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By Ekow Dontoh and Yinka Ibukun in 11/12/2020
The Ghanaian government is forcing Eni SpA to merge its Sankofa offshore oilfield with a neighboring discovery made by a national explorer and imposing its own terms on the deal, according to a letter seen by Bloomberg.
The West African country’s government is seeking to maximize the recovery of oil resources, and the move comes after Italian oil company and Accra-based Springfield Exploration and Production Ltd. missed a deadline to reach a an agreement to combine the fields, Energy Minister John -Wrote Peter Amewu in a letter dated October 14.
Within the oil industry it is common to combine nearby fields that turn out to be part of the same geological structure. The process, known as unification, distributes resources among licensees in proportion to their share of initial discoveries, enabling more efficient development of resources using a shared infrastructure.
However, Eni had opposed the unification of Sankofa, which operates in a company with Vitol Holding BV, with the Afina field in Springfield. The Italian company said Springfield had not sufficiently proven its discovery to show that it shares a deposit, the ministry said in another letter in April.
As of October 14, the two companies had not made significant progress in working together, making it “obvious that (they) do not intend to comply with Ministry of Energy directives,” according to the October 14 letter, which it was addressed to Eni and Springfield.
“The Minister of Energy now imposes terms and conditions for the unification of the Afina and Sankofa fields to ensure optimal exploitation and recovery of Ghana’s oil resources,” Amewu wrote.
Eni will be the unified area operator, according to the letter. A copy of it was shared by two people with knowledge of the matter, who requested not to be identified because the information is not public.
Springfield said in December that Afina has 1.5 billion barrels of oil in place. According to Eni’s website, Sankofa has reserves of about 40 billion cubic meters of natural gas and 500 million barrels of oil.
A spokesperson for the Energy Ministry declined to comment when contacted by phone.
“Eni is in contact with all relevant stakeholders, including the relevant Ministry in Ghana, to define a way forward and assess any potential unification cases in accordance with applicable law and international good oil practice,” said the Italian company. in a statement.
Kenneth Noonoo, Springfield’s manager of corporate affairs, said by email that “this is a proud and unique moment.”
“We look forward to working with Eni as the unified field operator to maximize production and economic benefits for all stakeholders, including the government and citizens of Ghana,” he said.
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