Nigerian billionaire Benedict Peters’ Aiteo Group sues Shell over sale of OML-29 operating license

The Nigerian energy company Aiteo Group has taken Shell Petroleum Development Company of Nigeria (SPDC) to court over the sale of the operating license of OML-29, a large block located in the southeastern Niger Delta.

Aiteo was founded by Nigerian billionaire oil mogul Benedict Peters.

According to recent reports, Aiteo Group sued SPDC for more than $2.5 billion over the ownership status of the block, which intensified a dispute around a sale completed six years ago.

OML-29 contains 11 oil and gas fields, four of which are producing.

The oil block stretches over 983 square kilometers, covering the Nembe Oil Field, Santa Barbara Oil Field and Okoroba Oil Fields. Its largest facility is the Nembe Creek Trunk Line, a 100-kilometer-long pipeline with a capacity of 600,000 barrels per day.

The Nigerian government granted the initial lease of the assets to SPDC in 1964 and renewed it after 25 years for a 30-year term in July 1989, set to expire in June 2019.

SPDC consisted of Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited.

In September 2015, an Aiteo Group subsidiary announced the acquisition of the block, Nembe Creek and related facilities in the region from SPDC for $1.7 billion.

However, in a court action dated July 27 this year, Aiteo Group accused Shell of selling the Kugbo West and Okiori oil fields to the company after handing the oil wells over to the Nigerian National Petroleum Corporation, the country’s state-owned oil company.

In response, SPDC stated that it had sold only a 30-percent interest in OML-29 to Aiteo.

SPDC said it would defend its position that it fulfilled its obligations under the sale and purchase agreement signed between the parties and in accordance with Nigerian law.

In turn, Aiteo claimed SPDC’s statement was false and aimed at depriving it of the full benefit of the assets and an undivided 45-percent participating interest in the wells.

Aiteo further claimed SPDC’s actions impacted its finances, as its initial expectations in line with the oil wells could not be achieved.

Peters is the founder of Aiteo Group, Nigeria’s largest indigenous oil-producing firm. As of November 2014, he had an estimated net worth of $2.7 billion, making him one of the richest men on the continent.