The protracted dispute over the unitisation of Ghana’s Afina and Sankofa oil fields has ignited unrest among hundreds of workers at Eni Ghana Exploration and Production Ltd, with concerns mounting over potential job losses and the broader impact on the country’s investment climate.
In a petition addressed to the Minister of Energy, the General Transport, Petroleum and Chemical Workers Union, representing Eni Ghana’s employees, warned that the government’s failure to resolve the unitisation impasse threatens to destabilize the OCTP project and Ghana’s upstream oil industry.
The Union’s intervention comes after the International Arbitral Tribunal in Stockholm ruled on July 8, 2024, that Ghana had breached both domestic law and the OCTP Petroleum Agreement by mandating the unitisation of the Afina discovery in the West Cape Three Points Block 2 Area (WCTP2) and the Sankofa field in Offshore West Cape Three Points Block Area (OCTP).
The tribunal’s decision, which sided with Eni and its partner Vitol, has yet to be enforced by the Ghanaian government. The Union expressed grave concern over what it perceives as the government’s disinterest in implementing the arbitration ruling, raising suspicions of foul play.
“The State’s failure to act decisively is eroding investor confidence and could lead to significant job losses,” the petition stated.
The Union has called for an urgent retraction of the directives issued by the Ministry of Energy in 2020, which mandated the unitisation of the two fields, arguing that this would restore confidence among OCTP Partners and encourage continued investment.
The directives have been a point of contention since their issuance, with Eni and Vitol arguing that they were imposed without proper adherence to legal and technical standards, leading to a protracted legal battle both in Ghanaian courts and at the international arbitration tribunal.
The implications of the ongoing dispute are significant. The OCTP project, once heralded as a key driver of Ghana’s oil production, has seen its output dwindle from an initial projection of 40,000 barrels per day to around 23,000 barrels due to the investment uncertainty.
This decline in production is impacting not only the project’s viability but also the country’s tax revenues, with fewer oil cargoes expected to be lifted by the Ghana National Petroleum Corporation (GNPC) in 2024 compared to previous years.
The dispute has also raised concerns about the broader investment climate in Ghana’s oil and gas sector. The country has not seen any new oil and gas fields developed since the Sankofa field commenced production in 2017, and a competitive bidding round in 2019 failed to yield the expected results, partly due to what investors describe as an increasingly hostile and unattractive environment.
The Union’s petition underscores the urgency of resolving the dispute, warning that continued inaction could have dire consequences for both the workforce and the broader economy. With over 2,000 jobs at stake and the potential for further erosion of Ghana’s standing as a favorable investment destination, the Union has requested a meeting with the Energy Minister on August 26, 2024, to discuss the withdrawal of the unitisation directives and explore ways to stabilize the sector.
The situation remains tense as Eni Ghana, its partners, and the Ghanaian government navigate the complex legal and economic ramifications of the tribunal’s ruling. As Ghana’s oil production faces increasing challenges, the resolution of the Afina-Sankofa dispute will be closely watched by industry stakeholders both domestically and internationally.
The protracted dispute over the unitisation of Ghana’s Afina and Sankofa oil fields has ignited unrest among hundreds of workers at Eni Ghana Exploration and Production Ltd, with concerns mounting over potential job losses and the broader impact on the country’s investment climate.
In a petition addressed to the Minister of Energy, the General Transport, Petroleum and Chemical Workers Union, representing Eni Ghana’s employees, warned that the government’s failure to resolve the unitisation impasse threatens to destabilize the OCTP project and Ghana’s upstream oil industry.
The Union’s intervention comes after the International Arbitral Tribunal in Stockholm ruled on July 8, 2024, that Ghana had breached both domestic law and the OCTP Petroleum Agreement by mandating the unitisation of the Afina discovery in the West Cape Three Points Block 2 Area (WCTP2) and the Sankofa field in Offshore West Cape Three Points Block Area (OCTP).
The tribunal’s decision, which sided with Eni and its partner Vitol, has yet to be enforced by the Ghanaian government. The Union expressed grave concern over what it perceives as the government’s disinterest in implementing the arbitration ruling, raising suspicions of foul play.
“The State’s failure to act decisively is eroding investor confidence and could lead to significant job losses,” the petition stated.
The Union has called for an urgent retraction of the directives issued by the Ministry of Energy in 2020, which mandated the unitisation of the two fields, arguing that this would restore confidence among OCTP Partners and encourage continued investment.
The directives have been a point of contention since their issuance, with Eni and Vitol arguing that they were imposed without proper adherence to legal and technical standards, leading to a protracted legal battle both in Ghanaian courts and at the international arbitration tribunal.
The implications of the ongoing dispute are significant. The OCTP project, once heralded as a key driver of Ghana’s oil production, has seen its output dwindle from an initial projection of 40,000 barrels per day to around 23,000 barrels due to the investment uncertainty.
This decline in production is impacting not only the project’s viability but also the country’s tax revenues, with fewer oil cargoes expected to be lifted by the Ghana National Petroleum Corporation (GNPC) in 2024 compared to previous years.
The dispute has also raised concerns about the broader investment climate in Ghana’s oil and gas sector. The country has not seen any new oil and gas fields developed since the Sankofa field commenced production in 2017, and a competitive bidding round in 2019 failed to yield the expected results, partly due to what investors describe as an increasingly hostile and unattractive environment.
The Union’s petition underscores the urgency of resolving the dispute, warning that continued inaction could have dire consequences for both the workforce and the broader economy. With over 2,000 jobs at stake and the potential for further erosion of Ghana’s standing as a favorable investment destination, the Union has requested a meeting with the Energy Minister on August 26, 2024, to discuss the withdrawal of the unitisation directives and explore ways to stabilize the sector.
The situation remains tense as Eni Ghana, its partners, and the Ghanaian government navigate the complex legal and economic ramifications of the tribunal’s ruling. As Ghana’s oil production faces increasing challenges, the resolution of the Afina-Sankofa dispute will be closely watched by industry stakeholders both domestically and internationally.
Source:norvanreports.com