BP marketing deal sets up Senegal-Mauritania LNG exports
Marketing agreement for phase one of Greater Tortue Ahmeyim will elevate the countries into the league of large-scale LNG exporters
BP and Kosmos Energy confirmed the production scale of a project that will establish Mauritania and Senegal as major hydrocarbon producers for the first time, when they signed the LNG sale and purchase agreement (SPA) for the first phase of the offshore Greater Tortue Ahmeyim gas project in 11 February.
BP Gas Marketing—sole offtaker for the phase one export output—will buy 2.45mn t/yr of LNG for 20 years, under the accord signed with the Mauritanian and Senegalese hydrocarbons ministers, Mohamed Abdel Vetah and Makhtar Cisse.
Also part of phase one, 70mn ft³/d of gas will be shared equally between the home markets in Mauritania and Senegal. That could be used to fuel electricity generation of around 500MW in economies where demand for power is rising fast.
Cisse says that the SPA—which was also signed by the state hydrocarbons companies SMHPM (Mauritania) and Petrosen, as minority stakeholders in the project—was awarded to BP Gas Marketing after a competitive international tender process. There were several rival offers, but BP offered the best price.
Production will not begin until 2022. But the SPA has been signed to give BP the certainty that it needs in order to go ahead and line up customers. Meanwhile, the agreement enables Kosmos to book an additional 100mn bl oe as 1P reserves—which increases the company’s 1P reserves to 268mn bl oe.
The Senegal-Mauritania relationship has transformed to one of bilateral cooperation
With phase 1 development costs projected at $5bn, according to Cisse, the Grand Tortue Ahmeyim (GTA) project represents a serious investment in the solidity of the economic and diplomatic partnership between the current governments in Nouakchott and Dakar.
This marks a clear contrast with the 1990s, when relations had been soured by the decision of the then Mauritanian head of state, Maaouiya Ould Sid’Ahmed Taya, to expel 70,000 “Afro-Mauritanian” southerners in 1989, a move that hugely angered Senegalese public opinion.
The relationship has since transformed to one of bilateral cooperation. President Mohamed Ould Abdelaziz (2008-19) and his Senegalese counterpart Macky Sall worked hard to rebuild trust and respect, an approach continued by the new Mauritanian head of state, Mohamed Ould Ghazouani, whose promised focus on tackling social disadvantage should benefit Afro-Mauritanians and haratines (descendants of slaves).
2.45mn t/yr Gas BP agreed to offtake for 20 years
The two neighbours have established a track record of partnership, notably with Mali and Guinea too, in the Organisation pour la Mise en Valeur du Fleuve Senegal (OMVS), which manages irrigation and hydropower projects in the Senegal river valley. Mauritania and Senegal are also building a bridge over the river, which marks their border, at Rosso.
Sangomar pre-emption rights dispute resolved
The International Court of Arbitration has ruled in a dispute over pre-emption rights in the Sangomar oil project, in Senegalese waters. It found against Australian E&P company FAR, which is a 15pc stakeholder, on 14 February.
The operator of Sangomar—formerly known as SNE—is Australia’s largest independent Woodside Petroleum. It holds a 35pc stake that it acquired from the largest independent American E&P company ConocoPhillips for $430mn in 2016. This deal provoked the ire of FAR. It was also already a participant in the venture and insisted that it had a pre-emptive option to buy the stake held by ConocoPhillips, so it took its claim to arbitration in June 2017.
Woodside remained ebullient, describing FAR’s claim as “frivolous”. Indeed, it felt sufficiently self-confident to press ahead with the plan to take over the operatorship from Cairn Energy, whose Capricorn Senegal retains a 40pc stake.
Neither Capricorn nor Petrosen (10pc) were caught up in the dispute between FAR and Woodside. News of the arbitration ruling hurt FAR’s share price, because a court decision in its favour could have enabled it to negotiate substantial compensation.
But analysts believe that the business remains in a fundamentally solid financial position. Having arrived in Senegal as a junior explorer in a country with no history of significant offshore hydrocarbons discoveries or production, it is now a 15pc stakeholder in a project that is due to start production in 2023 at around 100,000 bl/d.