Senegal hit hardest in West African project delays
BP has declared force majeure for a FLNG vessel at Grand Tortue Ahmeyim and Woodside is reviewing cuts and delays to Sangomar
Two months after signing the first sale and purchase agreement for gas from the Grand Tortue Ahmeyim project astride the Mauritania-Senegal offshore border, BP has declared force majeure on the delivery schedule for a floating LNG vessel.
The news was announced by Bermuda-registered Golar LNG, which was due to supply the $1.3bn facility in 2022 but is now in talks with BP over a revised timetable and the extent to which the Covid-19 pandemic is the cause of the delay. And Golar itself has now begun discussions with main building contractor Keppel Shipyard about a revamped schedule.
Back on 1 April BP CEO Bernard Looney, gave a clear signal that his company would respond to weakened world energy demand by slowing project development. He said the group’s 2020 capital spending would be c.25pc below its original forecast.
Meanwhile, Woodside Energy and its partners in the Sangomar oil project—which as recently as 14 January signed the FID—are now reviewing possible cost cuts and delays to expenditure that might set back the achievement of first oil in the Senegal offshore field.
For Mauritania, Senegal and Gambia, these delays are a manageable setback rather than a severe blow
One of these partners, FAR, has also put a hold on plans for its own drilling in the adjacent blocks A2 and A5 in Gambian waters. The company says it will seek to reactivate the programme when it is safe to do so and will continue to meet the obligations of the licence, which only requires a start to drilling by the third quarter of next year.
For Mauritania, Senegal and Gambia, these delays are a manageable setback rather than a severe blow. Although the first two have been planning systems for the management of the new hydrocarbons revenue, the forecasts of future income have been too inexact and too distant to incorporate in government budgeting.
The delay will bring only marginal political disappointments for the governments in power. Senegal’s next parliamentary election will be in 2022 when, even under the old timetable, the gas might barely have started flow, if at all. And neither Senegal nor Mauritania would have had the chance to spend much before their presidential elections in 2024.
For Gambia, with exploration at an early stage, the economic and political impacts are even less tangible.