Senegal Eyes 2023 To Kickstart $4.8 Billion BP-Backed Project

According to Oil Minister Sophie Gladima of Senegal, the Grand Tortue Ahmeyim gas field development, straddling the offshore waters of Mauritania and Senegal, is expected to produce its first gas in 2023 following delays related to the coronavirus pandemic.

In response to emailed questions, the two nations and international oil companies BP Plc and Kosmos Energy Ltd. are collaborating on the $4.8 billion project to produce 2.5 million tons of liquefied natural gas per year and 70 million cubic feet of natural gas per day in its first phase, to be shared equally between Senegal and Mauritania, Gladima said.

“The start of the pandemic coincided with a key period corresponding to the development of the oil and gas fields,” she revealed. “Many development-related activities, such as the mobilization of resources and people, the construction phases on various sites around the world and installations were affected.”

As its economy seeks to recover from the impact of the pandemic, which pushed down its 2020 economic growth target to 0.7 percent, the delay from a planned 2022 start has denied Senegal much-needed oil and gas revenues. According to the International Monetary Fund, reserves of more than 1 billion barrels of oil and 40,000 billion cubic feet of gas were discovered in Senegal between 2014 and 2017 — most of them shared with Mauritania.

This has prompted Senegal to be hailed as one of the most promising new producers in the region and as a potential future member of the Petroleum Exporting Countries Organization, reveals Bloomberg.

“Any talk of joining any international organization or not is premature,” noted Gladima. “Senegal is focused on the development of its oil projects to meet its objective of starting production from 2023,” she said. The resources will be used “to build an economy that’s connected and competitive,” through the reduction of the cost of electricity, local content development and industrialization.

After gas-to-power projects are completed, power plants run by the state-owned Senelec and independent producers such as Turkey’s Karpowership are expected to switch from heavy fuel to gas, President Macky Sall said at a climate conference in October.

“There’s a lot resting on gas-to-power,” said Kissy Agyemang-Togobo, a managing partner at Songhai Advisory Group Ltd. “Electricity is expensive in Senegal — the cost of production is high,” with many plants operating on imported fuel, she said.

The Sangomar project in Senegal, developed by Woodside Energy, based in Perth, Australia, with an estimated production capacity of 75,000 to 100,000 barrels of oil per day, is also set to commence production in 2023, Gladima said. The $4.2 billion project will receive 18% of its financing from Petrosen, a state-owned oil company, she said.

When the pandemic hit, the country had already begun to reap benefits from its discoveries. According to a report by the National Committee of Extractive Industries Transparency Initiative, the government’s revenues from the hydrocarbons sector reached 22.8 billion CFA francs ($42.5 million) in 2019, a 37 percent increase from 2018. That year’s increase was driven by a tax adjustment payable by Kosmos Energy of 5.21 billion CFA francs.

Yakaar-Teranga, a resource of 15 to 20 trillion cubic feet, is another gas field that seeks to start production in 2023 or 2024, she revealed.

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