Aiteo Eastern Exploration and Production Company Limited has taken legal action against Shell Petroleum Development Company of Nigeria (SPDC), demanding over $2.5 billion in compensation over the sale of Oil Mining License 29 (OML 29).
In the lawsuit, FHC/ABJ/CS/738/2021, filed on July 27, 2021, Aiteo claims that Shell misrepresented key assets included in the sale, particularly the Kugbo West and Okiori Marginal Fields. The company alleges that Shell sold the fields despite having previously handed them over to the Federal Government of Nigeria and the Nigerian National Petroleum Corporation (NNPC) in 2009.
Allegations of Misrepresentation
According to Aiteo’s legal counsel, Kemi Pinheiro, SAN, the company’s acquisition of OML 29 was based on the Agreement for Assignment dated October 17, 2014. The agreement, as detailed in Schedule 1, Part 3 – Wells, explicitly included Kugbo West and Okiori oil wells as part of the assets being transferred.
However, Aiteo contends that Shell knew or ought to have known that the fields in question had already been surrendered to NNPC five years before the sale, making their inclusion in the transaction a fundamental breach of contract.
Shell had held a 30% undivided participating interest in OML 29 in partnership with Total Exploration & Production Nigeria Limited (TEPING), Nigerian Agip Oil Company (NAOC), and NNPC. In October 2013, Shell published an Information Memorandum (IM) inviting bids for the sale of its joint 45% interest in OML 29.
Aiteo successfully emerged as the preferred bidder, completing payments totaling $2.35 billion, which included:
•$220 million as an initial deposit during negotiations.
•$2.13 billion as the final payment upon execution of the transaction.
As part of the 2014 assignment agreement, Aiteo claims that Shell and its partners transferred all rights, interests, and obligations in OML 29, which included the wells. However, when Aiteo sought to commence work on Kugbo West and Okiori in 2020, it discovered that the assets had already been re-conveyed to NNPC in 2009.
Seeking Legal Redress
Aiteo maintains that its $2.35 billion acquisition was made in full reliance on Shell’s representations in the electronic data room information, Information Memorandum (IM), and the Assignment Agreement. With the revelation that critical assets were not actually part of the sale, the company is now demanding:
•$2.5 billion in compensation
•Full legal accountability from Shell
Industry Impact
This lawsuit comes at a time when indigenous oil companies are taking a larger stake in Nigeria’s oil sector, following the divestment of foreign operators. Aiteo’s acquisition of OML 29 was considered a landmark deal, strengthening Nigeria’s local content development and energy independence.
The outcome of this legal battle could set a major precedent for oil asset sales in Nigeria, particularly concerning transparency and accountability in transactions involving multinational oil giants.
