After extracting the first barrel of oil from Sangomar, Senegal is planning to market its hydrocarbons. Here is how these recipes will be managed…
By Bocar SAKHO – It’s another day that has dawned in Sangomar. President Faye yesterday received a sample of the first drops of oil produced in Senegal on the sidelines of the Council of Ministers. Diomaye expressed prayers for Senegal so that this oil “brings prosperity, peace and harmony”. To chase away the curse of hydrocarbons. “I received today (yesterday), from the hands of the Minister of Energy, Petroleum and Mines, a sample of the first oil extraction from the Sangomar field. A small step on the long road that remains to be taken. Our satisfaction will only be complete when all of Senegal’s resources are equitably beneficial to the Senegalese people. According to the Constitution, in its article 25-1: “Natural resources belong to the People. They are used to improve their living conditions.” We are committed to it, we are working on it and we will do it,” notes Bassirou Diomaye Faye.
This Monday, the Australian company Woodside Energy brought out the first barrel of oil from the depths of the Sangomar field, which brings Senegal into the circle of black gold producing countries. If the future prospects are encouraging, it is essential to know the distribution of revenues from this oil exploitation.
Today, the government hopes to optimize its fossil fuel reserves to meet Senegal’s major needs for economic development and access to energy. This strategy will be guided by the volatility of oil prices in the international market.
In Sangomar, a windfall of 700 billion CFA francs is expected for the Senegalese government, which will undertake its own financial modeling of this money. As part of the management of this money, the State has put in place a revenue distribution key: the General Budget, the Intergenerational Fund and also the Stabilization Fund. In detail, a maximum of 90% intended for the annual budget, a minimum of 10% for the Intergenerational Fund, held by the State and managed by Fonsis. It is intended to keep savings available for future generations to ensure their development after the end of resource exploitation, with investments in projects that can produce long-term returns.
While the Stabilization Fund, which aims to protect Senegal from the risks of volatility in hydrocarbon revenues, is funded by the surplus of… revenues observed at the end of each quarter. It results from the difference between projected revenues and those actually collected. However, it can be invested in the general budget, in the event of an unfavorable fluctuation in hydrocarbon prices, after the adoption of a finance law. In any case, these two mechanisms each have an investment committee.
For the State, there are investment needs to enhance human capital, the structural transformation of the economy, the strengthening of security, stability and governance, and the financing of public debt. For the country, oil profits would constitute the most important source of public revenue, followed by corporate taxes. This will be a breath of fresh air for the authorities. A few weeks ago, the International Monetary Fund (IMF), which is completing its mission in Dakar this Thursday, called into question the budgetary framework for the current financial year, by asking the Senegalese authorities to review the copy of the 2024 budget, in the sense of drastically reducing revenue forecasts. Indeed, the IMF considers that the expected revenues from oil exploitation will not be there. The hopes of revenue which boosted the budget for the year 2024, with strong additional revenue for this year, have vanished.
You should know that the Sangomar field is one of the vast deposits discovered off the Senegalese coast in recent years. There is the announced exploitation of natural gas from the Cayar block, 65 kilometers northwest of Dakar, whose reserve estimates are estimated at around 1,400 billion m³ of gas intended mainly for local consumption. Without forgetting the Gta shared with Mauritania, also estimated at 1400 billion m³ of gas.
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