International oil giant Eni says an order by an Accra High Court for it to set aside 30 percent of revenue from the production of oil from the Sankofa field in a bank account until the determination of a suit filed by Springfield, a Ghanaian exploration firm, will deprive the company of revenue for future investment.
Eni and its partner Vitol, in a notice of arbitration filed against the government and the Ghana National Petroleum Corporation (GNPC), said the High Court’s interim application against the oil company for the preservation of revenues generated by Sankofa field is imposing a significant constraint on the company’s ongoing use of funds derived from the project.
The Italian oil company said it believes the Springfield proceedings are not expected to be determined until late 2022 or 2023 at the earliest.
“The substantial prejudice inflicted by the Preservation of Funds Order on the claimants’ interest is compounded by the fact that all current revenues are devoted to meeting operational costs and repaying historical investment costs,” Eni and Vitol said in the arbitration notice.
“It bears emphasis that this substantial interference with the claimants’ business and assets is all premised upon Ghana’s unlawful purported directives, which are the subject matter of this arbitration,” the companies added.
The commercial court, which ordered earlier this year that 30 percent of Sankofa revenues be placed in an escrow account, said its decision would protect the interests of Springfield while allowing Eni to continue operating and cover costs.
Springfield, which operates the Afina oilfield neighbouring Eni’s Sankofa offshore field, had asked the court to preserve revenue from Sankofa until a deal was reached to combine the projects.
However, Eni said it has appealed the Preservation of Funds Order on various grounds, adding that the decisions of the Ghanaian courts in the Springfield proceedings to date raise serious and legitimate concerns about whether it will have access to effective justice in the country.
Background to the case
In April 2020, the Ministry of Energy in a letter signed by the former Minister, John Peter Amewu, directed Eni and Springfield Exploration to unitise their fields—Sankofa and Afina.
The decision resulted from a series of engagements and analysis of post-drill data, which showed that the Afina discovery in the West Cape Three Points-2 block, belonging to Springfield, and Eni’s Sankofa field in the Offshore Cape Three Points contract area straddle.