Eni, Vitol committed to OCTP project - After winning unitisation dispute

ENI Ghana Exploration and Production and Vitol Upstream Ghana have received a favourable ruling from an international arbitral tribunal in respect of their unitisation dispute with Ghana over a long-standing opposition to the Ministry of Energy’s unitisation directives. 

The international arbitral tribunal concluded that the unitisation directives were wrong and unlawful and that Ghana's actions breached Ghanaian law and the terms of the Offshore Cape Three Points (OCTP) Petroleum Agreement.

The ruling was also without prejudice to Eni and Vitol’s right to claim damages if the wrongful directives were enforced. A statement issued by Eni Ghana and Vitol yesterday, however, stressed that they remained committed to Ghana and the OCTP project, a flagship project backed by the World Bank, which supplies Ghana a significant share of its gas for domestic use.  

It said Eni and Vitol had consistently maintained their willingness to assess the case for and against unitisation if the process were conducted fairly, transparently and in line with best international practices and Ghanaian law.

The statement said the consortium opposed the process adopted by Ghana because of its failure to meet the applicable legal and industry requirements.

“Eni and Vitol value their relationship with the Republic of Ghana and hope this award will help bring this dispute to a close, thereby allowing all parties to focus on the continued development of Ghana's oil and gas sector,” it added.

Top Ghanaian law firm, Kimathi & Partners, and leading international law firm, Herbert Smith Freehills, advised Eni during the arbitration and its ongoing litigation in Ghana.
 

Background

Eni and Vitol contested the actions of the Republic of Ghana, which had sought to compel a unitisation of the producing Sankofa oil field in OCTP with an adjacent discovery in WCTP2, the Afina discovery, which has not been appraised or tested.

In April 2020, the then 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 was 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.