Ghana’s poor handling of the impasse between the Italian oil and gas giant, ENI, and local upstream player, Springfield E&P, is likely to deter oil and gas investors from investing in oil exploration in the West African nation, Dr Babajide Agunbiade, Director for Houston-based National Oilwell Varco, the largest oilfield equipment manufacturing company globally, has stated.
According to him, the Government of Ghana has built a reputation of strongarming against multinationals regardless of what has been agreed in the PSA.
Eni, recently, sued the Government of Ghana at the International Tribunal in London over the directive, asking them and Springfield E &P to unitise the Sankofa offshore field operated by Eni and Afina block operated by Springfield E&P.
According to the directive, Ghana’s Ministry of Energy’s 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.
Eni, however, disagreed with the Government of Ghana’s position, resulting in the legal action against Ghana.
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 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.
It 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 UUOA sought to be imposed by purported November Directive or otherwise.
Again, it wants 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 an 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.
Commenting on the issue, Dr Agunbiade, noted that a review of the Petroleum (Exploration and Production) Act, 2016 (Act 919) and the Petroleum (Exploration and Production) (General) Regulations, 2018 (L.I 2359), the laws that regulate unitisation in Ghana, shows that dynamic or hydrocarbon communication is not a requirement for unitisation.
Dr Agunbiade expressed the belief that the current impasse could delay anticipated further appraisal of other ENI discoveries in Ghana including Akoma, etc.
“This brawl can greatly affect the relationship between GNPC and ENI. Both are currently partners on the Sankofa field so GNPC needs to juggle between their position as a national oil company and a partner for the Sankofa field. This is very critical for continuity of the OCTP project and also other joint projects the parties wish to jointly venture on,” he added.
According to him, “There has also been some rumours that the deteriorating state-owned Tema Oil Refinery (TOR), which was built by ENI in the 60s, could be revamped by ENI as part of their corporate social responsibility.
“This melee can affect such an initiative and deter the Italians for moving forward with the investment,” he pointed out.
“It will be a win-win for both presidents to help resolve this issue amicably so that other trade relationships between the countries involved are not affected,” he observed.