The ongoing impasse between Eni SpA and Springfield, having dragged for the most part of the year is unlikely to see the dust settle anytime soon, and may linger into 2022 as negotiations between Eni and the government remain inconclusive.
These negotiations started off following a court directive that required Eni’s grievances are settled out of court, after Eni SpA filed an application to nullify the unitisation directives issued by the Ministry of Energy.
Both parties- Eni SpA and Springfield have hurled each other to the courts to have the unitisation agreed upon; however, from all indications Eni continues to push against the directive.
Despite having been awarded exploration and production license on the Tano Basin offshore block in July 2019, ENI and its partner Vitol have had to tussle with Springfield and the Ministry of Energy on the proposed unitisation since 2020.
It all began in April 2020, when the then Minister of Energy, Mr John Peter Amewu, in accordance with Section 34(1) of the Petroleum (Exploration and Production) Act, 2016 (Act 919), directed ENI and Springfield to execute a unitization with respect to the Sankofa field in the OCTP and Afina discovery in the WCTP contract areas.
Equity, Key in Unitisation Agreements
While unitisation has been practised across the world for years, and has been found as a possible means by which oil companies and host countries can maximize the benefits from existing oil fields, the issues transcend just this; equity lies at the heart of the success of unitisation agreements. Concerns raised by Eni SpA have to do with doubts about the credibility of Springfield’s data on its Afina discovery.
Already, the stakes are high, given the fact that investments into the sector is dwindling, with climate change activists ‘spying’ on foreign investors and IOCs to restrain possible investments into the sector.
Without managing this situation in the most careful manner, an escalated situation could end up in the oil company exiting the country’s upstream petroleum sector, following Exxon’s exit style. Besides, Eni SpA is named among the list of top five European IOCs having no intentions to develop unsanctioned reserves in the country. And is currently divesting some of its oil businesses into renewables.
Dr Yusif Sulemana, a Petroleum expert is cited to have said that “there is a greater potential that it could repel investors actually. But it all depends on how we as a nation handle the situation because it is a delicate situation.
“We have other players who are closely monitoring and government should try and be a referee in this case. The stakes are high in this situation. And so, once the stakes are high everybody will be looking into this situation to see how it’s going to be resolved.”Dr Yusif Sulemana,
It would be regrettable to lose such an oil giant in the country’s upstream oil and gas sector, as that will mean that the country will be left with Tullow Oil Plc as the only dedicated oil giant in the upstream sector.
Should that happen, this may delay the national oil company’s operatorship role as the nation seeks to ride on the back of existing operators such as Eni SpA, and others to gradually drive this agenda.