The Institute for Energy Security (IES) has called on government to ensure that some two oil companies – ENI and Springfield – comply without further delay, its directive to them to unitize their operations.
According to IES, even though the Minister’s directive was founded on Ghana’s laws and international best practices, one year on, the two oil companies are yet to abide by the directive by signing the UUOA to give full effect to the directive.
It said this was a manifestation of clear disrespect and disregard for Ghana’s laws. “These laws make provision for the unitization concept because it prevents physical waste, prevents economic waste, and protects correlative rights (fair shares) of the parties to the contract areas.
“The Government of Ghana and the Parliamentary Select Committee on Mines and Energy must therefore act to protect the interest of the state.
“Until government prevails on ENI and Springfield to obey the laws of the country, they shall continue to act in violation of the country’s laws and petroleum regulations.
“While the country sits unconcerned and watches the two oil companies delay in effecting the country’s own directive, the state stands to lose heavily in the form of significant drop in operational and capital costs of the unitized fields, as well as increases in royalties, taxes, Additional Oil Entitlement (AOE), fees and levies,” IES stated.
IES continued that it was an established fact that unitization would lead to maximum economic benefits for the state, and to the parties involved in the production of the unitized accumulation. These benefits would be derived from, amongst others, the sharing of development infrastructure, thus lowering the costs of production through economies of scale and operating efficiencies, and ultimately improving economic returns.
Additionally, unitization is intended to maximize the ultimate recovery of the petroleum from the fields according to the best technical or engineering information.
“The Institute for Energy Security (IES) finds that the positions presently held by ENI and Springfield on government’s directive to the two to unitize their respective oil fields has created an impasse. The Institute finds that while Springfield’s position aligns with government’s claim of evidence of common reservoir, the ENI holds the view that there is no existence of hydrocarbon communication between the two contract areas based on data available to them,” it added.
The IES said it was of the firm belief that a workable agreement is still possible, adding that government and the Parliamentary Select Committee on Mines and Energy needed to intervene and help the parties to engage, analyze their respective data, and to engage in a possible constructive negotiation.
