September 20, 2021

Senegal is Running as New Member of Oil & Gas Producer Club

The new regulation of the oil activity in Senegal and the extensive experience, extensive know how and references in the Austrian petrochemical sector make up the ideal moment to position yourself.Senegal

For more than six decades, Senegal has attracted the interest of companies in the oil and gas sector. Although more than 140 wells had been drilled offshore since the 1950s, the resources found did not seem to meet the standards of the companies in the sector. This image changed dramatically when Britain’s Cairn Energy announced two simultaneous exploration successes at the end of 2014. Subsequently, at the beginning of 2016, interest increased with the discovery of gas carried out by the US company Kosmos Energy in the Tortue block, located on the border with Mauritania.

“The reform of the current Petroleum Code of 1998 is imminent”

Currently, all forecasts suggest that Senegal will become an oil producing country between 2021 and 2022 . With an expected production of between 100,000 and 125,000 barrels of crude oil per day, the Ministry of Economy estimates show an expected annual growth rate of 9.4%, with an increase of 52 billion dollars in national GDP . According to Senegalese geologist Fady Ndao, author of the book “L’or noir du Sénégal” the gas potential would allow the country to enter the top 10 African producers.

Along the coast of the country, the offshore blocks of Sangomar, Great Tortue, Saint Louis, Cayar, Rufisque, AGC and Senegal Sud Profond stand out. These are operated respectively by large oil multinationals such as Cairn, Woodside, Far, BP, Kosmos, Total or Petronas. It should be noted that the state-owned company Petrosen holds a 10% stake in each of the blocks .

On the other hand, importation, refining, storage, transportation and distribution of hydrocarbons were liberalized in 1998 . This sub sector includes companies such as Total, Vivo and Oilibya, which are the main clients of the Societe Africaine De Raffinage Senegal (SAR). This refinery is one of the largest in West Africa and has supplied butane gas, super gasoline, regular gasoline, kerosene, diesel and fuel to the Senegalese domestic market; and also provides to neighboring countries such as Mali, Mauritania, Gambia, Guinea and Guinea Bissau.

From 600,000 tons of hydrocarbons at the beginning of the activity, the processing capacity increased to 1,200,000 tons per year. However, neither the facilities nor the capacity of the Senegalese refinery are optimal to cover the production expectations of the coming years. Currently, this refinery located in Mbao is being remodeled. Likewise, the construction of a new plant capable of managing all the production that is about to arrive has already been considered.

“If there is a clear moment to position yourself in the Senegalese Oil & Gas market, it is now”
With regard to the regulation of oil activity , the reform of the current Petroleum Code of 1998 is imminent. The bill of the new Code has already been approved by the Council of Ministers and will enter into force once it is validated by the National Assembly and promulgated by the President. The objectives of this reform, the third since the independence of the country, are clear: update the tax provisions, strengthen the environmental provisions and add legislation on hiring local workers, as well as the preparation of bidding procedures for the award of futures blocks . The Senegalese Government’s concern for the sector has increased in recent years. Proof of this is the creation at the end of 2016of the Strategic Orientation Committee of Oil and Gas ( COS-PETROGAZ ) , in charge of mobilizing funds, implementing projects and guaranteeing good practices of public institutions.

If there is a clear moment to position yourself in the Senegalese Oil & Gas market, it is now. Currently, the projects are either in the preliminary design phase (FEED) or in the last investment decisions phase (FID). The big international actors of the sector, have already made a hole or are trying and the engineering, epecistas (EPC) and the great local metalworking workshops, try to position themselves as suppliers of products and services, but always with the eye on having partners international as technological support, expand capabilities or outsource parts.

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