President Nana Akufo-Addo has assured of an amicable resolution of the impasse between Ghana and Italian oil giant Eni.
“..I’m still very upset that at the end of the day, the matter that we were having discussion on has become the subject of notice of arbitration.
“..We should settle this matter and I will do my possible best to resolve it,†he stated.
President Akufo-Addo gave the assurance when he met some chiefs in the Western Region at the Western Regional House of Chiefs during his tour of the region.
Eni drags Ghana to arbitration in London
Italian oil giant , Eni, last week filed a suit at the International Tribunal in London, United Kingdom, to challenge a directive by Ghana’s Ministry of Energy, asking them to unitise Sankofa offshore oil field and Afina oil block operated by Springfield Exploration and Production (SEP) Limited, a wholly Ghanaian upstream player.
Eni seeks 5 reliefs
In a statement filed by three renowned lawyers namely Craig Tevendale, Andrew Cannon and Charlie Morgan from Herbert Smith Freehills LLP, Eni is seeking five reliefs from the Tribunal.
Eni wants the Tribunal to declare that the purported April 9, October 14 and November 6 directives on unitisation and any other steps taken to implement those directives represent a breach of contract under the Petroleum Agreement.
The third relief the claimant is seeking is an order that the respondent pays damages in an amount to be quantified for the losses suffered by ENI arising out of Ghana’s breaches of the petroleum agreement, Ghanaian law and International law on a joint and several basis.
In addition, Eni is seeking an order that the respondent pays all of the costs and expenses of the arbitration including the fees and expenses of ENI’s counsel and any witnesses and/or experts in the Arbitration, the fees and expenses of the Tribunal and the fees of the SCC on a joint and several basis and /or an order such further or other relief as the tribunal may in its discretion consider appropriate.
Eni drags gov to Ghana court
Prior to the arbitration, Eni dragged Ghana government over the controversies surrounding the unitisation directives.
In 2020, government declared the Sankofa and Afina oil fields unitised and directed Eni Exploration and Production Ghana Limited and Springfield Exploration and Production to take steps to work together.
The imposition was pursuant to Regulation 50(6) of the Petroleum Exploration and Production-General Regulation, 2018 (L.I 2359).
However, Eni, in a suit dated April 12, 2021, wants the court to declare the directives issued on October 14 and November 6, 2020 as illegal, unfair and arbitrary.
Eni argued that the then sector Minister John Peter Amewu did not follow due process in law in issuing the directives.
The Italian oil giant is praying the court for an interlocutory injunction restraining the Ministry of Energy from taking any steps to seek to enforce the directive pending the determination of the judicial review.
Per the contents of the suit, Eni is not challenging whether the fields straddle or not.
Following an independent evaluation of the Cenomanian Channel and hydrocarbons volumes on each side of the reservoir, the Ministry of Energy directed Springfield and Eni to engage.
In the course of the engagements, a stalemate emerged.
Fearing revenue losses, Springfield filed a case at court to protect its interest. The court has ordered Eni to deposit 30% of monthly revenue into an escrow account pending unitisation.
In response, Eni challenged the capacity of Springfield, arguing that it is only the Energy Ministry that can compel it to abide by the directive.
Eni lost the challenge as the court ruled that as interested party, the outcome of the case can affect Springfield.
Springfield then filed for preservation of funds.
At this point, Eni filed an application against the Attorney General and Minister of Justice, as well as the Energy Ministry, seeking judicial review of the directive.
Springfield - 54.545%
Under the arrangement, Afina, which is operated by Springfield, holds 54.545% of the combined field on a count of the volume of discovered oil and gas resources in the West Cape Three Points Block.
Eni Ghana - 45.8%
On the other hand, Eni Ghana, which operates the Sankofa field, will hold 45.8% per cent interest in the combined field.
Oil production to increase from 58,000 barrels to 115,000 barrels
The combined field, operated by ENI, currently produces circa 58,000 barrels of oil per day and has a potential to expand to circa 115,000 barrels of oil per day within the next few years.
Springfield becomes the first indigenous Ghanaian E&P company
With this, Springfield becomes the first indigenous Ghanaian exploration and production (E&P) company with oil production in Ghana.
Optimum exploitation and recovery of Ghana’s petroleum resources
According to the letter, the then Energy Minister John Peter Amewu imposed the terms and conditions for unitisation of the Afina and Sankofa fields to ensure optimum exploitation and recovery of Ghana’s petroleum resources.
Eni, Springfield failed to submit a joint report
The letter explained that the imposition became necessary because Springfield Exploration and Production and Eni Ghana Exploration and Production Limited failed to submit a joint report indicating each party’s respective interest in the accumulation as demanded by the Energy Minister.
Eni, Springfield failed to exchange data
It said the joint report was to be prepared after the companies had signed a confidentiality agreement for the purpose of exchanging data to determine each party’s shares in the accumulation.
They were also to conduct their respective independent analysis to determine the extent of straddling of accumulation and the Tract Participation of the two blocks. However, the companies failed to do as directed by the Energy Minister.
GNPC conducts independent evaluation
Therefore, when the deadline for submission of the report elapsed on September 18, 2020, the Energy Minister directed Ghana National Petroleum Corporation (GNPC) to conduct an independent evaluation of the Cenomanian Channel and hydrocarbons volumes on each side of the reservoir.
Cenomanian Channel straddles the 2 blocks
The results of GNPC’s evaluation confirmed that the Cenomanian Channel straddles the two blocks.
Hydrocarbon accumulation straddles the 2 blocks
In addition, hydrocarbon accumulation straddles the WCTP Block 2 and OCTP Block.
Over 1.1 billion barrels of crude oil in the 2 blocks
According to the findings of GNPC, the in-place oil volume for WCTP Block 2 side of the accumulation is estimated at 642 millions of barrels of crude oil (MMbbls) and the OCTP Block side of the accumulation is 535 MMbbls.
Based on the GNPC’s independent report, the initial Tract Participation was concluded to be 54.545% for WCTP2-Afina and 45.5% for OCTP2-Sankofa.
The Minister directed Eni to issue to the parties a schedule indicating past expenditures for unit operations prior to the effective date and schedule of indicating past production of unit petroleum and revenues derived from sale of such unit petroleum from the unit area prior to the effective date.
The parties have been instructed to reconcile the amount of each party’s aggregate surplus or deficiency of such actual net expenditures and reconcile their financials.
The Minister ordered the parties to undertake a redetermination exercise within 18 months of the date of the letter.
Source: Finder