Adnan Adams Mohammed
Government of Ghana has withdrawn the compulsory unitization directives imposed on ENI Ghana and Springfield in relation to the Afina-1X Discovery and the Sankofa Cenomanian Oil Fields.
This follows President John Mahama’s earlier instructions given to the minister to withdraw the Unitization Directives a fortnight ago during ENI’s President visit at the Jubilee House and further consultations and dialogue with relevant stakeholders.
The Minister of Energy and Green Transition in a statement issued last week indicated that government will explore options for coordinated development within and near the WCTP 2 contract area and continue to support Springfield as an Indigenous Ghanaian Exploration & Production Operator to commercialize the Afina discovery which has proven to have potential to add to Ghana’s reserves of oil and gas. However, the withdrawal of the Directives is without prejudice to the power of the Minister to issue new directives where necessary for the equitable and efficient development of Ghana’s petroleum resources.
“It is also note-worthy that the appraisal of the Afina discovery has revealed the potential for substantial gas resources which would enhance Ghana’s energy security and sustainability”, John Abdulai Jinapor said in the statement.
“The government will work with Springfield and other contractors nearby to monetize these gas resources in an expeditious manner.”
Meanwhile, ENI Ghana has welcomed the decision of the Minister to withdraw the Unitization Directives in relation to the Sankofa oil field issued in 2020.
ENI has further indicated that in line with the Government’s objectives, it remains committed to leverage its portfolio of innovative projects, seizing new opportunities both in the traditional and transition energy sector, while strengthening domestic energy security and sustainability.
Consequently, the government reiterates 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.
The withdrawal decision of the Minister follows a thorough review of the Arbitral Award referenced SCC Arbitration U2021/114 (ENI & Vitol v. Ghana & GNPC) dated 8th July 2024, and the legal opinion provided by the Attorney General and Minister of Justice.
While the Ministry acknowledges the Tribunal’s findings that while the issuance of the Directives breached the Petroleum Agreement due to the specific circumstances of their implementation, the concept of unitisation itself was not deemed inherently unlawful.
“This provides Ghana with the flexibility to determine the most appropriate course of action in the national interest”, the minister noted.
Currently, the Petroleum Commission is evaluating the appraisal report of the Afina 1X well as the government believes that the Afina field has the potential for a future unitization or a development on its own. Government has confidence in Afina’s potential as a future unitized field or a tie back to an existing infrastructure for development.
Although, government acknowledges that the Tama field, which is on the Springfield block, holds 1.2 TCF of gas and can greatly contribute to the country’s energy security. It encourages both ENI & Springfield to keep the door open for negotiations to determine an amicable and commercially optimal solution.
The decision is expected to assuage the worries of international oil companies, many of whom saw the unitization directive as a form of oil nationalism by Ghana since it effectively assigned a large proportion of ENI’s proven reserves to locally owned Springfield before the latter had met international standards in proving that its own discovery is as large as it claims.
The government remains open to dialogue with its partners aimed at charting the best way forward in the sustainable exploitation of its natural resource endowments.
