Court of Appeal dismisses ENI, Vitol case against 30% revenue preservation
The court in a unanimous decision dismissed the appeal describing it as unmeritorious and awarded a cost of GH₵10,000 against ENI and Vitol.
The Court of Appeal has dismissed an appeal by ENI and Vitol Ghana Exploration and Production Limited and Vitol Upstream Ghana Ltd. which sought to set aside an order by the High Court for 30% of all funds, revenue, and monies accruing from the exploration and production of petroleum to be preserved in an escrow account.
This was a June 2021 order by Justice Mariama Sammo in an action instituted by Springfield Exploration and Production Limited against ENI and Vitol
Springfield has a contractual right to the exploration and production of petroleum over an area known as the West Cape Three Points 2 Block (WCTP-2) whiles ENI and Vitol have contractual rights to the exploration and production of petroleum over an area known as the Offshore Cape Three Points Block(OCTP).
The contract areas of Springfield and the ENI and Vitol, cover two fields in their respective contract areas. These fields are the Afina Fields and the Sankofa Field on the other hand thus sharing a common boundary.
Springfield thus contended that it is a statutory requirement in section 34 of the Petroleum (Exploration and Production) Act 2016 (Act 919) that where an accumulation of petroleum extends beyond the boundaries of one contract area into another contract area, the relevant contractors must enter into an agreement to develop and produce the accumulation of petroleum as a single unit.
As a result, the Minister of Energy, John Peter Amewu, the then Minister of Energy Mr. John Peter Amewu directed the Springfield and the two(ENI and Vitol) to enter into a unitisation agreement for the purposes of developing and producing the accumulation of the petroleum straddling in both fields as a single unit
It was thus Springfield’s concern that ENI and Vitol had not complied with this directive from the Minister and have continued to produce petroleum which comes from their straddling contract areas and are enjoying the income, proceeds, funds, revenue, or monies earned from the production of petroleum from this common pool, to its exclusion thus prayed the High Court inter alia for;
An order for the preservation of funds, revenue and monies earned, paid to and/or accruing from the exploration and production of petroleum by Defendants from the Sankofa Field and
An order directed at Defendants to comply with the directive issued by the Minister of Energy in his letter of 9th April 2020 and enter into an agreement forthwith with the plaintiff to produce and develop the accumulation of the petroleum in the Sankofa and Afina fields as a single unit.
The High Court thus upheld Springfield’s plea thus granting the 30% preservation order by ENI and Vitol pending the final determination of the suit.
Subsequently, after ENI and Vitol had continuously failed to comply with the above directive, Springfield again went back to the High Court thus the court per its January 24, 2022, decision, ordered ENI Ghana Ltd and Vitol Upstream Ltd to pay 30 percent of revenue from the scale of crude oil to the Court Registrar. The amount involved a US$ 40 million to be paid monthly, starting from the date of the original ruling of June 25, 2021, until the determination of the substantive matter. This amount was to be paid into an escrow account by the Registrar, and records of same made known to parties.
Meanwhile, ENI and Vitol had gone to the Court of Appeal seeking to reverse and set aside the June 2021 order but the court has in a unanimous decision dismissed the appeal describing it as unmeritorious, and awarded a cost of GH₵10,000 against ENI and Vitol.