SENEGAL IS HOME TO GAS MEGAPROJECTS IN AFRICA, INVESTORS HEAD INLAND
Senegal is the hotspot for energy investment in West Africa right now, owing to a string of huge offshore hydrocarbons discoveries since 2014 (as well as its compelling renewables potential). The emergence of Senegal as a regional energy power is an exciting story. But for almost two decades, in fact, the country has been producing its own natural gas onshore, an hour’s drive from Dakar. Further investment could unlock Senegal’s onshore potential.
MSGBC Oil, Gas and Power 2021, organized by Africa Oil & Power under the auspices of H.E. President Macky Sall, will be held on 26-27 October 2021, in Dakar, SENEGAL.
Senegal has succeeded in fast-tracking its oil and gas developments, despite recent uncertainty caused by COVID-19, and has attracted investment in wind and solar, establishing itself as West Africa’s leader in the energy transition. The government of Senegal is keen to expand this narrative to encompass neighboring countries, with the goal of generating cross-border business and collaboration, and improving quality of life for hundreds of millions of people.
Within West Africa, Senegal has gained most attention with the Sangomar field development – a $4.2 billion investment with production potential of up to 100,000 barrels per day – as well as the Great Tortue Ahmeyim development led by BP and Kosmos, that is estimated to hold 100 million barrels of oil equivalent in natural gas reserves. Looking beyond Senegal, the massive 50 trillion cubic feet natural gas discovery made by Kosmos in Mauritania in 2019, the nearly 5 billion barrels of oil estimated to be present in Gambia’s blocks A1, A2, A4 and A5, and new entries and drilling programs in Guinea Bissau, Guinea Conakry and elsewhere, show abundant opportunities.
The region has very strong economic ties to North America, having a long legacy of welcoming US investment as well as US private companies operating in the energy sector. This strong connection was further reinforced in 2020 with the signing of an MoU between Senegal’s national utility Senelec and national sovereign fund FONSIS with General Electric for investments in health and power infrastructure worth $200 million. This connection is expected to be further reinforced in the coming years and will be at the very center of MSGBC Oil, Gas & Power 2021, to be held on 26-27 October, 2021 in Dakar and will be the elite energy gathering for one of Africa’s most compelling energy investment destinations.
The US-Africa Committee of the African Energy Chamber has provided its full support and endorsement. “Senegal and the region have historically welcomed US investment. This is now more important than ever. Looking ahead, American firms have a critical role in financing and providing technology to drive gas developments and the energy transition,” said Jude Kearney, former Deputy Assistant Secretary for Service Industries and Finance at the US Dept of Commerce and currently President of Kearney Africa Advisors.
“There is no better time to be in West Africa than now, and Senegal is at the heart of the opportunities. The projects are there, many investors have already succeeded, but viable projects across the value-chain still need FDI. The regional market is full of opportunity for the right investor, particularly those with a holistic view of the energy sector and a long-term eye on the energy transition,” said Renée Montez-Avinir, Managing Director at Africa Oil & Power.
Introducing Onshore Senegal
Fortesa International, led by CEO Rogers Beall, started exploring in Senegal in 1997 and from the start, Beall aimed to create a business that was fully Senegalese. Today, the company has a staff of 125, with two expatriate mentors and some African expatriate staff, but the vast majority (around 98 percent) is Senegalese nationals. Beall has continually advocated for Senegal with U.S. companies and now serves on the U.S.-Africa Committee for the African Energy Chamber.
Volcanic eruptions in the sea 175 million years ago, joined up by sand blown in from the Sahara, created the Dakar peninsula. That same feature on the carbonate shelf edge extends deep into the Atlantic Ocean, and this is the basis for the massive offshore oil and gas fields generating so much excitement globally. This is where North America used to connect to Africa, and where we are driving now used to be the state of Georgia before it was the deep ocean bed. The African plate itself never moved.
The Gadiaga field usually produces 3 million cubic feet (mcf) per day and could produce 7 mcf per day. This small field has produced just over $95 million of natural gas. But, as Beall says, “This is small potatoes compared to what Senegal needs.” The geology says that Gadiaga may sit next to a much larger gas field situated on the edge of the shelf in the Thiombane Dome. This strong potential is what Fortesa wishes to explore and develop, with fellow investors.
“There is no better time to be in West Africa than now, and Senegal is at the heart of the opportunities. The projects are there, many investors have already succeeded, but viable projects across the value-chain still need FDI. The regional market is full of opportunity for the right investor, particularly those with a holistic view of the energy sector and a long-term eye on the energy transition. - Renée Montez-Avinir, Managing Director at Africa Oil & Power.
Natural Gas Could Do More
Energy independence is the key to Senegal’s success, says Beall. Energy poverty is a trap that ties people down to subsistence living from Senegal to Somalia. Natural gas, available in abundance onshore as well as far out to sea, can be a fuel to remove those limits.
“Right now, this country is paying $14 per mcf by using heavy fuel oil. [In doing this] they are making six times the pollution, six times the negative effect on the planet, and nearly double the cost,” says Beall. “We are able to make the investment and take the risk of drilling onshore, and [in this region] only Fortesa is doing this.”
The Foundation Is Already There
Natural gas is cleaner and cheaper than the alternatives. It provides direct and indirect jobs for hundreds at Gadiaga, and more of it is available onshore. The company is keen to expand within its acreage to find and develop the onshore elephant that the geology points to, as well as optimizing current production. But with European and other Western financing institutions now shutting down funding for hydrocarbons, few options are available to fund expansion. Fortesa built a foundation for Senegal’s emergence as an energy player. Beall believed in the potential of Senegal before many in Europe and North America had thought to examine the country’s subsurface. His company worked with or trained many of the people now going on to run the sector or work at the national oil company Petrosen and others.
“This is one of the most cost-effective operations in Africa. Fortesa has essentially unlocked the value of Senegal’s energy resources. The projects run by Rogers and his team are sound and are an example of projects that can generate cash and deliver the return on capital that investors are looking for,” said NJ Ayuk, Executive Chairman of the African Energy Chamber, to AOP. “I see a team that is focused on improving asset-level economics, reducing capital outlay, and stretching their dollars to do more with less.”
“MSGBC Oil, Gas & Power 2021 will provide just the place for the right investors to discover deals, partners and clients that will not only benefit their companies, but the energy sector and the region’s economy at large”, added Montez-Avinir.
MSGBC Oil, Gas & Power 2021 is the sole event in Senegal with full government support that opens up national and regional opportunities across the scope of the energy transition. The 2021 program will unite leaders and projects representing the full spectrum of energy activities, from oil and gas exploration to renewable energy developments, local goods and service provision, infrastructure, finance and power production and distribution. The organizer will work with all actors in the MSGBC region and international delegations in oil, gas and power sectors, from government officials to private sector players, to define opportunities and help new and existing investors find success in the market.
To find out more, please visit: www.AfricaOilandPower.com