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AITEO launches $2.5b lawsuit against Shell

Royal Dutch Shell senior management has had advanced sight of the third party article below and the associated attachments with an invitation to point out any fake information. Shell let the publication deadline pass without taking issue with authenticity or taking up an invite to provide comment for publication alongside the article on a non-edited basis.  
Breaking News 5 Oct 2021
Fresh Trouble, Panic hits Shell Hqrs as Oil Giant, AITEO launches $2.5b lawsuit against Shell over the sale of OML 29  with fraud and misrepresentations 
Legal fireworks set to resume as Aiteo drags Shell to court, demands $2.5bn compensation 
An indigenous/global oil giant, Aiteo Eastern Exploration and Production Company Limited has dragged the Shell Petroleum Development Company of Nigeria to court over Oil Mining Licence 29.
Aiteo is seeking the sum of over $2.5 billion compensation for the alleged fraud perpetrated against it by Shell in the sales of OML 29.
In the court papers dated July 27, 2021, Aiteo claimed that Shell sold two Marginal Fields, Kugbo West and Okiori, to it despite that it (Shell) has already handed over the wells to the Federal Government through the Nigerian National Petroleum Corporation (NNPC).
Aiteo’s suit marked FHC/ABJ/C8/738/2021 was filed by its lawyer, Kemi Pinheiro, Senior Advocate of Nigeria.
It claimed that Shell breached the agreement reached in 2014 concerning the Kugbo West and Okiori Oil Wells.
Shell had in 2013, as the operator of OML 29, invited bids for the acquisition of its joint undivided 45 per cent participating interest in the oil well.
Aiteo took part in the bid and won.
It then proceeded to make payments to wit
$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.
Aiteo added that based on the agreement for assignment dated October 17, 2014, the Shell, 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”.
Aiteo said issues came up in 2020 when it wanted to commence work on the assigned wells.
The court paper read, “The plaintiff found that the wells had been earlier, re-conveyed by the defendant to the NNPC on or about 2009.”
It noted that the re-conveyance of the wells were done by way of offsetting Shell’s incurred liabilities to the NNPC under the JOA operated by it.
It added that the wells were then offered to prospective buyers during the just concluded 2020 bid round conducted by the Department of Petroleum Resources.
It further claimed that “In the circumstances, therefore, the plaintiff (Aiteo) avers that the representations made by the defendant (Shell) as aforesaid were made falsely, deceitfully and fraudulently with the intention of depriving the plaintiff the full benefit of the assets and the undivided 45 per cent participating interest in the wells.”
Aiteo added that as a result of the deceit, its expectations as it relates to the wells can no longer be achieved and that its financial position has been severely and adversely impacted upon.
The plaintiff averred that its inability to fully repay its alleged indebtedness to its financiers was directly attributed to the wrongful actions of Shell.
It said it paid $46.2 million for the wells, arguing that if the money had been invested in other business ventures at the rate of 9.9 per cent interest rate per annum from 2014 till the commencement of the suit, it would have yielded an additional sum of $52 million.
Plaintiff, therefore, claimed that it is entitled to a refund of $99 million.
It also argued that although by clause 25 of the agreement, disputes emanating from the said agreement ought to be resolved through arbitration since the fraudulent misrepresentation of the defendant goes to the root of the agreement to the sales of the wells it can not be entertained or determined by an arbitration tribunal.
Aiteo is therefore praying the Federal High Court to order Shell to refund him the sum of $46.2 million as payment attributable to Kugbo West and Okiori oil wells being money had and received for a consideration which has totally failed.
Plaintiff is also asking for another sum of $52 million being the interest that ought to have accrued on the sum paid on the two wells.
While it is claiming the sum of $500,000 general damages, it is also seeking the payment of $2.1 billion as the amount it would have derived from the sales of 32,000,000 barrels of crude oil and other petroleum products from the Kugbo West and 41,000,000 barrels of crude oil and other petroleum products from Okiori wells.
In 2015, shell reported that it had completed the assignment of its interest in oil OML 29 and the Nembe Creek Trunk Line (OML29 and NCTL) to Aiteo in total cash proceeds of some $1.7 billion.
It stated that the divestment was part of the strategic review of SPDC’s onshore portfolio and in line with the federal government’s aim of developing Nigerian companies in the country’s upstream oil and gas business.
OML29 covers an area of 983 square kilometres and includes the Nembe, Santa Barbara and Okoroba fields and related facilities and has a capacity of 600 thousand barrels per day.
In February this year, a Federal Court in Lagos had issued an injunction barring Shell subsidiaries from withdrawing money in 20 local banks until it ‘ringfences’ potential damages in a lawsuit brought against the oil major by Aiteo.
In the case, the company was seeking about $4 billion in total over alleged problems over claims Shell undercounted its oil exports through deliberate improper metering of the Nigerian company’s oil exports from the Bonny Light terminal.
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