CAPE TOWN, Oct 9 (Reuters) - Senegal has delayed the launch of an oil and gas licensing round due on Wednesday until Nov. 4 as contract documents still need to be finalised, oil minister Mahamadou Makhtar Cisse said.
“We need to ensure the legal framework for investors,” he told Reuters on the sidelines of an oil and power conference in Cape Town.
Senegal’s ambitions to become a major oil and gas producer have been overshadowed by allegations President Macky Sall’s brother was involved in fraud related to two offshore gas blocks being developed by BP.
Asked whether the scandal had dented investor appetite, Cisse told Reuters “We have not measured a negative impact.”
Prosecutors in Senegal launched an inquiry in June, and the president’s brother Aliou Sall resigned from his government post following the allegations reported by the BBC.
Senegal, where oil was discovered in 1961, expects all its offshore projects to come online between 2022 and 2026, the minister said.
According to the International Monetary Fund, between 2014 and 2017, oil and gas reserves worth more than 1 billion barrels of oil and 40 trillion cubic feet of gas, most of it shared with Mauritania, were found.
“Discoveries are important but will not lead to a major transformation of the economy, with hydrocarbons expected to make up not more than 5 percent of GDP,” the IMF said in a January country report.
Two large fields in Senegal are currently being developed - Australia’s Woodside Energy is developing the SNE field and BP the Greater Tortue Ahmeyim project.
Woodside’s general manager for Senegal reiterated that the company expected to take a final investment decision (FID) on phase one of the SNE field by December.
“We are intending to secure an FID by the end of the year and we propose to commercialise the first oil in 2022,” he said of a project requiring estimated capital expenditure of around $3 billion.
Geraud Moussarie, BP’s Senegal country manager, said their Mauritania-Senegal offshore discovery, which has already reached FID, “has a good place in our portfolio because we see it as a new basin, unexplored, with tremendous potential.”
The new licensing round will be open for six months and will seek developers for ten to twelve offshore fields, Mamadou Faye, managing director of national oil company Petrosen told Reuters.
He said some of the new oil production would be sold and refined locally by Societe Africaine de Raffinage (SAR), Senegal’s refinery.
“This refinery will be upgraded to process up to 1.6 million tonnes of oil a year from around 1.2 million tonnes now,” he said - a project expected to cost $70 million.
SAR eventually plans to reach a capacity of 2.5 to 3 million tonnes a year, another official said.
Faye said the state was also considering building a second, larger refinery capable of refining complex crudes at a cost of billions of dollars.
“The plan is to have the second refinery operational in 15 years, so around 2035,” he said.
The IMF forecasts growth of around 6.9 percent in 2019 for Senegal, rising to 11.6 percent in 2022 when first oil is expected to flow.
Kosmos Energy, a U.S.-listed oil and gas exploration company, said last month the results of its appraisal drilling offshore Senegal were good enough to consider a second liquefied natural gas (LNG) export plant in the country.
(Reporting by Helen Reid and Wendell Roelf, editing by Louise Heavens and David Evans and Kirsten Donovan)
Casting a spotlight on exploration and production in Africa’s oil and gas sector, the first day of the Africa Oil & Power conference (https://AfricaOilandPower.com/) and exhibition concluded with a panel discussion on Africa’s upstream sector.
Moderated by NJ Ayuk, Executive Chairman of the African Energy Chamber, the panel invited Robin Sutherland, General Manager of New Ventures at Tullow Oil; Kevin Vorhaben, Africa Unit Business Manager, Noble Energy; Geraud Moussarie, Country Manager, BP; Bongani Sayidini, CEO of PetroSA and David Grislain, Senegal Country Manager for Woodside Energy to discuss the future of exploration and production in Africa.
NJ Ayuk facilitated the conversation through various topics, including the competitiveness of Africa’s upstream sector on a global scale, whether the sector is indeed entering a new era, what makes Africa’s upstream attractive, what is holding the continent back, where the biggest opportunities in the sector are, how the continent can attract further investment, and how private investors can participate in Africa’s greater vision for its economy.
Responding to the leading question: “what makes Africa attractive?” the panelists agreed that it is important to look at African countries individually and study their geological terms in comparison to their fiscal terms in order to understand the performance of the upstream sector and were it stands on the global stage.
On collaboration and maintaining business in Africa, BP’s Geraud Moussarie, using the Grand Tortue Ahmeyim project as an example, said relationships between investors and the national oil companies are essential. “Dialogue, partnership and commitment from the two partners was tremendous,” he said, referring to the GTA project in particular and adding that, “for a big project to work the companies and national oil companies have to stay committed.”
Representing South Africa’s national oil company, PetroSA, Bongani Sayidini said that although the country is currently inactive in the sector, it is watching and learning from its neighboring countries who are making great progress.
“While we are not actively drilling, we are watching what the industry is up to,” he said. Also explaining that while PetroSA has not yet been in discussions with Total regarding its plans for the Brulpadda discovery, it is also keen to see what the French major does with the discovery and where it takes the sector.
Addressing the SADC regions reaction to the natural gas trend on the continent, Sayidini noted that: “the biggest challenge in the SADC region is that the gas market is not that developed and there are very few markets that are developed.”
In discussing how to make E&P work in Africa, the panelists provided their visions for the Africa’s E&P’s sector. “For Woodside, in the next five to ten years, we are focusing on commercializing the SNE phase 1 project and of course, SNE 2, SNE 3. So, it is full steam ahead for us,” said Woodside’s David Grislain.
“We are very very excited to be now in ten different countries in Africa, our focus is the MSGBC which has a special place for us being a new basin with lots of potential and lots of gas and we will work closely with the government to make it a very competitive basin”, said Moussarie.
“We are committed to Africa; I know we recently had a discovery in South America but that is because the geology is similar to Africa where we feel very much at home. We have a long history of opening bases that were deemed to be non-productive by others,” said Tullow Oil’s Robin Sutherland
The Africa Oil & Power conference and exhibition continues until October 11. Learn more at www.AOP2019.com
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(20min delay)