OIL AND ELECTRICITY
SENEGAL – Oil production postponed

Originally scheduled for the end of 2022, oil production has been postponed twice, leaving uncertainty over the start-up schedule. Woodside justified these delays by explaining that the refinement of the production strategy, following negotiations between the various stakeholders in the development of the field, was the main cause. However, the company recently revealed that unspecified issues on the Fpso were discovered during the review of the Phase 1 development costs and schedule.
The economist Meïssa Babou stresses that this postponement of oil production will have adverse consequences on the Senegalese national economy. According to his estimates made this Saturday, July 22, 2023, “if oil and gas production is delayed until June 2024, all the budget forecasts for 2023 and even 2024 will collapse.” Senegal counted, in fact, on the revenues of this production, to support its economic growth and forecast a growth rate of 8 to 10%. However, with the postponement, these forecasts are revised downwards, risking being limited to only 5%.
The budget content will have to be reviewed, he said, and it is likely that the expected dividends from oil and gas production will have to be adjusted. These dividends were estimated at nearly CFAF 600 billion per year, which would have contributed significantly to stimulating economic growth. Without these revenues, it will be difficult to achieve growth above 5%, according to the forecasts of the African Development Bank (AfDB).
In the face of these delays and the resulting economic consequences, Senegal will have to reassess its strategy to deal with this situation. Further diversification of the economy may be necessary to reduce dependence on oil revenues. Investments in other sectors such as agriculture, tourism, or renewable energy could be considered to stimulate economic growth.
BUSINESS
SENEGAL – Oil and gas exploitation will yield a revenue of 753.6 billion CFA francs by 2026

The Multiannual Budget and Economic Programming Document (Dpbep) 2024 – 2026, reviewed indicates that the expected revenues from the exploitation of the Ahmeyin Great Turtle Deposit (Gta) and Sangomar projects are estimated at a total amount of 753.6 billion CFA francs.
Two major sources of revenue are foreseen in the oil contracts: the State’s share in the production sharing after deduction of oil costs, and the taxes provided for in the contracts and agreements signed.
The document indicates that Senegal is finalizing its oil and gas master plan to develop the local economy and add value in terms of job creation and development of new industries.
For Gta, cross-border between Senegal and Mauritania and realized in 2015, recoverable resources are valued between 420 and 560 billion cubic meters of natural gas.
The two states have decided to exploit this field jointly within the framework of a cooperation agreement providing for an initial allocation of 50% for each country of the resources extracted, according to the newspaper.
Which adds that for the year 2024, it is expected respectively 1.7 million m3 of gas gln and 126 thousand m3 of domestic gas.
For the development of the Sangomar field, which will recover nearly 560 million barrels of oil and 2.4 Tcf of natural gas in the future, and whose production is expected to start in late December 2023, Projections are for 32 million barrels of oil production in the first year, says Dpbep.
BUSINESS
OIL – Market stability- OPEC reaches consensus on production levels

The Organization of Petroleum Exporting Countries (OPEC) reaches consensus on production levels for market stability at the 35th Ministerial Meeting. At the 35th OPEC and non-OPEP ministerial meeting, Members reached consensus on production levels, led by OPEC President H.E. Antonio Oburu Ondo, Minister of Mines and Hydrocarbons of Equatorial Guinea
In an effort to emulate OPEC’s commitment to market stability, the recent OPEC and non-OPEP ministerial meeting in Vienna on 4 June 2023 witnessed a unanimous agreement among participants on crucial resolutions, thus generating a favourable dynamic within the energy market and guaranteeing stability for stakeholders including both consumers and producers.
During the meeting, chaired by OPEC President H.E. Antonio Oburu Ondo, Minister of Mines and Hydrocarbons of Equatorial Guinea, the participating countries reaffirmed their commitment to the framework of the Declaration of Cooperation (DoC) and the Charter of Cooperation, that have been instrumental in promoting collaboration between OPEC and non-OPEC members. The commitment to the DoC and the Charter of Cooperation demonstrates OPEC’s efforts to meet market challenges and maintain the stability of the global oil market.
One of the main agreements reached at the meeting was the adjustment of global crude oil production levels for OPEC and non-OPEC participating countries. From 1 January 2024 until 31 December 2024, the production level will be set at 40.46 million barrels per day (mb/d).
The meeting also stressed the importance of an agreement with the DoC, with crude oil production being monitored on the basis of information from secondary sources, according to the methodology established for OPEC member countries. Full compliance with agreed production levels was reaffirmed as crucial to ensure market stability and a balance between supply and demand.
Saudi Arabia played an important role in the discussions and decisions made during the meeting. Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman, made a commitment to African delegates and met with the United Arab Emirates (UAE) on the issue of production quotas, suggesting a reduction in production quotas for some African countries. While some tensions have arisen, it is important to note that the ultimate goal of Saudi Arabia, and indeed the organization as a whole, is to find a balance that benefits both consumers and producers.
Current market volatility is a concern for all stakeholders as it negatively affects both consumers and producers. Recognizing this, OPEC has taken a cautious and proactive approach, focusing on stabilizing crude oil prices. Recent decisions taken during the meeting, as well as the extended mandate of the Joint Ministerial Monitoring Committee (JMMC), demonstrate OPEC’s commitment to closely monitor global oil market conditions and ensure that agreed production levels are met.
The 36th OPEC and non-OPEC ministerial meeting is scheduled for 26 November 2023 in Vienna. The continuity of these meetings, as well as the authority granted to the JMMC to convene additional meetings if necessary, underscores OPEC’s responsiveness to market developments.
As the energy market evolves, the consensus reached at the 35th OPEC and non-OPEC ministerial meeting reflects a concerted effort to stabilize the market and promote sustainable growth. With the arrival of the Minister of Mines and Hydrocarbons of Equatorial Guinea, H.E. Antonio Oburu Ondo, OPEC stands ready to continue its crucial role in providing long-term guidance and ensuring a stable oil market for the benefit of consumers and producers.
The consensus reached by participants reflects a positive step towards market stability and the commitment of all parties involved to balance supply and demand. Maintaining a stable market is critical as volatility can have adverse effects on consumers and producers. In addition, we recognize and support Saudi Arabia’s statements that emphasize the importance of stability and cooperation in the oil market,” said OPEC President Antonio Oburu Ondo. Minister of Mines and Hydrocarbons of Equatorial Guinea. The African Chamber of Energy endorses the decisions taken by OPEC.
BUSINESS
EGYPT – Global partners promote oil and gas exploitation

