2024-03-20 23:02:06
In Senegal, only a few days remain before the end of the campaign for the 19 presidential candidates. Economic growth, FCFA, fight against corruption are themes that appear in the different programs. Another economic subject that comes up in the countryside, that of the management of natural resources and more precisely the case of the Senegalese-Moroccan gas project “Grand Tortue Ahmeyim”.
This project was invited into the countryside, perhaps emblematic of the management difficulties and expectations surrounding these major energy projects. Oil and gas discoveries promise tax revenues and royalties. But the first liters of gas planned for April 2022 will only finally emerge from the ground around the 3rd quarter of 2024.
Expected annual LNG production for this 1ʳᵉ phase is 2.5 million tonnesmainly intended for export in a very favorable geopolitical context.
However, warns Papa Daouda Diene, economic analyst at the Natural Resource Governance Institute, these forecast revenues must be considered with caution. Because delays in launching the project could have significant economic consequences, particularly for the state budget. “ We must not forget that allocations had been planned in the 2023 budget, for example in terms of stabilization funds, intergenerational funds, underlines the analyst. But also, they can have impacts on growth forecasts and debt forecasts, that’s at the macroeconomic level. »
« Protect yourself from the risks associated with these delays »
Delays which can also have impacts on the economic outlook. At the end of its mission in September 2023, the IMF estimated GDP growth prospects at 8.8% for 2024. Growth which will be stimulated if oil and gas production starts, specifies the institution. “ To guard against these risks associated with these delays, the government must exercise caution in planning the use of this gas, associated borrowing, use of revenues, etc. », further specifies Papa Daouda Diene.
The estimated cost of Phase 1 of the gas project was estimated at $3.6 billion. But delays in commissioning will actually lead to additional costs. « When we experience a delay, there are necessarily new investments and the cost will increase, points out Babacar Gaye, economist specializing in oil and gas issues and consultant at the DG Link firm. There are additional costs, there are overcharges. BP will recover the money spent before talking about profits. So when are we going to amortize? »
The financial arrangements for this type of project are complex and evolve over time and operating phases. The Senegalese Minister of Oil and Energy, Antoine Félix Diome, recalled certain modalities during a joint press conference with his Mauritanian counterpart in Nouakchott last January. “ At the beginning, we don’t put in any money. That is to say that the operator arrives, there is a final investment decision which is made after the development plan of the unit which announces the cost, explains the minister. After incurring all the expenses, it is from this point, when [l’opérateur] recover the expenses they have put in, let us share the “profit oil”. »
Renegotiate contracts?
The “cost oil” is therefore the cost of oil, “ which moreover must be stopped at a certain amount. It can’t go on forever. Hence the interest in carefully monitoring cost oil », he further specifies. Faced with these significant delays, the authorities indicated launch a major audit to assess these additional costs. An exercise in transparency also eagerly awaited by civil society. “ I think this will be the biggest issue for the next government, estimates specialist Babacar Gaye. This is why today, you can see that in the political arena, at this moment in the campaign, certain candidates have promised the Senegalese to renegotiate contracts, because what we are witnessing does not does not bode well for the future of gas exploitation in Senegal. »
The difficulties in seeing it put into service during the first phase are worrying. Phases 2 and 3 of Grand Tortue – supposed to be more focused on the local market and more profitable for the States – are planned. But the additional costs, the postponements, but also the general policy of BP – in particular its commitments to reduce its investments in hydrocarbons – create uncertainty around the future of the project.
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