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Senegal—steady as she goes

A ministerial departure and a supermajor arrival reflect the rising stakes in West Africa's latest upstream player, but the president is playing it cool

Senegal is being well and truly blooded as a new oil and gas province. And as in the tradition of frontier exploration, the geopolitical risk is becoming murkier, as the list of discoveries grows.

In the latest episode, the energy minister was sacked by President Macky Sall on the same day in early May that it was announced that France's Total had signed an agreement covering exploration and a production sharing contract for the 10,357 sq km Rufisque Offshore Profond block off the central Senegalese coast and would also assess the potential of Senegal's ultra-deepwater acreage. Total will hold a 90% stake in the block, with state oil company Petrosen taking the other 10%.

Sall has given no reason for the removal of Thierno Alassane Sall—no relation, but a long-standing colleague of the president—from the energy ministry. However, the timing indicates the two events were related. Senegalese political and media sources suggest the minister may have favoured a rival bid for the acreage awarded to Total, but was overruled by a president keen to have a beefed-up French presence in the country.

Total's commitment to study Senegal's ultra-deepwater potential could also prove highly useful to the president—an oil geophysicist by training—in attracting further investment to the sector down the line, if it yielded encouraging results.

The sacking is unlikely to cause concern among the majority of foreign investors in the oil sector, given the country's track record of political stability and reassurances from the president in May that energy policy would remain unchanged, regardless of who was heading the energy ministry. The country's energy portfolio is now being managed by Prime Minister Mohammed Dionne.

Total's arrival in Senegal's exploration sector, joining BP, Kosmos, Cairn Energy, Woodside and others, reflects the strategic interests of Senegal, France and Total itself.

Having already enticed investments from UK, US and Australian firms, the Senegalese government will welcome upstream involvement from the flagship oil firm of France, the country's former colonial power, with which it has close ties.

Sall, in common with other Africa leaders, is keen to reinforce ties with Europe and Asia, as the US administration under President Donald Trump appears to be distancing itself from a continent that had been more of a policy focus during Barack Obama's presidency.

French connections

Meanwhile, on the French side, François Hollande, in the last days of his presidency before being replaced by Emmanuel Macron in May, had devoted considerable time to propagating the country's ties with Africa, and not least with Senegal, which plays host to one of France's largest foreign diplomatic missions. French involvement in Senegalese upstream—with UK-based BP already making waves there—may have received an airing during a state visit to Paris by Sall last December. Macron is likely to maintain France's close ties with Africa, according to French political analysts.

For its part, Total, which is privately owned but maintains close links with the French government, noted that it already had a presence in oil refining and marketing in Senegal and that its entry into the upstream built in the group's strategy to carry out exploration in new deepwater basins in Africa.

One hurdle for the deal to overcome is that African Petroleum—a firm founded by Romanian-Australian businessman Frank Timis—has contested the sale. The company claims it still holds the license for the exploration acreage acquired by Total, though the government told African Petroleum late last year that it had not been granted a license renewal because it had failed to carry out drilling on the block to an agreed timetable.

15tn cf - estimated size of latest gas find

Total's acreage is adjacent to the Sangomar Profond acreage to the south-west of Dakar. Operated by Cairn, where a series of oil discoveries have been made in recent years have yielded a 2C reserves estimate of 641m barrels and talk of starting production in the early 2020s, possibly using a 140,000 barrels per day floating production, storage and offloading vessel with expansion capability for satellite tie-backs.

Further north, Kosmos Energy, now joined by BP, has made a series of gas discoveries in Senegal and across the border in Mauritania. These have been bolstered by a gas discovery from the Yakaar-1 wildcat well in the Cayar Offshore Profond block, around 100km northwest of Dakar, which was announced in May. Kosmos puts the estimated resource at more than 15 trillion cf. This amount could support a liquefied natural gas export facility, when combined with the 5 trillion cf-plus Terana discovery made last year in the same block, though it's too early for detailed proposals.

The two companies are already planning to export gas using a floating LNG (FLNG) facility from the Greater Tortue field discovery, which straddles the border between Senegal and Mauritania, and has estimated resources of some 25 trillion cf. BP says it and Kosmos will be drilling three additional exploration wells over the next 12 months in offshore Senegal and Mauritania.

The Yakaar-1 discovery could be served by an onshore LNG plant, as it lies entirely within Senegal. FLNG is regarded as a simpler solution for Greater Tortue, to avoid political and logistical problems over how onshore export infrastructure would be divided between Senegal and Mauritania.

The find reinforces Senegal's position as a genuine prospect for both oil and gas production, marking the country out from the new offshore sector entrants on the other side of the continent, Mozambique and Tanzania, which thus far are solely gas plays.

Enabling the country to make a smooth transition from a predominantly agrarian economy to a cash-rich mixed hydrocarbons exporter without losing political and social stability is the delicate task now facing President Sall.

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