Eni is the operator of the Sankofa field, located in the Offshore Cape Three Points block, which began production in 2017. Vitol also holds an interest in the Offshore Cape Three Points block, along with GNPC. Springfield is the operator of the Afina field, located in the West Cape Three Points 2 block. The Afina field is not yet producing. Springfield completed a 3D seismic data valuation and drilled one exploration well, Afina-1x, in 2018. In April 2020, the Minister of Energy issued a directive under section 34 of the Petroleum (Exploration and Production) Act, 2016 (“Act 919”) requiring the Sankofa field and the Afina field to be unitised, on the basis of a purported finding that the accumulation of petroleum in the Afina and Sankofa fields is connected, extending across both blocks, and requiring Eni, Vitol, and Springfield to enter into a unitisation agreement accordingly.

In July 2020, Springfield commenced proceedings against Eni and Vitol in the Accra High Court, seeking, amongst other things, an order compelling Eni and Vitol to comply with the Minister of Energy’s directive to unitise the Sankofa and Afina fields and develop them as one unit, and an order requiring income, profits, and other funds due to Eni and Vitol from exploration and production at the Sankofa field to be paid to Springfield. Eni and Vitol filed applications challenging the capacity of Springfield to enforce the Minister of Energy’s directive and to seek reliefs relating to proceeds or revenue from the Sankofa field. In October 2020, on the basis that the Minister of Energy considered that no significant progress had been made by the parties to voluntarily agree the terms of a unitisation, the Minister of Energy issued a further directive to Eni, Vitol and Springfield imposing terms and conditions for the unitisation. Eni and Vitol contested both directives, including on the grounds that Springfield had not provided sufficient data or supporting evidence to substantiate a finding that: the Sankofa and Afina fields were in dynamic hydrocarbon communication; the Afina discovery was commercially recoverable (in particular, that commercial flow rates could be achieved); or unitisation would be the appropriate strategy for development to ensure optimum recovery. In January 2021, Eni and Vitol issued a notice of dispute under the Offshore Cape Three Points Petroleum Agreement accordingly. In April 2021, Eni and Vitol issued judicial review proceedings in Ghana to challenge the legality of the Minister of Energy’s directives.

On 25 June 2021, the Commercial Division of the High Court in Accra issued a decision following an application by Springfield for interim relief by Springfield, which ordered that 30% of all revenues accruing to Eni and Vitol from exploration and production activities from the Sankofa field must be preserved and paid into an interest-bearing escrow account until the substantive case is determined. Having unsuccessfully appealed the High Court’s preservation ruling, Eni and Vitol, on 16 August 2021, filed a notice of arbitration under the UNCITRAL rules pursuant to the arbitration provisions of the Offshore Cape Three Points Petroleum Agreement. Eni and Vitol assert that the Minister of Energy’s directives to require unitisation (amongst other matters) constitutes a breach of the stabilisation regime under the Offshore Cape Three Points Petroleum Agreement and a breach of Ghanaian and international law, including that it is contrary to the procedure for unitisation set out in Act 919 and the Petroleum (Exploration and Production) (General) Regulations, 2018 (L.I. 2359) passed thereunder.

Eni and Vitol are seeking damages together with a declaration that the unitisation directive and subsequent related directives by the Minister of Energy represent a breach of its petroleum agreement with Ghana and orders preventing all parties from taking further action to implement the unitisation. On 21 October 2021, the judicial review application referred to above was dismissed on the basis that the Minister of Energy’s directives did not fall short of Ghana’s constitutional standard for administrative justice (i.e., the directives were not unfair, arbitrary, and unreasonable). On 20 June 2022, Springfield filed an injunction application seeking to restrain the Ghana National Petroleum Authority, Ministry of Energy and Ministry of Finance from making further payments to Eni and Vitol for gas supplied to the state from the Sankofa field.

The Accra High Court granted the application and directed the injuncted parties to file accounts of all payments they have made to Eni and Vitol to the court. In September 2022, the High Court dismissed both applications, resulting in Eni and Vitol launching separate appeals against the ruling. In June 2023, the Court of Appeal upheld the High Court’s ruling on Springfield’s capacity to commence the proceedings, stating that there was no evidence that precluded Springfield from enforcing its own right pursuant to section 34 of Act 919.

For more insights on the Ghanaian Energy Sector, check out our chapter in the GLI Energy 2024 Guide here