Pay 30% revenue into escrow account – High Court orders Eni, Vitol

The Commercial Division of the Accra High Court has ordered the operators of the Sankofa Oil Field to preserve 30 per cent of all the revenues which will be accrued from the field until the final determination of a legal dispute relating to it.

Per the order of preservation, the 30 per cent revenue must be paid by the operators (Eni Limited and Vitol Upstream Limited) into an account agreed by all the contesting parties.

“This court will order that the 30 per cent of all funds, revenue and money earned or to be paid to and /or accruing from the exploration and production by the defendants from the Sankofa Oil Field shall be preserved in the interest of the parties and be deposited into an interest-bearing account with a bank to be agreed between the parties,” the court ordered in the interlocutory suit.

The court, presided over by Justice Mariama Sammo, gave the order last Friday after it upheld in part an application by Springfield Ghana Limited, the plaintiff in the legal dispute.

Upheld in part

Springfield had wanted the court to order the preservation of all funds that had accrued from the field since it initiated the suit early this year.

Justice Sammo, however, ruled that such a preservation would be too wide in scope.

Firstly, she ruled that the preservation could only come into effect as at the time the order was given (June 25), and not the time the suit was filed.

Also, she held that Springfield was only claiming part of the Sankofa field, and, therefore, it would not be fair to preserve all the expected revenues from the field.

A wholesale preservation, she held, would mean the operators of the field would not have access to funds for their operations and recurring business expenditure.

Again, it was her considered view that the defendant must pay statutory payments and royalties to the government, which it could not do, if the entire revenue was preserved.

Exception

In view of that, Justice Sammo ordered that the preservation would be 30 per cent of all revenues with the exception of funds to be used for statutory payments and royalties to the government.

She further ordered that in the event the plaintiff succeeds, the money would be shared among the parties in a ratio determined by the court.

“In the event the plaintiff action fails upon the final determination of the suit, the funds preserved together with the accrued interest shall be released to the defendants,” the court ruled.

Dispute

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

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

It is the case of Springfield that 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.

Springfield argues that the defendants were dragging its feet and had failed to comply with the directives of the minister.

Reliefs

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..