Deadline pending on Senegal’s offshore oil and gas block tender

Senegal’s first, and ongoing, offshore licensing round includes 12 oil blocks, the bulk of which are in ultra-deep-water territory[1] and one of which is subject to dispute.

In recent days, Oslo-listed E&P company PetroNor announced that it will be relaunching arbitration over the Senegal Offshore Sud Profond (SOSP) block while Senegalese local media are reporting that the SOSP is indeed included in the licensing round.  

The deadline for applications is 31 May.

Significance – Stable ambitions 

The licensing round was launched in November 2019 and originally expected to close in June 2020. However, it foundered as result of the pandemic[2]. Since then, there have been notable changes in Senegal’s cast of decision makers and the wider political environment.

For instance, a new petroleum and energy minister, Sophie Gladima, has been appointed. Macky Sall was re-elected in February 2019, before the round began, and will serve until 2024. But recent weeks have seen an elevation in popular unrest. See: Senegalese socio-political frustrations spill on to the streets. Tensions have calmed substantially since the release of opposition leader Ousmane Sonko but there are other tests on the horizon. Among them, Macky Sall’s intentions for 2024.

One thing past year has not changed is Senegalese authorities’ determination to see oil and gas potential in the basin realised or to better secure the interests of the state in that process. All the more so given reduced investment and stalled first oil and first gas from Sangomar and Tortue from post-2014 finds.

Frank Timis’ African Petroleum, which merged with Petronor in 2019, had its rights to Senegalese blocks cancelled in 2017 due to an alleged failure to deliver on exploratory work. It faced similar problems in the Gambia. In May 2020, PetroNor and Senegalese authorities had agreed to put their arbitration process to one side in order to allow time for direct discussions to succeed. Evidently, this was not successful.

Outlook – Investor arbitration  

First oil and first gas have yet to arrive, but hydrocarbons are a live issue in popular and political ideation. Under Senegal’s 2019 legislation, exploration permits are for four years, renewable twice for three rather than four-year periods. The state has a 10% carried interest via the national oil company PETROSEN and a working interest of up to 20% post-discovery. There are also local content provisions surrounding hiring and service provision alike. Meanwhile, the dispute with PetroNor can move back to the International Centre for the Settlement of Investment Disputes (ICSID).

[1] http://dfa-labo.com/petrosen/wp-content/uploads/2020/07/Senengal-2020-Licensing-Round-Brochure.pdf

[2] https://senegallicensinground2020.com/

Photo credit: Adja-Fatimata Seck. Unsplash

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