Ghanaian Oil Co. hit with sanctions in discovery fight

By Joyce HANSON

A Texas federal judge has slapped sanctions against an African energy company after finding that it lied in Ghanaian court about a discovery dispute related to a case in Ghana, saying attorney fees and costs are appropriate in relation to several proceedings.

U.S. District Judge Keith P. Ellison on Tuesday imposed the fees and costs sanctions against Ghanaian company Springfield Exploration & Production Ltd. following allegations lodged by Italian oil giant Eni’s Ghanaian unit, Eni Ghana Exploration & Production Ltd., claiming that Springfield misrepresented the nature of the related Texas dispute to the Ghanaian court.

“The court finds that the imposition of sanctions against Springfield pursuant to the court’s inherent powers to be appropriate based on [a] finding of bad faith,” the judge wrote.

The sanctions of attorney fees and costs are related to Eni Ghana’s motion to modify a protective order, a bid by Springfield’s counsel to withdraw from the proceedings, and the sanctions proceedings themselves.

On Tuesday, however, Judge Ellison declined to vacate the protective order while also finding that “modest sanctions are appropriate.” He asked Eni Ghana to submit a brief saying the amount of costs and fees it is owed, along with documentation.

Eni Ghana had instigated the Texas proceedings to procure production of a report prepared by Gaffney Cline & Associates Inc., which purportedly found that a Springfield oil field in Ghana had a large untapped reserve and thus proved the commercial viability of a joint undertaking that would unite two fields owned by Springfield and Eni Ghana, respectively, Judge Ellison said.

The original respondents in the Texas proceedings initiated by Eni Ghana were Gaffney Cline and its parent company, British oil services company Baker Hughes Co. Springfield later intervened. Judge Ellison granted Eni Ghana’s bid for production of the report in August 2022.

“However, Springfield refused to produce the Gaffney Cline report or the data the report relied on in reaching its conclusions, preventing Eni Ghana from challenging Springfield’s assertions,” the judge wrote.

Gaffney Cline and Baker Hughes eventually produced the report, but the judge said he issued a protective order because the resulting documents contained proprietary commercial information.

Eni Ghana had agreed to try to file the evidence under seal in any subsequent litigation, but the parties disagreed over what should happen if the Ghanaian courts rejected its motion to file under seal, Judge Ellison said.

“Eni Ghana contended it should be able to file the documents anyway, while Springfield argued that it should be prevented from filing the documents if they could not be sealed,” the judge wrote.

3udge Ellison ultimately sided with Springfield and issued the protective order in May 2023.

Just a month earlier, Eni Ghana had asked the Texas federal court not to stay its case seeking to compel Baker Hughes to hand over the records pertinent to the dispute over the oil reserved discovery in courts abroad, slamming the stay as “baseless” and “highly prejudicial.”

Eni Ghana and another oil company, Vitol Upstream Ghana Ltd., in April 2023 filed an opposition to Springfield’s emergency motion to stay pending its appeal over discovery of its documents. Judge Ellison denied the motion that same month, saying Springfield had not shown a likelihood of success on the merits.

In particular, Eni and Vitol had been trying to get access to the report prepared by Baker Hughes’ unit Gaffney Cline & Associates analyzing the commercial viability of the oil discovery central to the Ghanaian case.

Eni and Vitol said that the district court held that they’re indeed entitled to the discovery they’re seeking, but then Springfield intervened and appealed. With its motion for a stay, Springfield is just trying to further delay production of those materials, a move that could render the court’s order moot, Eni and Vitol said.

Eni and Vitol lodged their petition in the Southern District of Texas in July 2022. They said they invested $6.2 billion to develop an offshore oil and gas project that includes the Sankofa Cenomanian Oilfield.

In the courts of Ghana, Eni and Vitol are fighting “purported directives” from Ghana’s Ministry of Energy ordering them to jointly develop, operate and share the proceeds from the Sankofa oilfield with a new offshore oil discovery they call the “Alina Discovery.” They said the directives could mean a multibillion-dollar windfall upon the two owners of that discovery: Springfield and Ghana’s state-owned oil company, the Ghana National Petroleum Corp.

They added that there has yet to be any appraisal of the Afina Discovery, an essential component of establishing commerciality.

Eni and Vitol said in their April 2023 filing that it was “telling” how hard Springfield was fighting to withhold evidence about the Gaffney Cline report.

“The logical inference is that the undisclosed information is harmful to Springfield’s case on unitization,” they said.

Counsel for Eni Ghana and Vitol Upstream declined to comment Wednesday. Counsel for Baker Hughes, Gaffney Cline and Springfield didn’t immediately respond to requests for comment.

Eni Ghana Exploration and Vitol Upstream Ghana are represented by Luke A. Sobota of Three Crowns LLP.

Baker Hughes and Gaffney Cline are represented by Edwin S. Gault Jr. and Caroline Upchurch of Forman Watkins & Krutz LLP.

Springfield Exploration is represented by 3iII Carvalho of Burke Law Group LLP.

The matter is In re: Ex Parte Application of Eni Ghana Exploration & Production Ltd., case number 4:22-mc-01285, in the U.S. District Court for the Southern District of Texas.

–Additional reporting by Hailey Konnath. Editing by day Jackson Jr

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