IES urges government to follow through on unification directive to protect Ghana’s interests

The Institute for Energy Security (IES) urges the government to follow through on its unification directive to protect the country’s interests.

In a press release signed by Nana Amoasi VII, the executive director of IES, on Saturday, the institute said that as long as the government does not prevail over two oil companies – ENI and Springfield – will obey the laws of the country , they will continue to act in violation of the country. petroleum laws and regulations. “

IES said the two companies “failed to comply with the Energy Minister’s directive to unify the Afina discovery and the Sankofa field.”

According to the Institute, “even though the minister’s directive was based on Ghanaian laws and international best practices, a year later the two oil companies have yet to comply with the directive by signing the UUOA to give full effect to the directive – a manifestation of clear disrespect and disrespect for the laws of Ghana.

“These laws provide for the concept of unitization because it prevents physical waste, prevents economic waste and protects the correlative rights (equitable shares) of the parties to the contractual areas.”

He wants the government and the Special Parliamentary Commission on Mines and Energy to act to protect the interests of the state.

He said: “As a stakeholder in both areas and as the custodian of the country’s mineral resources with a lot to lose, it is imperative that the government immediately find a solution to this impasse. Undoubtedly, the longer this unitization delays, the more the country loses revenue.

“Therefore, the IES would respectfully request the government to inform the nation of how it intends to immediately resolve this issue, given the Institute’s interest in the efficient exploitation of the country’s oil resources.”

Below is the declaration

It is certain that Eni Ghana Exploration and Production Limited (ENI) and Springfield Exploration and Production Limited (Springfield) ignored the directive of the Minister of Energy to unify the Afina discovery and the Sankofa field.

In April 2020, former Energy Minister John Peter Amewu wrote to ENI and Springfield, directing them to sign a Unit and Unit Operation Agreement (UUOA), regarding the Afina discovery in the West Cape Three Points (WCTP2) and the Sankofa in the areas of the Cape Three Points (OCTP) offshore contract.

The purpose of the execution of the UUOA is to give full effect to the government directive to unify the Afina and Sankofa fields, and the subsequent imposition of terms and conditions for the unification of the Afina discovery and the Sankofa field. .

The directive follows previous commitments and post-drill data analysis by the Petroleum Commission (PC) and Ghana National Petroleum Corporation (GNPC), which confirmed that the Afina discovery in WCTP-2 and the Sankofa field in the OCTP contract areas were one and the same. That is, the Cenomanian reservoir of Sankofa extended into the area of ​​the WCTP-2 contract.

As a result, and in accordance with the law, the minister ordered Springfield and Eni to begin the process leading to unification and provide him with a draft UUOA within 120 days of his letter.

Even though the minister’s directive was based on Ghanaian laws and international best practices, a year later the two oil companies have yet to comply with the directive by signing the UUOA to give full effect to the directive – a manifestation of disrespect and manifest contempt for the laws of Ghana.

These laws provide for the concept of unitization because it prevents physical waste, prevents economic waste and protects the parties’ correlative rights (fair shares) over the areas of the contract.

The government and the special parliamentary committee on mines and energy must therefore act to protect the interests of the state. Until the government convinces ENI and Springfield to obey the country’s laws, they will continue to act in violation of the country’s laws and oil regulations.

While the country remains indifferent and watches the two oil companies delay the implementation of the country’s directive, the state risks losing heavily in the form of a significant drop in the operating and investment costs of the unitized fields. , as well as an increase in royalties and taxes. , Additional Oil Rights (AOE), Charges and Levies.

It is a fact that unification will lead to maximum economic benefits for the state and the parties involved in the production of unified accumulation. These benefits would derive, among other things, from the sharing of development infrastructure, thus lowering production costs through economies of scale and operational efficiency gains and, ultimately, improved yields. economic.

In addition, unitization aims to maximize the ultimate recovery of oil from the fields according to the best technical or engineering information.

Urgent action is required from the government as time is of the essence to maximize the exploitation of the country’s hydrocarbon resources for the benefit of citizens. It must act quickly to efficiently harness its fossil fuel resources as quickly as possible ahead of the “green” revolution, focusing more on the renewable energy space.

The Institute for Energy Security (IES) believes that the positions currently held by ENI and Springfield on the government’s directive to the two to unify their respective oil fields have created an impasse. The Institute finds that, although Springfield’s position agrees with the government’s assertion on the proof of a common reservoir, ENI considers that there is no communication of hydrocarbons between the two contractual zones. on the basis of the data available to them.

The IES strongly believes that a workable deal is still possible. In this regard, the government and the special parliamentary commission on mines and energy must intervene and help the parties to engage, analyze their respective data and engage in a possible constructive negotiation.

As a partner of both OCTP and WCTP-2, the Government of Ghana is well positioned to be the catalyst for a fair resolution of the stalemate between Springfield and ENI. As a stakeholder in both estates and custodian of the country’s mineral resources, the government can still play the role of mediator to help the two companies overcome resistance to a viable solution.

As an interested party in both fields and as the custodian of the country’s mineral resources with much to lose, it is imperative that the government immediately find a solution to this impasse. Undoubtedly, the longer this unitization delays, the more the country loses revenue.

Therefore, IES would respectfully request the government to inform the nation of how it intends to immediately resolve this issue, given the Institute’s interest in the efficient exploitation of the country’s oil resources.


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