The Public Interest and Accountability Committee (PIAC) has raised concerns about the recent arbitration ruling on the unitisation of the Afina and Sankofa oil fields. PIAC says the outcome could slow down the development of Ghana’s upstream oil sector and delay important projects.
In July 2024, an international tribunal ruled that Ghana broke its Petroleum Agreement with Eni Ghana and Vitol Upstream Ghana. The tribunal found that Ghana’s directive to combine the Sankofa and Afina fields into one operational unit was issued too early. There was not enough technical evidence to prove the two fields shared a reservoir, which is required under Ghanaian law for such a decision.
The Ministry of Energy issued the directive in 2020 to maximize oil recovery and make operations more efficient. Unitisation, a common practice in the oil industry, is used when oil reserves cross boundaries. It helps prevent waste and ensures fair sharing of profits. However, Eni Ghana disagreed with the directive, arguing it was not supported by strong technical evidence. This disagreement turned into a legal battle, leading to the tribunal’s ruling.
In its latest 2024 semi-annual report, PIAC described the arbitration ruling as a big concern for Ghana’s oil sector. It warned that disputes like this could slow progress in developing the industry and reduce its economic benefits for the country.
While the tribunal supported Ghana’s right to mandate unitisation, it stressed that such decisions must follow the law and be based on thorough technical studies. The tribunal dismissed a $915 million damages claim against Ghana, which was a relief, but the unresolved conflict has left valuable resources untapped and raised questions about how the sector is being managed.
The Afina field, discovered in 2019 by Springfield E&P, was seen as a major success for Ghana’s oil sector, with reserves estimated at over 1.5 billion barrels. The Sankofa field, operated by Eni, plays a key role in Ghana’s energy production, supplying oil and gas for domestic power generation. Combining the two fields was expected to improve efficiency and increase revenues, but the arbitration has delayed these plans.
Industry experts agree with PIAC’s concerns. They say the arbitration highlights problems with how rules are applied and creates uncertainty for companies. They believe that clear and consistent rules are essential for the oil and gas sector. Long delays and disagreements, they warn, could slow down progress and make it harder for Ghana to grow its oil industry.
