Italian oil Company Drags Ghana To London Tribunal Over Attempt To Force Struggling Springfield E&P On It

talian oil and gas firm, Eni, has 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 the cash-strapped Springfield E&P, a wholly Ghanaian upstream player owned by a certain Kelvin Okyere.

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.

This, follows the foreign company’s dissatisfaction with proceeding in a Ghana court, following Akufo-Addo’s government’s directive that the companies must unitize – is the joint development of a petroleum resource that straddles territory controlled by different companies.

In June this year, a High Court in Ghana, presided over by Justice Mariama Sammo, ordered the Italian oil and gas firm, ENI and Vitol, to set aside 30 percent of oil proceeds from the Sankofa Field in an escrow account, pending the final determination of an application filed by Springfield E&P, a wholly Ghanaian upstream player.

Springfield E&P filed a suit at Ghana’s Commercial Court ‘3’ Division of the Accra High Court following Eni’s refusal to unitise the Afina oil block held by Springfield E&P and Sankofa Field operated by Eni and Vitol because the two oil blocks are said to straddle.

The ENI wants the Tribunal to declare that the purported 9th April Directive, 14th October Directive, 6th November Directive and any other steps taken to implement those directives represent a breach of contract under the Petroleum Agreement.

The claimant also wants the Tribunal to declare that the respondents take no further action to implement the purported unitisation of the Sankofa Field and Afina Discovery on the terms of the purported 14th October Directive, the Draft Unitization and Unit Operating Agreement (UUOA) sought to be imposed by purported November Directive or otherwise.

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 the claimant arising out of the respondent’s breaches of the petroleum agreement, Ghanaian law and International law on a joint and several basis.

Additionally, the claimant is seeking and order that the respondent pays all of the costs and expenses of the arbitration including the fees and expenses of the claimant 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.

It would be recalled that in April 2020, Ghana’s former Minister for Energy, John Peter Amewu issued a directive to Eni and Springfield E&P to begin talks and combine their adjacent oil and gas fields in April and gave them until September 18 to reach an agreement.

The Minister’s directive said that seismic data had indicated Eni’s Sankofa offshore field, which entered production in 2017, and Springfield’s Afina Discovery had identical reservoir and fluid properties.

“Regrettably, it has become obvious that the parties do not intend to comply with the ministry of energy’s directives,” the letter signed by Minister John Peter Amewu said.

More than a year after the directive, both Eni and Springfield E&P have failed to unitise the Sankofa offshore field and Afina Discovery.

Unhappy with the development, Springfield took the case to a high court in Accra, capital of Ghana.

The court in its ruling recently directed Eni to escrow 30 percent of proceeds from the Sankofa offshore field pending the final determination of the case.

The two oil companies were directed to unitise the two fields by the Ministry of Energy about a year ago but it has since not happened.

Among the reliefs sought by Springfield was an order directed at the Defendants to comply with the directive issued by the Minister of Energy in the letter of 9th April 2020 and enter into an agreement forthwith Plaintiff to produce and develop the accumulation of the petroleum in the Sankofa and Afina fields as a single unit.

The oil firm also wanted the court to direct that “any income, profits and other finds due Plaintiff from Defendant’s exploration and production activities in the Sankofa Fields be paid to the Plaintiff upon account having been taken”.

Eni and Vito are expected to pay an amount approximately $40million a month which will be directed to an account agreed by both parties.

Commenting on the ruling, Kevin Okyere, CEO and founder of Springfield, described the ruling as a “welcome vindication of Springfield’s position on the issue of unitization and a positive result”. He said that the Company was forced to take the legal route following Eni’s reluctance to follow the Minister of Energy’s directive and for all parties to reach an amicable resolution to this unfortunate impasse.

Kevin added “Springfield is not interested in stalling ongoing crude oil production on the Sankofa Field, and believes in fairness and justice for all, irrespective of their size and position. The consequences of this case for the Ghanaian oil industry will be systemic and immediate”.

Regional oil and gas actors have been under severe pressure following disruptions caused to supply chains in the wake of the Covid-19 pandemic and market changes triggered by the global energy transition. In the light of such unprecedented challenges, Springfield believes Ghana cannot afford to delay development of a flagship project capable of contributing significantly to the State’s coffers and ultimately improve the standard of living of Ghanaians.

Kevin concluded by saying that, “Springfield looks forward to working with Eni as the operator of the unitized field in maximizing the production and the economic benefits for all stakeholders, including the Government and citizens of Ghana”.

Meanwhile, Ghana’s western neighbour Cote d’Ivoire says it has identified a major offshore oil and natural gas reservoir, after a deepwater exploration by the Italian oil company Eni.

The find will “greatly increase Cote d’Ivoire’s proven reserves as well as its oil and gas production in the coming years,” said energy minister Thomas Camara.

Eni, which drilled a 3,445-metre-deep well about 60 kilometres off the coast, said will carry out a further evaluation of the wider potential of the find.

Camara said the reservoir could hold 1.5 to 2 billion barrels of oil and around 51 million cubic metres of gas.

To date, Cote d’Ivoire has 51 identified oilfields, most of them offshore near the border with Ghana. Four are in production, 26 in exploration, and 21 are still open.

The country increased its oil production in 2019 by 12 percent, to reach 36,000 barrels a day.

It signed contracts in 2019 with Eni and the French oil giant Total to explore the possibility of increasing its oil production.

Total, Eni and other international oil companies, notably British firm Tullow Oil, announced significant discoveries of Ivorian offshore oil reserves in recent years.

Written by Web Master

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