Ghana court orders Eni to freeze slice of Sankofa revenues amid unitisation dispute with Springfield

A court in Ghana has ordered that a slice of revenues from the Eni-operated Sankofa offshore field be placed into an escrow account, thereby granting a request made by domestic operator Springfield, which was part of an ongoing field unitisation dispute between the two oil companies.

The decision brings Ghana and Springfield one step closer to developing Afina, a deepwater oil discovery located in the offshore West Cape Three Points Block 2 (WCTP 2) off Ghana.

Springfield’s Afina discovery, made back in late 2019, is adjacent to Eni’s producing Sankofa field and is the subject of an ongoing dispute between the two companies after it was determined last year that the same reservoir straddles both Eni’s Sankofa field and Springfield’s Afina discovery. The Sankofa field, located in the Offshore Cape Three Points (OCTP) block, has been producing since 2017 through the John Agyekum Kufuor FPSO. 

After it was discovered that the two fields share the same reservoir, the Ghanaian government in April last year gave Eni and Springfield a chance to hammer out a unitisation agreement or the country’s minister of energy would stipulate the terms and conditions of the agreement. 

As the two companies failed to reach an agreement, the government of Ghana in October 2020 imposed its own terms and conditions for Eni and Springfield E&P to ensure optimum exploitation of the Afina and Sankofa fields.

According to a November 2020 statement by Springfield, the government of Ghana declared the two fields unitised with Afina holding 54.545 per cent of the combined field and Sankofa having the remaining 45.455 per cent. At the time, the combined field was producing circa 58,000 barrels of oil per day, with a potential to expand to circa 115,000 barrels of oil per day.

On Friday 25 June 2021, a Commercial High Court sitting in Accra ruled in favour of Springfield’s application to freeze 30 per cent of revenues received by Eni and its partner Vitol from the sale of crude oil from the Sankofa field.

Namely, Springfield had asked the court to preserve Sankofa revenues until the unitisation agreement is reached with Eni and each company gets its share.

The payment amounts to approximately $40 million a month, which will be directed to an account agreed by both parties, Springfield said in a statement on Monday. The decision is already in effect. 

Commenting on the ruling, Kevin Okyere, CEO and founder of Springfield, described it as a “welcome vindication of Springfield’s position on the issue of unitisation and a positive result”. He said that the company was forced to take the legal route following Eni’s reluctance to follow the Minister of Energy’s directive and for all parties to reach an amicable resolution to this unfortunate impasse. 

Okyere added “Springfield is not interested in stalling ongoing crude oil production on the Sankofa field, and believe in fairness and justice for all, irrespective of their size and position. The consequences of this case for the Ghanaian oil industry will be systemic and immediate”.

Springfield believes that, in light of last year’s market challenges and energy transition, Ghana cannot afford to delay development of a flagship project capable of contributing significantly to the state’s coffers and ultimately improve the standard of living of Ghanaians.

Okyere concluded: “Springfield looks forward to working with Eni as the operator of the unitized field in maximizing the production and the economic benefits for all stakeholders, including the Government and citizens of Ghana”.

Offshore Energy has reached out to Eni, seeking comment on the court’s decision. A spokesperson for Eni said: “We are waiting to receive the full detailed ruling of the Court and review same in order to establish the impact it could have on our current operations. We fully expect to take the appropriate steps necessary in order to protect our operations in the country, including appealing against this ruling”.

Springfield believes that the ruling could open the way for constructive negotiations and swift agreement in the interest of all parties, including the State, the Ghana National Petroleum Corporation, and hard-pressed stakeholders in the country’s nascent energy industry.

The Afina-1, located at a water depth of 1030 metres, was drilled to a total depth of 4085 metres and encountered light oil with a gross thickness of 65 metres, with 50 metres of light net oil pay in good quality Cenomanian sandstones.

The Afina discovery doubled the already existing proven oil reserves of the Block to 1.5 billion barrels and added 0.7tcf (trillion cubic feet) of gas to the existing discoveries.

Springfield is the majority interest holder (84 per cent) of West Cape Three Points Block 2, with the Ghana National Petroleum Corporation and its exploration company, EXPLORCO, holding the remaining stake.