"Senegal licensing round now losing momentum With revision of...

"Senegal licensing round now losing momentum
With revision of Petroleum Code stalled and recovery of acreage proving complex, government will struggle to launch auction next month"

The prospect of Senegal launching a licensing round in March, as desired by President Macky Sall, are receding because little progress has been made in revising the country's Petroleum Code.

It also remains unclear what, if any, acreage can be recovered from smaller players that are unwilling to relinquish.

An overhauled oil and gas law, replacing the 1998 Petroleum Code, will be a pre-requisite for Sall's preferred policy of bringing in more majors and state-owned oil giants to join BP and Total in participation with national oil company Petrosen.

Senegal has no time now for small players coming in only to flip the acreage, said Energy Minister Mansour Elimane Kane, who took up the post last August, having earlier headed the World Bank’s Multilateral Investment Guarantee Agency. “The new law will allow the government to work directly with the majors who will develop and produce our resources, rather than relying on juniors who would seek to sell out immediately after exploration. From this year on, all new contracts shall signed with majors,” Kane said.

A petroleum revenue management bill is also being considered but that, too, had yet to be presented to the National Assembly because it would provide for absolute transparency and seek to establish a Sovereign Wealth Fund, said Kane.

He said gas-fuelled industrial growth and power generation lies at the heart of government policy, aiming to distribute cheap fertiliser to farmers and sell excess power to other countries in the region — a similar ambition to that professed by neighbouring Mauritania. Kane and his Head of Hydrocarbons Aminata Toure — an ex-Petrosen geologist — have been trying to ease out smaller non-performing players, while Petrosen, under the stewardship of veteran oilman Mamdou Faye, has been trying to contain the damage caused by what is claimed to have been previous administrative neglect.

Still, there is little chance of freeing up a full selection of acreage any time soon because most minnows are in talks with farm-in partners and lenders, while those whose applications for first period extensions were either rebuffed or ignored are in no mood to roll over without a fight.

Letters of revocation issued last year by former energy minister Alassane Thierno Sall, allegedly without due process, have been contested by at least two players while Petrosen’s attempt to press the reset button by cajoling operators to re-apply for their own acreage has had marginal success.

Even out in undemarcated waters beyond currently allocated acreage, Total’s deal last year to study the exploration potential of the ultra-deep — in addition to its controversial award of the Rufisque Deep against vehement objection from incumbent African Petroleum — would strongly suggest the French major has secured right of first refusal.

It is possible a final draft of a new law may fall under parliamentary scrutiny this summer, but available acreage looks less likely to emerge. No round can be launched with the threat of arbitration and trespass suits hanging over the play.

http://www.upstreamonline.com/hardcopy/1427217/senegal-licensing-round-now-losing-momentum