Shell, Banks say Nigeria’s Aiteo owes $1.7 billion in oil loans

Shell, Banks say Nigeria’s Aiteo owes $1.7 billion in oil loans

One of Nigeria’s largest oil producers, Aiteo, owes $1.7 billion to Shell and seven banks, which if unpaid, could do significant harm to the West African country’s financial system, say the lenders.

Aiteo Eastern E&P Co. purchased a pipeline and an operating interest in one of the nation’s most prized onshore oil blocks seven years ago for $2.4 billion. Zenith Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc and other Nigerian lenders loaned the company $1.5 billion to support the acquisition, while Shell – the seller of the assets – provided $504 million in financing. The parties have been locked in a tangled legal dispute since October 2019 when the creditors notified Aiteo that it was in default.

The lenders claim the debt owed climbed to $1.7 billion by the end of last year, from less than $300 million in late 2019, according to a ruling by the English commercial court on Apr. 1. The rising sum is due to missed repayments, unpaid interest and default penalties, the financiers said when they began an arbitration case against Aiteo in late 2020, when the amount stood at $910 million.