The Biden Administration has made clear its intention of scaling up investment in Senegal, just as the West African country is about to see first hydrocarbon production at its Greater Tortue Ahmeyim (GTA) and Sangomar projects.
Last week, United States Secretary of the Treasury, Janet Yellen, conducted a state visit to the country, meeting with a suite of government representatives, including Senegalese President and Africa Union Chair, H.E. Macky Sall, with the aim of advancing trade and economic ties.
With priority placed on improving investments in energy, discussions centered on opportunities for U.S. companies in Senegal, driving rural electrification and the U.S.’ mutually beneficial economic strategy in Africa.
This year, Senegal is set to lead the MSGBC region’s hydrocarbon journey with two sizeable oil and gas projects expected to soon reach first production: the 100,000-barrel per day Sangomar oil project and the 2.5-million-ton-per-annum Greater Tortue Ahmeyim (GTA) development, straddling the maritime border of Senegal and Mauritania. These developments not only represent the start of an ambitious growth agenda – unlocking a series of project developments across the region – but have triggered newfound interest by global superpowers in regional investment opportunities.
For the U.S., Senegalese first production spells new opportunities for trade, with Yellen explaining that, “A key focus of my trip to Senegal…is to discuss ways in which the U.S. and the continent can partner together to benefit both of our economies.”
Since the signing of a Bilateral Investment Treaty between the U.S. and Senegal in 1983, trade between the two nations has grown. In 2019 alone, Senegal represented the country’s 134th largest goods trading partner, with $328 million in total, two-way trade. And while these figures have decreased following the onset of the COVID-19 pandemic and threats of a global recession in 2022, fresh oil and gas supplies being brought on the market in Senegal open new opportunities for energy-trade and heightened U.S. transactions. The U.S. government is looking at establishing long-term economic ties with Senegal, with Yellen emphasizing that, “The U.S. is all in on Africa, and all in with Africa. Our engagement is not transactional, it is not for show, and it is not for the short-term.”
This renewed investment interest could signal a wave of foreign capital directed at Senegalese energy, enabling the country to maintain a positive growth trajectory following first production from the GTA and Sangomar. Across the MSGBC basin, an estimated 50 trillion cubic feet (tcf) of natural gas reserves and nine billion barrels of oil are held, and while GTA aims to unlock up to 15 tcf of gas and Sangomar 500 million barrels of oil, opportunities for further monetization are present, with a suite of large-scale projects still awaiting final investment decisions.
However,the Biden Administration has made clear its intention of scaling up investment in Africa’s renewable energy space. According to Yellen, “Our goal is to further deepen our economic relationship and to invest in expanding energy access in a way that uses renewable resources spread across the continent. With this approach, Senegal can rely on energy sources that are within its border, cost effective and not prone to volatility in prices.”
During her visit to Senegal, Yellen broke ground on a rural electrification project that aims to improve access to electricity for up to 350,000 people across the country, while supporting approximately 500 jobs across 14 states in the U.S. Led by U.S.-based engineering firm, Weldy Lamont, the project is set to receive technical assistance from the U.S. Power Africa Initiative, capacity building from the U.S. Agency for Trade and Development, and a $102.5 million loan guarantee from the Export Import Bank.
Speaking during a site visit to the project location, Yellen stated that, “This groundbreaking will create a higher quality of life in many communities, and it will help Senegal’s economy grow and prosper. It will also help Senegal get one step closer to its goal of universal electricity access by 2025.”
MSGBC’s green energy space offers unparalleled opportunities for global financiers. Large-scale developments such as Mauritania’s 30GW AMAN green hydrogen development and 10 GW Project Nour; as well as Senegal’s 158MW Taiba N’Diaye Wind Farm speak to the potential of this sector, and the opportunities for heightened U.S. investment.
As the U.S. advances investment in Africa, the upcoming third edition of the MSGBC region’s premier energy event, MSGBC Oil, Gas & Power – taking place from November 21-22 in Mauritania – provides the ideal platform for U.S. financiers to connect with government representatives and companies from across the regional energy landscape. Through a series of panel discussions, private meeting opportunities, investor summits and presentations, the event provides U.S. investors with the insight they need to make informed decisions regarding MSGBC transactions.