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Senegal tussle for operator
Barry Morgan
16 Mar 2018 00:00 GMT

African Petroleum has contracted the services of a Paris-based law firm to advise on its contractual rights to two production sharing contracts off Senegal, Rufisque Offshore Deep (ROD) and Senegal Offshore South Deep (SOSD), which the government is seeking to withdraw, writes Barry Morgan.

The first renewal period for SOSD expired on 15 December but the company claims to have lodged an application in good time to proceed to the next phase, requesting to exchange an outstanding well commitment for a 3D seismic programme.

African Petroleum said it has received no response to its application and also notes with regret that French major Total has reportedly commenced seismic acquisition on ROD to which it still claims title, despite the Senegalese government moving to re-allocate the acreage.

“Formal notices of dispute were lodged in January for both licences with the Senegal authorities and parties have three months under the terms of the PSCs to resolve the matter — after which there are arbitration provisions that can be utilised by African Petroleum to protect its interests,” the company said.

While observers think it unlikely the Oslo-registered explorer will retrieve ROD, there may be room for manoeuvre if the government restores title to SOSD and African Petroleum pulls back the threat of arbitration.

If no compromise is reached before 18 April and arbitration begins, there might be repercussions for the wider play — where the government is keen to shore up perceptions of contract sanctity ahead of a licensing round.

A similar problem has begun to affect licensing ambitions in nearby Gambia, where processing of applications for open acreage under the licensing exercise launched in January have all but ceased.

Gambia’s Minister of Energy & Petroleum Fafa Sangyang had hoped to reallocate deep-water blocks A1 & A4 by the end of February, but African Petroleum has indicated unwillingness to let go easily.

African Petroleum has just announced progress in appointing arbitrators at the International Centre for the Settlement of Investment Disputes over its title to A1 and A4, but said it “remained open to engaging in constructive dialogue to achieve a satisfactory solution”.

On the Gambian side, Justice Minister Ba Tambadou has reportedly taken over the case and is said to be pushing for an amicable settlement.

In Sierra Leone, the company has entered the second extension periods for ultra-deep licences SL-03-17 and SL-4A-10 but has yet to commit to drilling.