Oil exploration Springfield has accused Italian oil firm ENI as the uncooperative party in the Unitization talks of the Afina and Sankofa Oil fields.

This concern was captured in statement issued the Springfield on the current unpassed surrounding the unitization of the two oil fields.

Springfield in the statement noted since April 2020 when the directive was issued for the two fields to be unified, talks have been ongoing among amongst various government institutions on one hand and Springfield, with “Eni being the only uncooperative party in the said talks”.

Springfield however noted that it welcomes the latest stances of ENI, adding that; “We hope that ENI translates its statements into action by coming to the table for productive discussions to enable the parties complete the unitization process” Springfield added in the statement.  

Background 

The Energy Minister then Peter Amenu in an April 9, 2020 letter directed Eni SpA and Springfield E&P to begin talks to combine their adjacent oil and gas fields.

The letter then told the two companies to begin, within 30 days, the process leading to the unitization, or joint operation, of the two fields in order to ensure efficient production and gave them 120 days to provide the ministry a draft agreement.

However, it appears the move have stalled. Already some think tanks in various articles have argued that the country is losing millions of dollars because of the delays.

ENI is a recent release maintained that it is committed to the process, adding that they are working with the relevant authorities to find what it describes as mutually accepted solution to enable the country to capitalise on the Afina discovery.

Springfield on commitment to the process

 According Springfield the statement was to correct some inaccuracies and innuendoes which has made it imperative to set the records straight to clarity the position and give the public a fair and accurate perspective. 

It maintained that as far as it’s concerned, it has been and will remain a willing, cooperative party to the unitization of the Afina-Sankofa fields. It added that they have even taken the necessary steps to actualize the said directive and has consistently pushed for an early resolution of all the challenges to executing the directive.

Unitization Process

It has been stated in some publications that “….unitization needs to follow an appropriate, shared work programme and evaluation process to assess the elements before taking decisions”. 

But Springfield noted that erroneous as it is not the position of the law. Any process or principle for unitization must ultimately conform to the laws of the nation, Ghana. Per the laws of Ghana, the sole requirement for the unitization of fields is when an accumulation of petroleum extends from the boundaries of one contract area into another.

Springfield on the Appraisal issues raised

Springfield also described as erroneous certain publications that claim “the unitization process for Afina and Sankofa field would entail an appraisal programme of the Afina area including (but not limited to) production and interference tests”.

It noted in a statement noted that this is inaccurate. This is because a key objective of appraisal activities is to delineate fields and know how far they extend.

“Thus, appraising a field would apply to the entire petroleum accumulation and not just a portion of it,” it added

The oil exploration firm noted that “with the Afina and Sankofa fields already established as a single unit, the drilling of Afina-1 fulfilled the appraisal objective as it proved that the Sankofa field extends further into the Springfield operated area”.

Cost and liability issues

It has been stated in some of the publications that “….each party must first pay its share of the costs of producing hydrocarbons from the unitized field in order to have a right to the oil produced and proceeds from the production”. 

However, Springfield in the statement noted that is a misrepresentation of the process. “Past production from the unitized field must also be re-allocated to the Parties in accordance with their respective interests in the unitized field,it added.

It also noted that per industry practice reconciliation of past costs and past revenue from production will be conducted to determine the entitlement of the Parties to past revenue vis-à-vis past costs.

 Since Springfield is entitled to a significant participating interest in the unitised Afina and Sankofa field, a full-fledged audit has to be conducted to ascertain all past costs (Opex and Capex) incurred and all past revenues collected from the sale of hydrocarbons to date and apportion the costs and revenues to each party proportionately.