gangs will rule at the expense of legitimate authority, development, security and progress of all," he says.

Back in Goi, Chief Dooh's son, Eric, was preparing to go to the Netherlands to represent his father in the case against Shell.

"The human cost of all this pollution is too high. After the spill, Dad's business collapsed, Mother died because there was no money to treat her illness and my brothers and sisters had to come out of school. I am not fighting for myself. This is a test case. Perhaps Shell will now sit up and be corrected after this week. I am fighting for communities across the delta."