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Tuesday, May 17, 2022

Aiteo sues Shell Petroleum for $2.5 bln over sales of OML 29

Aiteo Eastern Exploration and Production Company Limited has dragged Shell Petroleum Development Company (SPDC) over the sales of Oil Mining Licence 29, seeking the sum of over $2.5 billion compensation.

Aiteo in the court summon dated July 27, 2021 alleged that Shell sold two Marginal Fields – Kugbo West and Okiori to it when it, “knew or ought to have known that the defendant had handed over the wells to the federal government of Nigeria\Nigerian National Petroleum Corporation (NNPC) for which the defendant received valuable consideration in or about 2009 prior to the agreement for assignment.

The plaintiff in the suit marked, FHC/ABJ/C8/738/2021, is claiming that the defendant breached a fundamental term of the agreement for assignment dated October 17, 2014 as set out in schedule 1 part 3 – wells, in relation to the Kugbo West and Okiori oil well s listed in schedule 1 of the agreement for assignment.

Shell was the legal and beneficial holder of a 30 percent undivided participating interest in OML 29, which is part of the undivided percentage interest held by the defendant in conjunction with TEPING, NAOC, NNPC amongst others.

Prior to the assignment of the lease to Aiteo, Shell as the operator of OML 29 published Information Memorandum in October 2013 wherein it invited bids from interested entities for the acquisition of their joint undivided 45 percent participating interest in OML 29.

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The plaintiff claimed it did not only join others to bid for OML 29 but emerged successful.
“As consideration for the agreement, the plaintiff made the following respective payments of; $220,000,000.00 as deposit pending the negotiation, completion and execution of the transaction documents and relevant agreements and the balance of $2,130,000,000.00 upon the execution of the transaction and acquisition documents and the agreement,” it stated.

Plaintiff further averred that based on the agreement for assignment dated October 17, 2014, the defendant in conjunction with TEPING and NOAC as Assignors transferred to it their entire participating interest in OML 29 together with the rights, interest, obligations thereto and in the process purportedly also transferred their participating interest in the wells, “when they knew or ought to have known that they had surrendered and given the wells to the NNPC/ the federal government about five years earlier for valuable consideration.”

While Aiteo claimed its bid for the acquisition of OML 29 was based upon a complete reliance on the representations in the electronic data room information, IM and the Agreement, particularly as they concern the wells contained within OML 29, it noted that issues came up in 2020 when it wanted to commence work on the assigned wells.
“The plaintiff found that the wells had been earlier, re-conveyed by the defendant to the NNPC on or about 2009,” it added.

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