Eni refuses to comply with directives by Ghana’s Ministry of Energy
Eni and Springfield have been an at impasse over unitisation talks
The Supreme Court, on Tuesday, November 16, 2021, dismissed Eni and Vitol's application for special leave to appeal the court of appeal's affirmation of the High Court's ruling to deposit 30% of the revenue from the sale of crude oil from the Sankofa field into an interest-bearing account.
According to the court, the reasons adduced by Eni and Vitol were insufficient as they failed, in the estimation of the court, to state any special circumstances or reasons for leave to appeal.
Therefore, by December 2021, Eni and Vitol have no option but to comply with the High Court ruling and retrospectively pay the 30% from 25th June 2021 into the bank account.
This, in monetary terms, amounts to an estimated $240million for the period in question.
The ruling comes after yet another decision by a High Court on October 26th that denied Eni’s application for a review of the government’s April 2020 directive on the unitization of the Sankofa and Afina Fields.
In that ruling, the Trial Judge was emphatic that the Minister of Energy acted within the Petroleum Law in issuing the directive. He, therefore, did not err in going according to what the law stipulates.
Beyond the Courts in Ghana, Eni’s is before an International Court of Arbitration seeking almost the same reliefs so far rejected by the Ghanaian Courts. This raises questions about how their case against the government will fare, given that Courts of Arbitration rarely overturn national laws and regulations by which parties have agreed to abide.
In July this year, a three-member Court of Appeal rejected a similar request by the two companies, Eni and Vitol, to stay execution of the order to make the payments and affirmed the decision of the High Court saying ‘the order by the Trial Court ought not for the time being be disturbed pending the determination of the substantive appeal.
The Court noted that sufficient cases had not been made by the applicants, Eni and Vitol, to warrant the grant of the applications.
It said "we have read and re-read the ruling of the learned Trial Judge and in particular, examined the reasoning behind the ruling she gave. We have come to appreciate the matters the Trial Judge took into consideration in arriving at the decision".
The Commercial High Court had on June 25 ordered Eni and Vitol Upstream Limited to set aside 30 percent of oil proceeds from the Sankofa Field’s production in an escrow account to be agreed by the feuding parties, pending the final determination of an application filed by Springfield E&P.
The Supreme Court having made pronouncements on the matter, the Appellants’ only remaining option, according to legal experts, is to appeal to the same court for review of its decision, a rarity and a route which some advice against.
The position held by Springfield is in agreement with the law, but the question is, in anticipation of a potential partnership with ENI, how long can the legal tussle continue.
Springfield filed the suit following Eni’s refusal to comply with directives by Ghana’s Ministry of Energy for the parties to unitise the Afina and the Sankofa Fields operated by Springfield and Eni respectively.
The Minister at the time [John Peter Amewu] is said to have imposed the directive in April 2020, to optimize the benefits because the data showed that the two fields were one and same, but this has not come to fruition based on different positions taken by the parties.
Springfield sought among other reliefs an order directed at the Defendants to comply with the directive issued in the letter of April 9, 2020 to enter into an agreement forthwith with the Plaintiff to produce and develop the accumulation of petroleum in the Sankofa and Afina Fields as a single unit.
Eni and Springfield have been an at impasse over unitisation talks