Inside the Legal Dispute Stalling Investment Flow of Ghana’s Oil Industry

A prolonged legal battle is deeply dampening investment prospects in Ghana's oil sector, Africa Energy Pulse can report. 

The arbitration issue between energy heavyweights Eni and Vitol and the Government of Ghana over oil field development, with no new petroleum deal being secured since 2018. 

The drought, occasioned by the Sankofa-Afina unitisation controversy, has been ongoing for about a decade now as the upstream petroleum sector faces several hurdles. 

The Ghana Chamber of Bulk Oil Distributors (CBOD) also reported this in its 2024 Petroleum Industry Report. 

The report, published on 6 January 2025, noted that the arbitration issue signaled a significant risk to potential investors, making companies reluctant to commit capital while licences remained tied up in litigation.

The report covered total crude oil production of 48.24 million barrels, highlighting a slight decrease from 2023 and approximately 32.5 percent less than 2019 levels. 

The CBOD suggested increased foreign exchange allocations to bulk importers, measures to stabilize the cedi, removal of burdensome taxes on liquefied petroleum gas and promotion of petroleum product exports to save the situation. 

Details about the dispute 

The dispute centered on a 2020 directive from Ghana’s former energy ministry requiring Eni’s producing Sankofa field and Springfield’s nearby Afina discovery to be merged or unitised, a common practice when reservoirs straddle adjacent licence areas.

Eni and partner Vitol opposed the move, arguing insufficient data demonstrated the fields were genuinely connected. The companies argued that the unitisation order breached their petroleum agreement terms and Ghanaian law. 

After mixed results in domestic courts, they proceeded to the matter to international arbitration under United Nations Commission on International Trade Law (UNCITRAL) rules through the Arbitration Institute of the Stockholm Chamber of Commerce.

An international tribunal ruled largely in favor of Eni and Vitol in July 2024, finding that Ghana’s unitisation directives were unlawfully implemented. It determined that Ghana breached its laws and the Offshore Cape Three Points (OCTP) Petroleum Agreement by issuing the directive in circumstances inconsistent with applicable regulations. Meanwhile, the panel affirmed Ghana’s broader authority to unitise oil fields for efficient exploitation when proper procedures are followed.

The tribunal dismissed entirely the claimants’ monetary damage claims, which initially sought seven billion dollars before being revised to 915 million dollars plus interest. The panel also dismissed all claims against Ghana National Petroleum Corporation (GNPC), while preserving Eni and Vitol’s right to claim damages if unitisation directives were enforced in the future. The government subsequently withdrew its unitisation orders in early 2025 after reviewing the tribunal’s decision.

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