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0 The Ministry of Energy and Green Transition has withdrawn the unitisation directive between Springfield Exploration and Production Limited (Springfield) and Eni Ghana Exploration and Production Limited (ENI) concerning the Afina-1X Discovery and the Sankofa Cenomanian Oil Field.
This decision was announced in a statement dated February 25, 2025 and signed by the Energy Minister, John Abdulai Jinapor.
According to the ministry, the decision was taken following a legal advice provided by the Attorney General and Minister of Justice and a thorough review of the Arbitral Award referenced SCC Arbitratiofi U2021/114 (ENI & Vitol v. Ghana & GNPC) dated July 8, 2024.
The Energy Ministry further noted that a Tribunal established to look into the agreement identified several procedural flaws with the implementation of the unitisation directive.
The findings by the Tribunal includes; absence of a statutory trigger for unitisation and arbitrary determination of initial tract participation.
“The Tribunal determined that the conditions required under Section 34 of the Petroleum (Exploration and Production) Act, 2016 (Act 919), and Regulation 50 of the Petroleum (Exploration and Production) (General) Regulations, 2018 (L.I. 2359) were not satisfied.
“The allocation of participation interests was deemed arbitrary and unsupported by sufficient evidence etc,” the Ministry said in its statement.
According to the Ministry, the withdrawal of the unitisation provides Ghana with the flexibility to determine the most appropriate course of action in the national interest.
“In consequence, and in alignment with the discretionary powers vested in the Minister under Section 34 of Act 919 and Regulation 50 of L.I. 2359, the Ministry hereby withdraws the Unitisation Directives,” the statement added.
The Ministry expressed its commitment to “issue new directives upon subsequent evidence that such a measure is required for the equitable and efficient development of Ghana’s petroleum resources.”
The Ministry reiterated its commitment to maintaining a conducive environment for investments in the upstream petroleum sector while ensuring compliance with the legal and regulatory framework governing the industry.
Background
Letters by the Energy Ministry under the erstwhile Akufo-Addo dated April 9, 2020, October 14 2020 and November 6, 2020, mandated a compulsory unitisation between Springfield Exploration and Production Limited (Springfield) and Eni Ghana Exploration and Production Limited (ENI) in relation to the Afina-1X Discovery and the Sankofa Cenomanian Oil Field (Unitisation Directives).
The directive was primarily driven by the claims of Springfield Exploration and Production Ltd., a Ghanaian-owned company, which argued that its Afina discovery was part of the same reservoir as ENI and Vitol’s Sankofa field. Springfield insisted that both fields should be jointly developed to optimize production and maximize national revenue.
However, the directive was met with resistance from industry experts, regulatory bodies, and the affected companies.
International Arbitration
In 2021, Ghana’s Attorney General and Minister of Justice received formal notification regarding the initiation of arbitration proceedings under the United Nations Commission on International Trade Law (UNCITRAL).
This action was taken by Eni/Vitol against the Republic of Ghana and the Ghana National Petroleum Corporation (GNPC) for alleged violations of the OCTP Petroleum Agreement.
The arbitration hearing took place in August 2023, and on July 8, 2024, Eni Ghana/Vitol obtained a favourable ruling from the Arbitral Tribunal concerning the unitization dispute with the Republic of Ghana. The Tribunal’s decision supported Eni and Vitol’s longstanding opposition to the Unitization Directives.
The Arbitral Tribunal upheld the position of Eni Ghana/Vitol, determining that the Unitization Directives issued by the Minister of Energy regarding the Sankofa Field, and the Afina Discovery were wrong and unlawful. Furthermore, it found that the actions of the Republic of Ghana violated both Ghanaian law and the provisions of the OCTP Petroleum Agreement.
The Arbitral Tribunal also found that:
- the illegal unitisation was not implemented in a manner that is consistent with the applicable legal framework in several respects, including the key unitisation provisions of the Petroleum Act and its regulations.
- the existence of dynamic communication and a straddling accumulation are essential elements of the test for unitisation under Ghanaian Law and neither had been established in the current case.
- Appraisal was a necessary step required under the Petroleum Act and regulations. Therefore, the imposition of terms and conditions for the said unitization was done in violation of the procedural and substantive rules applicable under the Petroleum Act and regulations.
- the October 6, 2020, GNPC Independent Technical Evaluation of the Cenomanian Channel and Hydrocarbon Accumulation across the WCTP Block 2 and OCTP Block Report was flawed and did not form a substantive basis to impose unitisation; and
- the Minister of Energy’s calculation of tract participation that Hydrocarbon Originally in Place (STOOIP) of WCTP block 2 operated by Springfield is 642MMbbls and was to be given a 54.545% and that of OCTP operated by Eni Ghana and Partners (i.e., Vitol and GNPC) of 535MMbbls and was to be given 45.455% suffered from multiple flaws.
Additionally, Eni/Vitol’s right to claim damages if the unitisation directives are enforced was expressly preserved by the Arbitral Tribunal. If Ghana attempts to enforce or acquiesces to the enforcement of the directives, then Ghana will be liable to Eni Ghana/Vitol for their full damages.
The Republic of Ghana’s counterclaim for violations of the Petroleum Agreement resulting from Eni Ghana/Vitol’s alleged defiance of the unitisation measures was completely dismissed.
ENI and Vitol, challenged the order, arguing that the data did not support the claim of reservoir connectivity. Despite their objections, the Akufo-Addo government proceeded with the directive, setting the stage for a lengthy dispute that eventually led to international arbitration.
ENI and Vitol, took their grievances to the International Tribunal, which ruled against Ghana, essentially stating that the unitization directive lacked a strong technical basis.
Industry analysts criticized the government for failing to build a solid technical and legal case before issuing the directive, while some questioned the motivations behind the decision, given Springfield’s political connections.
The post Energy Minister withdraws ENI Ghana, Vitol and Springfield unitisation directive first appeared on 3News.
