Supreme Court dismisses ENI, Vitol motion against 30% oil revenue payment

The Supreme Court has dismissed a motion by ENI Exploration and Production Ltd and Vitol Upstream Ltd against Springfield Ghana Ltd, in which they were seeking certiorari, to quash a January 24, 2022 decision of the High Court.

Variation Ruling

The particular High Court decision on January 24, 2022, ordered ENI Ghana Ltd and Vitol Upstream Ltd to pay 30 per cent 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.

Preservation Ruling

In its original ruling on June 25, 2021, the High Court, presided over by Justice Mariama Sammo, ruled that 30 per cent of all funds, revenue, and monies earned, paid to, and accruing from the exploration and production of petroleum by ENI Ghana and Vitol Upstream Limited from the Sankofa Field be preserved, and in the interest of the parties be deposited into an interest-bearing account with a bank to be agreed between the parties.

However in their affidavit in support of their motion at the Supreme Court, the applicants, ENI Ghana and partners, Vitol Upstream Ltd argued that the January 24, 2022 order of the High Court, changed the “nature”and “character” of the preservation ruling of June 25, 2021, particularly with regards to the form and terms on which the funds were to be preserved. 

It was also their case that the High Court, by the nature of its January 24, 2022 order, acted in excess of its jurisdiction, “as the High Court does not have the jurisdiction to review its own decisions.”

Furthermore, they also refuted claims by the original plaintiffs (Springfield Ghana Limited), that they refused to comply with the preservation ruling, for which reason the court gave its January 24, 2022 orders. 

In his arguments at the Supreme Court on June 7, 2022, counsel for ENI Ghana, Kimathi Kuenyehia stated that if their application was granted, they could determine the interest and other particulars the two parties agreed on and therefore sought to request the Court to grant the application so parties could go back to the former order, where a time limit may be scheduled for the parties to agree on the bank for the funds to be paid into. 

Likewise, David Adu Tutu Jnr, counsel for Vitol Upstream Ltd stated that if the application is granted, parties can go back to the former order and decide on a bank that saves the money at a lower cost, and also at a higher interest rate. 

However, Thaddeus Sory, counsel for respondents, Springfield Ghana Ltd said the court’s order was clearly an enforcement in which the court had jurisdiction to make consequential orders, and thus it acted in its jurisdiction. He added that the January 24, 2022 order had to be made due to non-compliance by other parties and their lawyer. 

The five-member Supreme Court panel presided over by the Chief Justice, Kwasi Anin Yeboah, with Justice Gabriel Pwamang, Justice Amadu Tanko, Justice Mariama Owusu, and Justice Henrietta Mensa-Bosu as members dismissed the application on grounds that it lacked merit. 

Justices particularly noted that for over a year, the parties have not complied with High Court’s original order. The Court also stated that it deemed the order by the High Court beneficial to parties. 

It, therefore, awarded cost of GHC 5000 each against ENI and Vitol Upstream Ltd. 

Background

The disputed Sankofa Oil Field is part of the Offshore Cape Three Points (OCTP), located on the coast of Western Ghana, with about 500 million barrels of oil reserves, and 40 billion cubic metres of gas. Italian multinational oil giant, ENI is the lead operator in the area. 

Whereas Springfield is the lead operator in the West Cape Three Points (WCTP), with the Afina Field.

According to Springfield, various analysis and tests had shown that the accumulation of petroleum in the Sankofa field extended to its contract area (Afina Field).

In April 2020, 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 unitisation with respect to the Sankofa field in the OCTP and Afina discoveries in the WCTP contract areas.

It is Springfield’s case that the defendants, ENI and its partners Vitol Upstream Ltd, had failed to comply with the directives of the Minister.

In its substantive suit, Springfield is seeking an order from the court directed at the defendants to comply with the Minister’s directive and enter into an agreement with it to make the Sankofa and Afina fields a single unit.

It also wants the court to direct the defendants to cooperate with the plaintiff to develop the two fields into one.

Springfield is further seeking an order from the court directed at the defendants to account for all the revenues accrued to them from the Sankofa Field since 2009 when exploration commenced.

The plaintiff further wants the court to order the payments of all revenue it deserves from the Sankofa Field.