Ghana withdraws controversial oilfield unitisation directive after arbitration ruling

The Ghanaian government has officially withdrawn a directive that compelled the unitisation of the Afina-1X Discovery and the Sankofa Cenomanian Oil Field, following an international arbitration ruling that found flaws in its implementation.

In a letter signed by the Minister for Energy and Green Transition, John Abdulai Jinapor, the Ministry cited procedural shortcomings identified by an arbitral tribunal in the case ENI & Vitol v. Ghana & CNPC (SCC Arbitration U2021/114) as the basis for its decision.

The unitisation directive, issued in 2020 by the previous government, required Springfield Exploration and Production Limited (Springfield) and Eni Ghana Exploration and Production Limited (ENI) to merge their oilfields, with Springfield taking a 55% stake in the combined asset. However, the arbitration tribunal ruled that:

1. The directive lacked a statutory basis under Section 34 of the Petroleum (Exploration and Production) Act, 2016 (Act 919) and Regulation 50 of the Petroleum (Exploration and Production) (General) Regulations, 2018 (LI 2359).
2. The allocation of participation interests was arbitrary and not supported by sufficient evidence.

While the tribunal acknowledged the potential value of unitisation in principle, it determined that the specific directive breached the Petroleum Agreement due to its flawed execution.

The Ministry of Energy stated that while the directive has been withdrawn, the Minister retains the power to issue new directives in the future if evidence supports the need for unitisation to ensure the equitable and efficient development of Ghana’s petroleum resources.

The government also reaffirmed its commitment to fostering a stable investment climate in the upstream petroleum sector while ensuring adherence to the country’s legal and regulatory framework.