Senegal’s energy sector has recently got a huge boost after U.S. and UK companies announced oil and gas findings off the coast of the West African country.
Senegal has been one of the few countries in the region that enjoys relative political and economic stability. While neighbouring Mali, Mauritania or Guinea have faced civil wars, Islamist violence and the spreading of the Ebola virus in recent years, Senegal has been able to develop and become the region’s number one business hub. Now the country could turn into the new energy hotspot of the continent thanks to new offshore oil and gas discoveries.
U.S. energy firm, Kosmos Energy, said in January that its Guembeul-1 exploration well has discovered the largest gas field in West Africa, off the coast of Senegal and Mauritania. After drilling to a total depth of more than 5000 meters, the well found “101 meters of net gas pay in two excellent quality reservoirs”, which looks to be a “single, large gas accumulation”. After further drillings, on March 16, Kosmos announced a fourth significant offshore gas finding in the same area. Related: Oil Industry On Edge As Political Turmoil In Brazil Rages On
"Our Ahmeyim-2 appraisal well offshore Mauritania discovered a significant amount of gas and builds on our previous success in the basin, proving there's sufficient resource for a world-scale LNG development," Thomas Golembeski, VP of corporate communications, told Reuters, adding that with the hope to find oil in the same basin, “Kosmos will begin drilling its first of three new wells in Senegal within several weeks”.
However, Kosmos won’t be the first to carry out exploratory oil drillings in the area. Last week, UK firm, Cairn Energy Plc reported positive results from its oil well off Senegal. In January, the company successfully tested its SNE-2 well in the Sangomar Offshore block and now the flow-test of its SNE-3 well has been another success, with a flow rate of about 4000 barrels a day. Related: Oil Prices Rally To 2016 Highs On Weaker Dollar
Undoubtedly, the oil and gas fields in the area have great potential and, despite current low oil prices, it is likely that more international energy firms will turn up in West African waters after these promising results. This could be a major game-changer not only for Senegal, but perhaps for the whole troubled region of West Africa.
Moreover, Senegal has also boosted its nuclear energy sector, with a new 70 megawatt power plant, located in the town of Tobene. The International Finance Corporation (IFC), a member of the World Bank Group, and Melec PowerGen built and own the plant, which will provide electricity for 1.5 million people in Senegal. The project’s main goal, above all, is to produce accessible energy in rural areas, which could also give a vital push to the country’s agricultural industry.
“Financing the Tobene power station is part of the World Bank Group’s wider efforts to support the Government of Senegal increase access to energy in rural parts of the country. Renewable energy is also part of this strategy. IFC recently signed an agreement to develop between 50-200 megawatts of solar energy through the Scaling Solar initiative to help African countries procure renewable energy quickly and affordably.” IFC said in a statement. Related: Despite Fundamentals, Oil Surges Above $40
The real challenge for Senegal, however, will be to avoid the so-called resource curse, which has tormented several African states rich in natural resources. As long as Senegal is able to develop and maintain a sustainable energy policy and tackle internal issues, such as high unemployment, large-scale emigration and possible extremist violence, the ingredients are there for the country to become the new powerhouse of the continent. Senegal’s government, led by President Macky Sall, certainly has ambitious plans for the future and aims to transform the country into an emerging economy.
But, although recent oil and gas findings are great news for the government’s “Emerging Senegal Plan” (PSE), the country’s leaders should not forget the possible impacts of these discoveries on the environment, local communities and tourism. There is plenty to do for Sall and his government, but with an earnest resource strategy, a bright future lies ahead of Senegal.
By Daniel Stemler for Oilprice.com
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