By becoming an oil producer, “Senegal will have more room to maneuver to transform its economy”

Senegal entered the circle of oil producers on Tuesday June 11. The Australian company Woodside Energy today announced the first extraction from the Sangomar field, around a hundred kilometers off the Senegalese coast, which it operates with the Société des Petroles du Sénégal (Petrosen).

For Benjamin Augé, researcher at the French Institute of International Relations (IFRI), the new executive could “negotiate more favorable future contracts”failing to succeed in reviewing those already signed.

Senegal is now an oil producer. What will this change for its economy?

There will be an influx of new money, on average 700 billion CFA francs, or more than a billion euros per year over a period of 30 years, according to the public company Petrosen, but this will not completely change. the structure of the Senegalese economy. Production still remains low. It is estimated at around 100,000 barrels per day, very far from African giants like Nigeria. This should, however, allow the new power of Bassirou Diomaye Faye to have more room for maneuver to transform the economy, a subject put forward during the electoral campaign.

The new president had promised during his campaign to renegotiate the oil and gas agreements signed under the presidency of Macky Sall. What about it?

We do not easily renegotiate contracts with private companies because there are international rules which guarantee the stability of contracts. In cases where there are contract renegotiations, it is extremely complex and can lead to international arbitrations that States have no certainty of winning.

In the case of Senegal, the contracts that were signed with companies like Woodside Energy, in charge of the Sangomar oil fields, and British Petroleum, for the Grand Tortue Ahmeyim (GTA) offshore gas field, were quite favorable to the sector. private. And for good reason: there was still no development and it was necessary to attract investors. Now, Senegal is moving to another stage: the oil field is known and it can negotiate more favorable future contracts.

Today, what can be done in the case of the GTA gas field is to review the costs. The latter have exploded and some are not necessarily justified from the point of view of the audits which were carried out by the Mauritanian and Senegalese governments.

What about relations between Senegal and Mauritania which share the “Grand Tortue Ahmeyin” project?

The relationship between Senegal and Mauritania has been extremely poor under the presidency of Mohamed Ould Abdel Aziz. Since Mohamed Ould Ghazouani came to power in 2019, the relationship between the two countries has greatly improved. It seems that the two oil ministries work together, as do the two foreign ministries. In any case, they must be absolutely united to renegotiate with BP the costs which have exploded. It is a standoff that is as much legal, technical as political.