Senegal has become an oil producing country. Woodside, which holds an 82% stake in Sangomar, announced that it had produced the first barrel. Oil company officials gave a teleconference in which the issue of contract renegotiation was well raised.
Even before coming to power, Senegal’s new authorities announced their desire to renegotiate oil and gas contracts. Question on which the oil companies working in Senegal had not reacted until now. But, after announcing the production of the first barrel of oil yesterday Tuesday, Woodside, which holds an 82% stake in Sangomar, spoke out on the issue.
“I had the opportunity to meet the Minister of Oil Birame Souleye Diop and it was mainly to take stock of the progress made on Sangomar, but also to reiterate our commitment. And Woodside is really looking to work with the government of Senegal moving forward. It was a very good meeting, a very positive meeting,” said Shiva MacMahom, Woodside’s head of international operations, during a conference call of which iGFM reviewed the transcript.
“WHAT THE MINISTER OF OIL, BIRAME SOULEYE DIOP, TOLD ME…”
She also revealed the speech given to her by Antoine Diome’s successor at the Ministry of Oil: “Minister Diop reiterated and reinforced the importance of respecting contractual obligations by all parties. I know there have been different rumors in the market, but the reality is that, and our experience has shown that, the countries that are most successful are those that have collaborated with industry, respecting the sanctity of contract and those who create a stable investment environment.”
The head of international operations at Woodside said what her company expects from the new leaders of Senegal. And it is essentially respect for the rights of the investor. “We also conduct our business with integrity, work well and support governments that uphold the same values. We know that the Senegalese government is also committed to these principles. We appreciated the President’s recent comments welcoming private partnerships and reinforcing the State’s commitment to upholding the rule of law and protecting the rights of investors. It was a very positive visit and a very positive start to our relationship with the new government.she says.
HOW PRODUCTION WILL BE SHARED
As for the contracts linking Woodside to the State of Senegal, she explains that it is a production sharing contract. And at peak production, 75% of revenues may be spent on cost recovery, including operating expenses, capital expenditures in the execution phase, capital expenditures prior to the decision of the Final Decision of investment (Fid) and royalties paid to the government.
Then, the remaining revenues are shared: the government’s share being 15 to 20% depending on our expected production rates. The income tax that will be applied to the company is 33%, in addition to a branch income tax of 10%. In addition, minor withdrawals and payments will take place, reveals the company manager.
