This is a momentous time for the development of Senegal’s energy sector. The country is now on track to become an African energy powerhouse. Senegal currently has two mega offshore oil and gas projects under development: Grand Tortue Ahmeyim (GTA), scheduled to produce first gas by 2022, and the Sangomar offshore field, scheduled to produce first oil by 2023.
Ibrahima Fall, Senegal country director, Invest in Africa believes that “while the projects may be halted or delayed, the current state of affairs is not a direct threat to Senegal’s prosperous oil and gas future. As it is not a producing country, it is less affected by the crashing oil prices than other economies such as Nigeria or Algeria.”
Unlike many countries, lockdown has not been declared and each company is entitled to taking decisions at its own discretion. According to Fall, many corporations have asked employees to work from home when possible and limit face-to-face meetings as much as possible.
On the GTA project, French construction company Eiffage Génie Civil Marine is currently building 21 concrete caissons (55 m long, 28 m width, 31 m high, 16 500 t each), forming the breakwater, sheltering a hub marine infrastructure which is located 10 km from shore and encompasses berthing facilities for a permanently moored FLNG and the loading of LNG Carriers. The installation by 33 m water depth is due be completed by 2020. The construction site is located at Dakar port and employs hundreds of workers. The recent directive from the government disallowing gatherings of more than ten people translates to potential delays and difficulties for the project and the GTA development overall.
Directly involved subcontractors, such as Haliburton and Schlumberger, were due to initiate projects in the second half of 2020, so they are not directly impacted by the current situation, but the launch of their operations will also most likely be delayed. Preparatory work such as on-site studies have been suspended due to foreign workers being banned from travelling into Senegal.
Depending on the duration of the crisis, Fall estimates that delays will be at least several weeks.
“The combination of the coronavirus spread and the crashing oil price, if sustained, is a threat to the presence of current energy players in the country and across Africa. According to UK-based advisory firm EY, the current global issues could be an extra push for major oil and gas players to move away from fossil fuels and subsequently look to handover petroleum projects to other companies,” he notes.
Small and medium enterprises (SMEs) remain a worrisome topic for global economies, and even more so in Africa where their financial stability is often precarious due to a large amount of delayed payments. The Senegalese government has announced the deployment of an economic and social resilience plan endowed with 1,000 billion CFA francs, around $1.68 billion, in order to support the country’s economy during the crisis. It is not known to which end those funds are to be used, nor if there will be a specific plan for SMEs. Fall reckons that many smaller companies were already struggling pre-crisis, due to delayed payments from the state for publicly funded projects. The government is also urging larger National companies to support smaller companies down their supply chain in any way possible.
While the combination of the COVID-19 crisis and the crashing oil price have undeniably slowed Senegal’s tremendous development pace in the energy sector, spirits remain high that the projects will come online eventually.
Due to the conditions imposed by COVID-19 on travel, meetings and large gatherings globally, Africa Oil & Power has announced the postponing of Senegal’s prime conference in the energy sector, Senegal Oil & Power 2020 event, originally planned for May 27-28.
Africa Oil & Power is currently working with the government partners to find a new date for the conference, while showing its support to all stakeholders involved in the fight against coronavirus.
The new date will be chosen in order to satisfy the wishes of the government and the people of Senegal, in line with the presidential vision. With Senegal on the verge of becoming a major player on the global energy scene, this event creates critical new links between global capital and Senegalese projects; provides a platform for the government to explain its vision; defines the narrative on how Senegal’s people will benefit from energy and how this will happen and gives a holistic view of the opportunities of the energy sector in all its diversity, including renewables.
