@raynbow- I know a lot of people who are allergic to peanuts, and they are not able to eat any foods that contain peanuts in any form. Unfortunately, I'm pretty sure that your nephew will have to avoid all foods that contain peanuts too, including peanut butter.
Since this type of food allergy can cause major allergic reactions, it is not a condition to take lightly. Anyone who is ever in charge of your nephew's care should be made aware of his allergy to be able to prevent him from eating foods that will trigger his allergic reaction. His parents should follow up with his doctor to determine how severe his peanut allergy is. It is possible that he will have to carry an allergic reaction treatment with him to prevent major problems like anaphylactic shock.