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Senegal is a newcomer to the oil industry, and as the international companies that ventured into the West African country and struck oil in 2014 are nearing final investment decisions on oil and gas projects, the key question for the future of Senegal’s economy and investment climate is: will the country escape the ‘resource curse’ that has plagued other countries in Africa such as Nigeria and Angola.
According to oil industry executives and diplomats who spoke to the Financial Times—Senegal has a chance to avoid the ‘oil curse’ pitfall because of its relatively strong institutions and because the country’s president, Macky Sall, is actually from the industry—he is a geological engineer and geophysicist.
The Senegalese institutions are relatively strong, and experts expect that they could help the county to dodge the worst of the resource curse bullet—widespread corruption, growing inequality, and inflation.
The president, Sall, formerly served as the CEO at the Senegalese National Oil Company (PETROSEN) and has served as minister of energy.
“It is helpful to have a president who understands the industry,” one international oil executive told the FT. “He has been managing expectations in government and among the public that it’s not going to be an overnight bonanza.”
The president’s administration has been working on plans to spend the oil revenues once they start flowing into Senegal. Those plans are to ration some of the oil and gas income for immediate public expenditures and to preserve the rest for sovereign investment for the long term.
Still, there have been problems along the way. Back in 2016, the awarding of offshore drilling permits to a firm once linked with the president’s brother Aliou Sall sparked street protests, and many Senegalese are still suspicious of the oil companies that have been drilling in the country.
These are London-listed Cairn Energy, Dallas-based Kosmos Energy, and supermajor BP.
Kosmos and BP—partners in the offshore gas discovery Tortue that extends into Mauritania waters—expect a final investment decision (FID) for the Greater Tortue project around the end of 2018 and are aiming for first gas in 2021.
Cairn, for its part, has a multi-phase development plan for the SNE oil field, targeting submission of the plan in the second half of 2018. Government approval is targeted for end-2018, and FID thereafter. First oil from Senegal is expected in the period 2021-2023.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.