Eni/Vitol case: Tribunal dismisses $7bn claim against Ghana
The London Court of International Arbitration has given its final ruling in the commercial dispute in which Eni S.p.A. and Vitol is seeking the annulment of the imposition of the unitisation terms on the consortium.
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The consortium of Italian and Swiss investors, Eni/Vitol, was also seeking $7 billion claims against Ghana and its national oil company, the Ghana National Petroleum Corporation (GNPC), which holds carried interest in any oilfield on behalf of the state.
The Tribunal found that “the unitisation directives in the circumstances in which they were issued" were wrongful. Specifically, it found that the imposition of the unitisation terms was wrongful, and that the determination of the initial tract participation was arbitrary.
However, the Stockholm Chamber of Commerce Tribunal in London denied the claimants their monetary damages of $7 billion, and subsequently reviewed it to $900 million plus interest by the end of the proceedings.
The Tribunal also dismissed the claims against GNPC in their entirety. In addition, the Tribunal dismissed the claimants’ invitation to the Tribunal to declare that Ghana breached the Petroleum Agreement by “refusing to withdraw or prevent reliance by third parties on the unitisation directives.”
Regarding allocation of fees and costs, the Tribunal held that since both parties had prevailed in some ways, the parties would be required to pay their own legal fees and costs.
However, the Tribunal held that Ghana should pay 50 per cent of the amount paid by claimants to the Swedish Chamber of Commerce, which amounts to €189,000.
GNPC was, however, not ordered to pay any amount at all.
The claimants were denied any interest in respect of the costs of €189,000.
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A-G satisfied
Reacting to the award, the Attorney-General (A-G) and Minister of Justice, Godfred Yeboah Dame, indicated that while he would have wished the Tribunal to uphold the claim of the Republic in its entirety, he was pleased to note that it rejected partly the claims against Ghana, and entirely the claims against GNPC.
He is also delighted by the complete dismissal of all claims for monetary compensation made by ENI/Vitol against Ghana.
Going forward
Mr Dame added that in the circumstances, the parties must determine the best way to proceed going forward. “Unitisation in principle, is not unlawful per the Tribunal’s decision. It is the manner and the circumstances in which same was carried out which the Tribunal frowned upon, while granting Ghana the benefit of not having to pay any monetary compensation,” the A-G said.
Mr Dame added that the country had the option to accept the award or to initiate proceedings to set it aside in the Swedish courts within two months. The Daily Graphic has started the process to speak to representatives of Eni/Vitol consortium.
In April 2020, the Minister of Energy directed that the Afina oil block held by Springfield E&P and Sankofa Field operated by Eni and Vitol should be unitised because the two oil blocks were said to straddle.
The directive required that an agreement be reached for the development and production of the blocks because the accumulation of the petroleum in the Sankofa and Afina fields were a single unit.
However, Eni refused to heed the directive, insisting that both appraisal and commerciality had to be established before any unitisation process could take place. In June 2021, the Ghanaian oil and gas exploration and production company, Springfield, won a ruling at the Accra High Court (Commercial Division) ordering the Italian-Swiss oil and gas consortium, ENI and Vitol, to set aside 30 per cent of oil proceeds from the Sankofa Field in an escrow account, pending the final determination of an application filed by Springfield E&P.
Dissatisfied with the directive and ruling, the consortium triggered the jurisdiction of the International Tribunal on September 1, 2021.