Dragging Eni and Springfield Unitisation Deadlock into 2022 Unfortunate – Expert

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Eni
Eni

Dr Yusif Sulemana, a petroleum expert and senior oil production specialist at the Petroleum Development of Oman, has described as unfortunate the drag in the unitisation deadlock between Eni and Springfield into 2022, indicating that while in-depth dialogue is needed that is not enough to put the issue to rest but credible data remains the panacea.

Both parties have taken on extreme postures; while Eni believes the two fields are not straddling, Springfield believes otherwise, and although some field data has been provided by Springfield, however, that has not yielded positive results. It has been ‘stubbornly’ difficult to get a credible third-party assessment of the unitisation of the Afina and Sankofa fields.

Indeed, negotiations are far advanced and the President of the Republic has indicated willingness to ensure that the supposed unitisation impasse is resolved, this appears not to have materialized and is expected to drag into the coming year.

The proposed unitisation between Eni and Springfield Group is the second unitisation in the last five years of commercial production of oil in the country. In 2017, Kosmos Energy and Tullow Oil plc engaged in the unitisation of the Jubilee field but the processes involved did not escalate into an Eni/Springfield styled impasse.

Then, the unitisation cost of about US$1.9 million was agreed upon to integrate the Teak, Hyedua and Mahogany discoveries into the Jubilee field’s production and floating vessel in order to extend the field’s lifespan and increase its commercial reserves.

In fact, no one ever thought the proposed unitisation impasse would go as far as into its second year since the unitisation directive was issued in April 2020 by the then Minister of Energy including the multiple court issues witnessed in the past year.

According to Dr Sulemana, ample data should be sought after by both parties and as the data justifies the need for unitisation or not, that would help in the agreement, he said. Indicatively, on account of data, two things must be done: “a static data and a dynamic data”.

“A seismic data has to be available to actually prove that these two reservoirs are connected but that may not be enough”. Yet still, the fact of making this data available does not guarantee that the two fields are straddling. Because sometimes, some reservoirs are connected but there is no migration of fluid between the concession areas. That’s how critical these situations are. So, it is possible that a seismic data on the surface could show that the two blocks are connected, it is also possible that internally or downward the two fields are not commuicating.

“Secondly, we need to do fluid migration test which is classified as a dynamic data. In that case, we need to drill a well along the boundaries, especially at Springfield’s side. We need to drill the well, complete it and run a gauge through the well, monitor and potentially contract an independent party to also monitor; this could go a long way to bring matters to a rest.

“Unitisation and court issues is not a good thing and I just would have wished that this issue was solved out of court. However, where it has reached, it is almost clear that the waters are getting muddied and if care is not taken it would impact both parties and at the end of the day Ghana would be the loser.”

Already, the stakes are high, given the fact that investments into the sector is dwindling, with climate change activists ‘spying’ on foreign investors and International Oil Companies (IOCs) to restrain possible investments into the sector.

Without these steps taken, the coming year may result in another series of court issues or unfortunate incidences of either of the parties opting to exit, which action may also have implications on investor sentiments.

Government must take these into consideration and help deal with the data issues related with the proposed unitisation. Ghana’s upstream oil and gas industry holds promise for the future, and these situations should not be allowed to mar the good fortunes within the sector.

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