ENI/Vitol-Springfield impasse: No judgement debt would arise - MP denies claims

According to him, even though government is making efforts to resolve the impasse between ENI/Vitol and Springfield Ghana, no judgement debt would arise out of the case as government is committed and determined to help resolve the issue to the satisfaction of all the parties.

In a statement, the MP said the minority in parliament is seeking to create fear and panic amidst the growing and flourishing oil and gas industry.

Giving details of the issues, he explained that in 2020, the then Minister of Energy, John Peter Amewu, per Section 34(1) of the Petroleum (Exploration and Production) Act, 2016 (Act 919), directed ENI and Springfield to execute unitisation with respect to the Sankofa field in the OCTP and Afina discovery in the WCTP contract areas.

Prior to the directive, the minister had been satisfied by a geophysical and geological analysis in March 2018, which showed that the Sankofa Cenomanian Reservoir extended into the WCTP Block 2 contract area.

The situation saw the industry stakeholders calling on government to encourage the companies to use arm's length dialogue and a common-sense approach to resolve the differences between the companies in order to produce oil from the straddling fields.

In May this year, the Commercial Division of the Accra High Court ordered the operators of the Sankofa Oil Field to preserve 30 percent of all the revenues which will be accrued from the field until the final determination of a legal dispute relating to it.

Per the order of preservation, the 30 percent revenue must be paid by the operators (Eni Limited and Vitol Upstream Limited) into an account agreed by all the contesting parties, which was appealed by ENI Ghana but lost.

Eni Ghana then 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 E&P, a wholly Ghanaian upstream player.

"The issue is still at arbitration, and it is unfortunate for the ranking member to suggest that government is likely to pay judgment debt when the case is yet to be decided." the lawmaker narrated.

He, therefore, described the minority statement as unfortunate as judgement is yet to be made on the case.

Read the full statement below:

DORMAA EAST MP RESPONDS TO ALLEGATIONS OF LOOMING JUDGEMENT DEBT FROM ENI, SPRINGFIELD IMPASSE BY JOHN JINAPOR

Accra Ghana, August 2, 2022: Good Morning Ladies and Gentlemen, I wish to bring your attention to some happenings in Ghana's upstream oil and gas industry with regard to the ongoing legal battle between the Italian Oil company ENI and the only indigenous Ghanaian oil producing company, Springfield Ghana of which the minority through the ranking member of mines and energy committee, John Jinapor, has alleged government risk paying some Judgement debts.

It is important to state categorically that the government of President Nana Addo Dankwa Akufo Addo will not manage this country in a way that will create inconvenience for businesses and result in the payment of judgement.

It is important to note that the government of President Nana Addo Dankwa Akufo Addo, is making effort to resolve the impasse between ENI/ Vitol and Springfield Ghana and I urge stakeholders in the industry as well as the good people of Ghana to support government in this process.

Ladies and Gentlemen, I must say that President Akufo Addo has met all the parties involved in the tussle and meetings are ongoing to bring amicable solutions to the problem and I condemn the claims by the minority in parliament about a potential judgement debt as a result of the impasse. I want to clarify that no judgement debt would arise out of the case since the president of the nation is committed and determined to help resolve the issue to the satisfaction of all the parties.

Meanwhile, I am urging all the parties involved in the tussle to adhere to the laws regulating the industry to ensure a smooth operation in the oil and gas industry.

When we fully obey the laws, rules and regulations governing the industry, there wouldn't be any need for institutions to plead or call on the president to intervene in any impasse but because we have decided to ignore the rules, we end up in situations where we then call on the president to intervene. However, I can assure the good people of Ghana and stakeholders in the oil and gas industry that the president is seriously working with the officials at the Ministry of Energy to bring an end to the issue.

Ladies and Gentlemen, It will be recalled that President Akufo Addo last year promised to resolve the ongoing impasse between Eni Ghana and the Ghanaian-owned international oil company, Springfield Exploration & Production (SEP).

Unitise

This followed the inability of the two companies to comply with a directive to link (unitise) their neighboring discoveries, located in their contract areas. Government in the year 2020 issued the directive for the two companies to unitise, under the management of John Peter Amewu, former minister of Energy.

Many interventions to resolve the situation proved futile forcing Eni Ghana, to drag Ghana to the London Tribunal for attempting to force a wholly owned Ghana upstream company, Springfield E&P on it.

President Akufo-Addo while responding to a request by the Paramount Chief of Eastern Nzema Traditional Council and President of the Nzemamanle Council, Awulae Amihere Kpanyinli III, to address the issue between the two companies last year, said he is personally committed to ensuring that the issue is resolved amicably.

"I am still very upset that matters we have been discussing have become the subject of arbitration with notice of arbitration coming in," I quote the president.

President Akufo-Addo said he had had separate meetings with the parties, all aimed at finding a common ground to deal with the matter without any litigation.

"But I want to assure you that we would continue to discuss and find an amicable solution", the president said

The impasse

In 2020, the then Minister of Energy, Mr John Peter Amewu, in accordance with Section 34(1) of the Petroleum (Exploration and Production) Act, 2016 (Act 919), directed ENI and Springfield to execute unitisation with respect to the Sankofa field in the OCTP and Afina discovery in the WCTP contract areas.

Prior to the directive, the minister had been satisfied by a geophysical and geological analysis in March 2018, which showed that the Sankofa Cenomanian Reservoir extended into the WCTP Block 2 contract area.

The situation saw the industry stakeholders calling on the government to encourage the companies to use arm's length dialogue and common-sense approach to resolve the differences between the companies to produce oil from the straddling fields.

Ministry's action

Ladies and Gentlemen, we will also recall that the current Minister of Energy, Dr Matthew Opoku Prempeh, earlier this year told the media that until recently, when the parties resorted to the court to resolve certain issues, the government was engaging the parties to speed up the process towards unitisation.

That notwithstanding, the minister said, the ministry was committed to ensuring that the issues were resolved expeditiously to enable the unitisation of the fields for optimum recovery of petroleum from the fields for all parties.

He said the ministry was working hard to ensure that there was optimum recovery of petroleum through activities that conformed with international best practice.

The 30 percent, appeal & arbitration

In May this year, the Commercial Division of the Accra High Court ordered the operators of the Sankofa Oil Field to preserve 30 percent of all the revenues which will be accrued from the field until the final determination of a legal dispute relating to it.

Per the order of preservation, the 30 percent revenue must be paid by the operators, (Eni Limited and Vitol Upstream Limited) into an account agreed by all the contesting parties, which was appealed by Eni Ghana but lost.

Eni Ghana then 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 E&P, a wholly Ghanaian upstream player.

The issue is still at arbitration and it is unfortunate for the ranking member to suggest that government is likely to pay judgment debt when the case is yet to be decided.

I am therefore urging the people of Ghana and stakeholders in the oil and gas industry to remain calm.

Let's ignore the rants of the minority in parliament seeking to create fear and panic in our ever-growing and flourishing oil and gas industry and the government in their effort to make Ghana a place of choice for oil and gas business.

Thank you and God Bless you all.

Paul Twum-Barimah

Member of Mines & Energy Committee

NYA/FNOQ