FPSO Leopold Sedar Senghor. The production platform for Senegal’s first oil production.
Senegal has become an oil and gas producer for the first time after it announced extraction of its first oil at the Sangomar deep-deep-water project off its coast on June 11.
In total, the up to $5.2 billion project will encompass 23 wells, including 11 production wells, 10 water injectors and two gas injectors in phase one, although a 12th production well will be drilled in the current campaign, Woodside, the Australian energy company handling the project, said.
The company, which also has assets in Namibia and the Republic of Congo, holds an 82% stake in the project, alongside state-owned Petrosen with 18%. It pumped 513,000 boe/d across its global portfolio in 2023.
The West African nation is on the brink of becoming one of the world’s fastest-growing economies as it also prepares to launch the $4.8bn Grand Tortue Ahmeyim liquefied natural gas (LNG) project.
President Bassirou Diomaye Faye, speaking to students on the same day, said that the earnings would be “well managed”, and that an “inter-generation fund” had been set up for the benefit of “your generation and those to come”, the AFP news agency quoted him as saying.
Woodside described the extraction of oil from the field as a key milestone for the company and the nation. The company aims to produce 100,000 barrels of oil per day and is expected to generate billions of dollars for Senegal and boost its economy.
Thierno Ly, the general manager of Petrosen, said the nation had entered a “new era”.
“We have never been so well positioned for opportunities for growth, innovation and success in the economic and social development of our nation,” he said.
Mr Faye has been keen on renegotiating the deal as part of reforms he promised during his election campaign.
Senegal’s move to renegotiate oil and gas contracts has been a major objective of the newly elected government and analysts say it has sparked fears among investors in the project, but government supporters say it is vital for the country to increase its stake in projects so that the nation benefits from its natural resources.
Prime Minister Ousmane Sonko recently insisted that contracts signed by previous administrations were ”unfavourable” to the country, and would be reviewed.
“We’re the ones who promised you we’d renegotiate the contracts, and we’re going to do it. We’ve started already,” he was quoted as saying in an address.
It is not clear if a renegotiation of the contract has commenced, but the government’s insistence on taking such steps would likely mean a re-evaluation of its stake.
“To boost the state’s revenue from oil and gas, it’s necessary to renegotiate the contracts to increase the state’s shares and change the system of sharing of production,” said Ngagne Demba Toure, an oil adviser to Faye.
“Renegotiating contracts doesn’t mean that the state will impose itself on the companies without taking the law into consideration, but that the two parties agree to discuss some clauses of the contract”, he said.
