Senegal at 57: Oil investment boom fuels growth hopes - African Business Magazine
Senegal at 57: Oil investment boom fuels growth hopes

Senegal at 57: Oil investment boom fuels growth hopes

International investment in Senegal’s oil and gas industry is picking up as the country celebrates the 57th anniversary of its independence from France on Tuesday.

BP has bought equity in Kosmos Energy’s Tortue oil project, while Cairn Energy is drawing up detailed plans to develop the nearby SNE oil field. Most recently, between January and March, Scottish oil company Cairn drilled the SNE 5 appraisal well to a depth of 2,853m and the well uncovered further oil, confirming the company’s expectations.

Cairn expects to submit its development timetable to the government next year with the final investment decision to follow within a year. Much will depend on the result of further appraisal wells, to be drilled later this year, which will help clarify the size and structure of the field.

The company is the operator of three blocks offshore Senegal: Sangomar Deep, Sangomar Offshore, Rufisque Offshore, with a 40% stake in each, alongside partners Far Ltd (15%) and Petrosen, which is the state oil company of Senegal 10%. Australia’s Woodside Petroleum bought a 35% stake in the consortium from ConocoPhillips last year.

Probable oil reserves are already put at 473m and first oil is expected sometime in 2021-23. It is likely that a floating production storage and offloading (FPSO) vessel will be deployed on the deepwater field.

FPSOs are used on fields that lie in water that is too deep to allow production via an oil platform anchored to the seabed. Cairn described the SNE find as “the largest global oil discovery in 2014”. The SNE 1 well was the first to be drilled in the country for more than 20 years and its first deepwater well.

BP farms in

At the end of February, BP completed the purchase of equity in Kosmos Energy’s Tortue project, which covers 33,000 square km of maritime territory offshore both Senegal and neighbouring Mauritania. It has acquired a 32.49% stake in Kosmos’ Senegalese blocks and 62% of those in Mauritania. First gas is expected in 2021.

The structure of the deal for the Senegal assets involved the purchase of a 49.99% stake in Kosmos BP Senegal Ltd, which holds a 65% share in the Saint Louis and Cayar deepwater fields. Timis Corporation (25%) and Petrosen (10%) are the remaining members of the Tortue consortium. The group aims to develop the gas reserves jointly but the big question is whether the two governments can be persuaded to pursue joint development.

BP also becomes operator of the project, although Kosmos will remain the technical operator while three more exploration wells are drilled, probably this year. The US firm will still hold a slightly larger – although much reduced – stake in the Senegal blocks, at 32.51%.

Kosmos CEO and chairman Andrew Inglis said: “With the transaction now complete, Kosmos looks forward to working with the government of Senegal and partners to move ahead with the next stage of our work program involving further exploration in the two blocks and seeking to produce first gas from the Tortue project by 2021.”

Kosmos estimates gas reserves on the Tortue Field at more than 15 trillion cu ft and further exploration could push that figure higher. Up to 50 trillion cu ft has already been suggested. The most likely commercial outlet for the gas would be a liquefied natural gas (LNG) plant that would allow the gas to be exported around the world.

There are currently only three LNG exporters in Sub-Saharan Africa: Nigeria, Angola and Equatorial Guinea, although Mozambique and Tanzania are likely to join them in the next few years. Even a small plant would require billions of dollars in investment, representing the biggest single investment ever made in either Senegal or Mauritania.

The government of Senegal hopes that some of the gas can also be used in domestic power generation, as the lack of reliable power supplies is one of the biggest drags on economic development. In addition, oil and gas investment should help the country to build on its recent more rapid economic growth. GDP increased by 6.5% in 2016, the fastest rate for eleven years, and the IMF forecasts annual growth of 7% for this year and next.

Neil Ford

Related Posts

  • Focus on Ghana: Insurance policyholders come first

    The President of Ghana, Nana Addo Dankwa Akufo-Addo appointed Justice Yaw Ofori as the new Commissioner of the National Insurance Commission of Ghana. He took over from Lydia Lariba Bawa in September last year. Prior to his appointment, he was the first Director of the Ghana Insurance College for 11 years and also a Senior Manager of Vanguard Assurance Company for two years, bringing an extensive range of experience to his new post.

  • Focus on Ghana: Insurance regulations yielding fruit

    Ghana’s insurance sector, still one of the smallest on the continent, has recently seen healthy growth thanks to innovative products – but a great deal more needs to done before it can reach its full potential.

  • Focus on Ghana: Bonds and equities activity set to increase

    Paul Ababio was appointed Deputy Director General of the Securities and Exchange Commission in September 2017 following a two-year stint at UT Bank. Ababio and the Commission’s Director General Daniel Ogbarmey Tetteh, have set out ambitious plans to grow private-sector participation in Ghana’s capital markets. African Banker spoke to Ababio about how they will achieve their goals.

  • Focus on Ghana: A more positive outlook for 2018

    “Following on from the reductions in treasury bill rates, the banking sector is readjusting to actually making money from the real sector,” says Alhassan Andani, President of GAB and MD Stanbic Bank Ghana.

Join our mailing list

If you would like Independent, Informative and Invaluable news analysis on the African continent, delivered straight to your inbox, join our mailing list.

Help us deliver better content