…As DPR Awards Kugbo West Marginal Field In OML 29 To 7 Waves Petroleum
…Aiteo Seeks Over $2 billion in General, Other Collateral
Damages
The controversy surrounding the sale of OML 29 by Shell
Petroleum Development Company of Nigeria to Aiteo Eastern Exploration and
Production Company Limited in 2014 may be far from being over as Aiteo has
again dragged Shell to court over what it alleged as “fraud, deceit and
misrepresentation” in the sale.
In a suit, FHC/ABJ/C8/738/2021, dated 27 July 2021 and filed
before a Federal High Court in Abuja, Aiteo is accusing Shell of not fully
disclosing the true position of the oil wells to it at the time of the sale,
despite receiving the full amount required for the sale.
Describing Shell’s action as “fraudulent, deceitful” and a
“misrepresentation,” Aiteo is seeking, among others, the payment of over $2
billion from Shell in general and other collateral damages as a result of the
alleged lies and deceit at the time of the sale.
Shell, which sold its stake in OML 29 to Aiteo in 2014, is
accused of transferring the Kugbo West and Okiori Marginal Fields to the
Department of Petroleum Resources without disclosing this to Aiteo during the
negotiations that led to the purchase of the asset.
Trouble started with a letter dated September 16, 2021 and
titled, ‘2020 Marginal Field Bid Round Award Of Kugbo West Marginal Field
Located In OML 29 to 7 Waves Petroleum Limited’, from 7 Waves Petroleum
Limited, informing Aiteo that a section of the controversial OML 29 now belongs
to 7 Waves, courtesy of the 2020 Oil Bid Round conducted by the Department of
Petroleum Resources (DPR).
The letter signed by Mr. Daniel Alabi, Managing Director, 7
Waves Petroleum Limited, stated in part:
“7 Waves Petroleum Limited actively participated in the 2020
Marginal field bid round conducted by the Department of Petroleum Resources
[DPR] and emerged as the awardee with 100 per cent equity interest in Kugbo
West Marginal Field in OML 29 upon payment of the statutory signature bonus.
The field would be jointly operated with our partner ‘Multiplan Nigeria Ltd’.
“Our firm would be glad to discuss and engage with Aiteo
Eastern Exploration and Production Company Limited being the lease holder for
OML 29 with the underlying objective of executing the required Farmout
Agreement thus (to) enable our firm commence field development activities
essential to meet the timeline set by the DPR.
“We would be glad to set up an introductory meeting to
discuss the next steps, kindly notify our firm of a suitable date and time.
Thank you for the assistance, we look forward to a mutually beneficial and
long-lasting working relationship.”
Aiteo had earlier received the rude shock when DPR notified
it of the new development in a letter dated 3rd August 2021 and signed by Edu
Inyang for Director/CEO, DPR.
The letter titled, ‘2020 Marginal Field Bid Round Award Of
Kugbo West Marginal Field Located In OML 29 to 7 Waves Petroleum Limited’, copy
of which was sighted by THEWILL, stated in part: “Kindly be informed that Kugbo
West Marginal Field located in OML 29 has been awarded to 7 Waves Petroleum
Limited (7 Waves) following the 2020 Marginal Field Bid Round exercise. The
award was accordingly communicated to 7 Waves through our letter
DPR/tt86/vol.1/269/98 dated 3rd May 2021.
“The award letter, among others, specified that the awardee
negotiate and conclude a Farm-out Agreement with the lease holder of the Oil
Mining Lease {OML) 29 within ninety (90) days.
“Consequently, you are hereby requested to commence
negotiation of the Farm-out Agreement of Kugbo West Marginal Field with 7
Waves, as the company has met the conditions for the award of the field. It is
expected that the negotiation will be concluded within the time specified in
paragraph 2 above.”
Responding to the development, Aiteo moved to the court,
accusing Shell of not informing it that part of the OML 29 had actually been
ceded to the Nigerian National Petroleum Corporation (NNPC), its joint partner
for the oil wells, as settlement for other undisclosed obligations.
Apparently miffed by the disappointments it has been meeting
with the entire OML 29 since its purchase from Shell in 2013/2014, Aiteo is
seeking not only the payment of the sum of $2,135,250,000 that would have been
accrued from commercial exploration and other activities if the deal had gone
well but also a refund of the sum of $46, 200,000 being the payment made to
Shell for the controversial portion of the oil wells that has now been
allocated to 7 Waves.
Efforts to get the Media Relations Manager of Shell, Mr
Bamidele Odugbesan, to comment on the latest development proved futile when
filing this report on Friday as phone calls made to his phone number did not go
through.
Recall that bubble had burst for Shell as a court in The
Netherlands, early in the year, compelled it to compensate two Nigerian farmers
for damages over 2004/2005 oil leaks. Its alleged age-long game of cheating and
exploiting technicalities in the production and evacuation of crude oil to
allegedly short-change not only the Federal Government, but also local
operators in the oil and gas business, were also busted.
And despite all justifications and defence, Shell was also
fingered in a messy missing crude oil scandal by local regulator, the
Department of Petroleum Resources (DPR) through unapproved metering system,
which it allegedly used to misappropriate crude and shortchange local
operators.
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