Aiteo Eastern Plans Big Expansion

In a bid to boost output, Nigeria’s largest oil independent has pledged to spend US$5 billion on drilling new wells and reopening existing sites over the next five years. Aiteo Eastern E&P Co. is one of the fastest-growing energy companies in Africa, pumping around 90,000 barrels of oil a day. The weighty investment is part of the company's plan to ramp up oil and natural gas production and continue its reign as one of Africa's oil and gas giants.

To hit its targets Aiteo also plans to increase its stake in Oil Mining Lease 29, a joint venture with the Nigerian National Petroleum Company (NNPC). Currently Aiteo owns a 45% share with the NNPC holding the remaining 55%. Under the new plan, Aiteo will increase its share and become the primary owner.

“We have a development plan which has been submitted to our joint venture partner NNPC,” revealed Victor Okoronkwo, the company's Chief Executive Officer, in a recent interview.

Aiteo seeks to hit 250,000 barrel a day target

Under the planned expansion Aiteo Eastern will increase production to 250,000 barrels a day over the next five years. The upgrades will also see the daily natural gas production rates increase by up to 300 million standard cubic feet per day.

The expansion is made possible by recent changes to how operators are allowed to raise funds. The Nigerian government is moving away from the "cash call model" which sees partners fund joint venture projects depending on their stakes. Instead, the new regulations empower companies with more freedom and make it easier for operators to source financing and fund projects.  

“Our expectation is that in line with the joint venture agreement between us and the federal government, the existing partner will have the right of first refusal,” says Okoronkwo.

Making up for lost profits

Aiteo has hit hard by the slew of attacks on oil and gas infrastructure in West Africa, which forced overseas investors to shut down operations. The company was relying on profits sourced from oil contracts leased by majors such as Royal Dutch Shell Plc, including the Nembe Creek Trunk Line which connects Aiteo wells with Shell’s Bonny crude export terminal. According to Okoronkwo, shutting down the Nembe Creek Trunk Line has cost the company, as well as the Nigerian government, a huge US$2 billion in revenue over the past two years.

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