Senegal - Big Changes, page-10

Hi All

There is nothing like rock-throwing protest crowds to focus one's attention on the geopolitical risks inherent in African business ventures.

With the looming oil and gas billions set to underpin Senegal's future, the fact that the first rock was hurled six years in advance of the first oil should concentrate the minds of Government and operators alike to the risk mitigation task ahead. Put bluntly, the trough is still being dragged into place and yet the queue of thirsty drinkers has begun the squabble.

In this climate, FAR's Government relations and community standing are paramount to its own future. Remember those soccer balls? In bypassing his Energy Minister, President Sall has moved swiftly to bring O&G developments under his direct control. His relationship with his former company, the government-owned Petrosen, will ensure it is Sall pulling the strings as Senegal approaches the twin towers of Tortue and SNE. In turn, those companies that have developed close ties with Sall, and that can evidence the financial clout and urgency required to bring assets to production, will be best placed to win political favour. FAR's mystery backers - rumoured elsewhere to be Blackstone and Total - now become even more critical to its future. If those are in fact our benefactors, this will carry enormous weight with the Government and would assuredly see SNE development plans waved through as long as Total/FAR are in, er, total control. That would be assured if FAR can PE COP's full 35% as the FAR/Total/Petrosen troika would own roughly 65% of the field.

The Government is clearly already under pressure to secure a larger share of O&G revenues for its populace. It will also need plenty of cash to develop the security infrastructure needed to defend the nation against the inevitable tide of extremists drawn to the honey pot of hydrocarbon riches. FAR has oft trumpeted the terms it secured with early mover advantage; it remains to be seen whether those terms might be varied at the whim of this or a future Government less disposed towards the trail-Blazers that made wealth possible.

Ah, geo-political risk. Don't you just love it.

By the way, it could be said that these Government announcements - which have much broader ramifications than simply the bypassing of an Energy Minister - qualify as Malcy's "big news out of Senegal". Couldn't it?

Twenty million traded on Friday. Pressure building. The time clock ticking ever nearer an announcement of significance. The shorters - whomsoever they might be and whatever their motives - will surely need to act soon to buy back or attempt to buy out. The latter option, in my view, would be bound to fail.

Gut feel says some news next week. And no, I have not spoken to a single Chinese: It is simply a gut feel.

OOO