Senegal's vote in favour
The coalition ruling one of Africa's more stable nations has out-performed expectations in recent polls, giving assurance to the hydrocarbons sector
A sweeping victory for the ruling party in Senegal's parliamentary elections has reinforced the power of President Macky Sall, enhancing chances of political continuity in the oil and gas-rich West African nation beyond the next presidential elections, scheduled for 2019.
Since Sall was elected for a seven-year term in 2012, the geological engineer and former head of state energy company Petrosen has laid the foundations for Senegal to become a hydrocarbons producer. His party's victory will be welcomed by international oil companies operating in one of the region's best functioning democracies.
The ruling coalition won nearly 50% of the vote in the 20 July elections and took 125 seats in the 165-seat National Assembly, helped by an economy that the IMF predicts will grow at a healthy 6.8% this year.
Some opposition politicians said their treatment by the government was heavy-handed and that the elections were fraudulent. But Senegal's track record among international electoral observers has been good. A president is limited to two terms in office and the Senegalese people voted in a referendum last year, backed by Sall, that the term should be cut from seven to five years from 2019.
The size of the ruling coalition's victory—even making substantial gains in the capital Dakar, where the opposition usually fares well—improves prospects for Sall to push through his agenda for the energy sector and the rest of the economy for the remainder of this presidential term.
Cairn, BP, Kosmos and the other IOCs now working on oil and gas developments in the country can look forward to more of the same from a government that has facilitated chunky investments from the industry at a time when other West African countries have been struggling to do so.
The government's relationship with the industry has not been without its controversial moments. Earlier this year, energy minister Thierno Alassane Sall—no relation to the president—resigned on the same day it was announced that Total signed an exploration and production-sharing contract for the Rufisque Offshore Profond block. There was speculation that the president had overruled the energy minister's preference for a more financially competitive bid from China's Cnooc to allow Total to get a toehold in the Senegalese offshore.
Still, the hydrocarbons story has mostly been a positive one so far, with the country still on track towards producing first commercial oil and gas within the next four or five years.
BP chief executive Bob Dudley said in August that the Greater Tortue gas complex, which straddles the Senegal-Mauritania maritime border and which the firm is developing with partner Kosmos Energy, probably holds around 50 trillion cubic feet of gas. The companies were testing the Tortue-1 well in August using the Atwood Achiever drillship, which was set to move on to drill the Hippocampe prospect in Mauritania's C8 block, followed by another Mauritanian well before returning to Senegal to drill in the Requin Tigre prospect.
6.8% - Economic growth forecast for 2017
The field development plan, which includes building a liquefied natural gas export plant, calls for a final investment decision to be taken in 2018 with a view to producing first gas by 2021. The export facility could well be a floating LNG vessel. But BP and Kosmos will also be hoping to strike oil, given the presence of it further north in Mauritania and further south in Senegal, albeit in different geological formations.
Kosmos, listed on the New York Stock Exchange, has also sought to capitalise on the buzz around its venture with BP-and its longer relationship with Tullow Energy, another UK-based firm, in Ghana—by seeking a secondary listing on the London Stock Exchange in late 2017. It would be the largest hydrocarbons company to join the LSE since late 2014.
BP cemented its role in the Tortue project in April, buying the holdings held by commodities tycoon Frank Timmis in the blocks in which the Senegalese side of the Tortue field is located. As a result, BP's local vehicle has raised its stake in the project to 60%, with Kosmos holding 30% and Petrosen taking the other 10%.
Cairn, meanwhile, has been carrying out further exploratory drilling on its Rufisque-Sangomar-Sangomar Deep (RSSD) acreage to the south-west of Dakar. The Edinburgh-based firm recently completed drilling an exploratory well in its FAN South-1, the results of which are now being analysed to see how they tie in with those from the previously drilled Fan-1 well. The Fan South-1 well was drilled to a total depth of 5,343 metres, targeting a prospective resource of 134m barrels of oil.
The Stena Drillmax drillship has now been relocated from Fan to the northern part of the company's acreage to drill the SNE North-1 well on the Sirius prospect. Far, the Australian junior that holds a 15% stake in the overall RSSD licence, said this would be the most northerly well yet drilled on RSSD and that it expected reserve estimates to rise following the current drilling campaign. Far's most recent estimates for the SNE discovery are that it contains 348m barrels of 1C resources and 0.64bn barrels of 2C resources. Australia's Woodside Petroleum has a 35% stake and Petrosen 10%.