After several years of delays, the Woodside company announced on Tuesday June 11 that it had started exploitation of the Sangomar offshore deposit located off the coast of Dakar. With a daily production of 100,000 barrels, Senegal is now a member of the restricted circle of hydrocarbon producing countries in Africa. The country also expects an annual added value of around 700 billion FCFA which should be good for its economy. But there remains the “curse” of oil to which is added, in the African context, the ignorance of the production circuit.
Connection in Abidjan, Bati Abouè
It is a historic day, announced the Australian Woodside Energy group which welcomed, on Tuesday June 11 in a press release “the safe completion of the production of the first barrel from the Sangomar field” 100 km off the coast of Dakar . The Senegalese government has rather refrained from official comment but we can imagine the fresh air that this news brings, since the entry into production of the Sangomar oil field should bring in some 700 billion FCFA annually to the national budget.
In the eyes of Thierno Ly, general manager of Petrosen Exploration and Production, “the start of extraction from the Sangomar field marks the beginning of a new era, not only for the industry and economy of our country, but especially for our people”, while the boss of the Australian company, Meg O’Neill, speaks of a “historic day for Senegal and for Woodside”. It comes after a long wait, since the discovery of the vast Senegalese oil and gas deposits in the Atlantic dates back to 2014. And as happiness never comes alone, this first extraction of Sangomar precedes the entry into production, from the third quarter, from Grand tortoise/Ahmeyim (GTA), to the border with Mauritania. Developed by the British BP with the American Kosmos Energy, the Mauritanian Hydrocarbons Company (SMH) and Petrosen, this project should produce around 2.5 million tonnes of liquefied natural gas per year and place Senegal in 5th place among the countries gas producers on the African continent in a context of the Russian-Ukrainian crisis which has increased the world price of hydrocarbons.
A sector to audit
The production of both raw materials is intended for export and the domestic market. It is, obviously, below the levels of global and African giants, notably Nigeria. But the projected revenues should help the accelerated transformation of the Senegalese economy which needs a second wind. The new president Bassirou Diomaye Faye has also made no secret of his intention to audit the mining, gas and oil sector to enable his country to garner the maximum resources that can enable it to create the jobs that young people are looking for. Senegalese. Senegalese Prime Minister Ousmane Sonko also reaffirmed on Sunday the desire to review these contracts. “It was we who promised you that we were going to renegotiate the contracts and we are going to do it, and we have already started,” he declared in front of the young people of his party gathered in Dakar.
The first production phase of the Sangomar oil field consists of a floating production and storage unit. This is connected to underwater infrastructures, designed in anticipation of later phases of development. In total, 21 of the 23 wells, including 11 production, 10 water injection and 2 gas injection wells, must enter production, said the boss of the Australian company.
Leonine clauses
Renegotiation of gas and oil agreements is never a simple task. In an interview given on March 19 to the Bloomberg news agency, former President Macky Sall estimated that the contracts “can be improved, but that denouncing contracts already signed with companies is not possible. (In addition), it would be disastrous for Senegal,” he insisted. The most notable of the difficulties that will stand in the way of the new Senegalese authorities is that “there are no explicit clauses which provide for renegotiations in oil contracts” but, on the other hand, there are “clauses which regulate possible disputes,” explained oil expert Ibrahima Bachir Dramé, quoted by AFP. But in the eyes of Papa Demba Thiam, international economist and industrial development specialist interviewed by AFP, the renegotiation of these contracts is entirely possible. According to him, “40 to 92% of contracts are (generally) renegotiated over a period ranging from 1 to 8 years” after their signature. And since according to the Senegalese constitution, “natural resources belong to the people and must benefit them”, Papa Demba believes that “all the conditions are met to justify a renegotiation of these contracts” as the Senegalese Executive duo wishes.
But whatever happens, oil resources still benefit almost exclusively from Western multinationals which have the financial resources essential to influence the content of contracts. According to the monthly Jeune Afrique, the cost of operating the Senegalese gas field, initially estimated at $3.6 billion, ultimately exceeded $9 billion. However, faced with them, African countries do not always have qualified local personnel to effectively control the production circuit of these precious minerals. So it is the operator’s declaration that is generally authentic. To this reality, we must also add that of African administrations which ensure that the production of oil or gas, instead of helping to get populations out of the rut, ostentatiously enriches local oligarchs.
