The 30-year-old Nigerian international was a regular threat for West Brom last season when he scored 15 league goals as they finished 11th. He joined from Lokomotiv Moscow a day before the opening game of the 2010/11 season.
"We can now look forward to benefitting once again from Peter's goal-scoring prowess and seeing him play an important part in our campaign to stay in the Premier League for a second successive season," manager Roy Hodgson said on the club's website.
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