The Ministry of Energy and Green Transition has officially withdrawn its directive mandating the unitization of oil fields operated by ENI Ghana Exploration & Production Limited, Vitol Upstream Ghana Limited, and Springfield Exploration and Production Limited.
This decision was communicated in a letter signed by Energy Minister John Abdulai Jinapor and addressed to the Managing Director of ENI Ghana, the Country Manager of Vitol Upstream, and Springfield Exploration and Production.
The withdrawal follows a thorough review of a ruling by the Tribunal in the SCC Arbitration U2021/114 (ENI & Vitol v. Ghana & GNPC) on July 8, 2024, as well as legal opinions provided by the Attorney General and Minister of Justice.
The Tribunal, while recognizing the potential benefits of unitization in principle, identified procedural flaws in its implementation, including:
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Lack of a statutory basis for unitization: The Tribunal found that conditions required under Section 34 of the Petroleum (Exploration and Production) Act, 2016 (Act 919) and Regulation 50 of the Petroleum (Exploration and Production) (General) Regulations, 2018 (L.I. 2359) were not satisfied.
Arbitrary determination of participation interests: The Tribunal ruled that the allocation of participation interests was unsupported by sufficient evidence.
Additionally, the Tribunal concluded that the issuance of the directive had breached the Petroleum Agreement due to the circumstances surrounding its implementation. However, it clarified that unitization itself was not inherently unlawful, allowing Ghana the flexibility to decide on the most appropriate course of action in the national interest.
Citing the discretionary powers vested in him under Act 919 and L.I. 2359, Minister Jinapor formally withdrew the unitization directive.
“The withdrawal of this directive is without prejudice to the power of the Minister to issue new directives upon subsequent evidence that such a measure is required for the equitable and efficient development of Ghana’s petroleum resources,” he stated.
He reaffirmed the government’s commitment to fostering a favorable investment climate in the upstream petroleum sector while ensuring compliance with the legal and regulatory framework governing the industry.
The Minister expressed optimism about continued collaboration with industry stakeholders, stating, “I look forward to continuing our collaborative efforts to advance Ghana’s upstream development goals and strengthen trust with all our partners.”