Senegal Is Betting on Both Fossil Fuels and Renewables for Its Energy Boom

• Senegal is developing its energy industry rapidly, attracting significant investment in oil, gas, and renewable energy sectors.
• Senegal's government aims to increase the use of renewable energy, targeting a 40% share in the electricity mix by the end of the decade.
• Senegal's energy expansion is expected to support economic growth, boost energy security, and create new economic hubs across the country.

This month, Senegal announced it had struck oil at its first offshore project. This is just the latest of several new energy projects that the West African country is developing, with an energy mix that includes both fossil fuels and renewables. Following the recent expansion of its energy industry, Senegal is now catching the eyes of several international energy investors, particularly in China. 

In Senegal, around 65 percent of the population has access to electricity, showing there is a long way to go to establishing energy security. Over the last few years, the government has introduced several policies aimed at increasing the use of liquefied petroleum gas (LPG) to reduce the country’s reliance on solid biomass for cooking, which has helped decrease pollution in urban regions of the country. 

In 2021, oil contributed 48.9 percent of Senegal’s energy mix, followed by biofuels and waste at 39.1 percent, coal at 10.4 percent, and renewable energy at just 1.6 percent. Energy consumption rose by around 224 percent from 2000 to 2021, as Senegal undergoes industrialisation and access to electricity increases. Renewable energy sources contributed a 16 percent share of power generation in 2021. 

Last year, the government launched a development plan entitled Plan Sénégal Émergent (PSE) 2035, which aims to encourage higher levels of foreign direct investment (FDI) and private sector participation across various industries, to support economic growth. Senegal recently joined a Just Energy Transition Partnership (JETP), partnering with France, Germany, the European Union, the United Kingdom, and Canada. The JETP will provide up to $2.69 billion over a three to five-year period to help Senegal develop its clean energy sector. 

The JETP program is expected to increase the renewable energy electricity mix to 40 percent by the end of the decade. The government of Senegal will work with the International Partners’ Group to develop an investment plan, which it expects to publish this year. The former President of Senegal, Macky Sall, stated, “The multifaceted crises we are experiencing today are straining African economies, particularly in their significant efforts devoted to economic development, access to energy, and industrialization. Diversifying our energy sources and our supply chains will increase our resilience. The partnership for a just energy transition (JETP) that we are establishing today with our partners will make it possible to support the Senegalese dynamic that we started several years ago of incorporating renewable energies into our energy mix and securing our energy system thanks to all our natural resources in line with the Paris Agreement.”

This month, Australian firm Woodside Energy announced the start of production at Senegal’s first offshore oilfield. This follows several years of delay. Woodside hopes to eventually produce 100,000 bpd of crude at the site, as well as exploit its natural gas reserves. The discovery of offshore oil and gas reserves was made in 2014. The state-owned energy company Petrosen which has an 18 percent stake in the oilfield, believes the sector could bring in over $1 billion a year over the 30 years. 

The Sangomar oilfield is located around 100km offshore. Phase One of development includes the drilling of 23 wells, 21 of which have already been drilled. Senegal’s recently-elected President Bassirou Diomaye Faye said that the profits from the country’s oil production would be “well managed”. Faye informed Senaglese students, “The State of Senegal has set up an inter-generational fund. For your generation and those to come, we have reserved shares (in the resources derived from oil exploitation).”

In addition to crude, Senegal also expects to produce its first LNG later this year, from its Greater Tortue Ahmeyim LNG project, located on the border with Mauritania. British energy giant BP and the U.S. firm Kosmos Energy will operate the field alongside Petrosen, aiming to produce 2.5 million tonnes of LNG a year. 

Senegal is attracting greater interest in its growing energy industry, with Chinese companies investing $1 billion in Senegal since 2013, making China the second-largest economic partner in the West African country after France. As part of China’s Belt and Road initiative, Chinese companies are expected to invest heavily in supporting infrastructure for energy projects, such as the roads and ports needed for oil production and export, as well as the expansion of the domestic railway network. This is expected to help develop new economic hubs across the country. The IMF forecasts that Senegal’s GDP could grow by as much as 7.1 percent this year and 10 percent in 2025, driven largely by an increase in foreign investment.

Senegal is developing its energy industry at a rapid pace, having attracted significant investment in its oil, gas, and renewable energy sectors. This is expected to support economic growth and provide Senegal with a diverse energy mix over the coming decade, to boost energy security. 

By Felicity Bradstock for Oilprice.com

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