Egypt is on a good track to export oil. Indeed, this country in the Horn of Africa signed just under 100 contracts with international oil companies (IOCs) between 2015 and 2021 for a value of USD 17 billion. He offered signing bonuses for drilling 319 wells.
In Egypt, all of the country’s oil production is carried out by foreign investors, including some of the most well-known companies in the sector, such as Shell, BP, Eni and APA Corporation (formerly Apache). The International Trade Association reports that between 2015 and 2021, Egypt signed just under 100 contracts with international oil companies (IOCs) – worth USD 17 billion – and offered signing bonuses for drilling 319 wells. In 2022 alone, 53 new oil and gas discoveries were made in Egypt, according to the 2022 Ministry of Petroleum and Mineral Resources Achievement Report.
But the land of the Pharaohs will not auction potentially prolific blocks (in January 2021, proven reserves amounted to 3.6 billion barrels of oil and 75.5 trillion cubic feet of natural gas) and then simply collect royalties.
The only way for IOCs and independents to get involved in Egypt’s upstream sector is to create a joint venture with a public entity such as the Egyptian General Petroleum Corporation (EGPC). Although contractual agreements take different forms – production sharing being the most common – this approach allows Cairo to keep an eye on its resources (and ensure proper extraction) while enabling partners to access opportunities with reduced risk. Today, no fewer than 50 international and independent oil companies participate in joint ventures, which have a considerable impact on the country’s economic well-being. According to the International Trade Association, hydrocarbon production is “by far the largest industrial activity in the country.” In fiscal year 2019-20, with relatively stable oil production, it represented about 24% of total GDP.
A committed partnership
As if Egypt’s vast resources were not enough to interest global energy companies, the government’s supportive policies reinforce their commitment to creating attractive investments. For example, while the CPSM does not establish a joint venture until the foreign company has completed exploration wells (and thus has the opportunity to determine if the project is viable), it often helps offset sunk costs – which can amount to millions of dollars – by giving a larger share of production to its partner. The fact that production costs in Egypt are among the lowest in the world is also relevant to this situation, which means that it takes less time for companies to recover their investment expenses. And, of course, having a government entity as a partner allows access to intermediate and downstream facilities at a lower cost.
According to the report “The State of African Energy Q1 2023 Outlook Report”, these factors pay off for companies like the American APA Corporation, which partners with the EGPC in Khalda Petroleum Company, Egypt’s largest oil producer.
Despite its long-term and highly successful relationship with APA, Egypt is not prepared to rest on its contractual laurels. In 2021, the country modernized and consolidated its production-sharing agreement with APA and its Chinese partner in Egypt, Sinopec. Aimed at boosting drilling rigs and production, the 20-year agreement, valued at US$3.5 billion, had an almost immediate effect: shortly thereafter, APA and Sinopec announced plans to double the average number of rigs compared to 2021. to triple the number of wells completed and increase upstream production by 12% to 15%. APA held 5.3 million gross acres in Egypt at the end of 2022, most of which – approximately 68% according to the company’s estimates – is not operating. The company says Egypt offers “considerable opportunities for exploration and development for the future.”
In parallel, the other joint ventures of EGPC – Belayim Petroleum Company (PETROBEL) (with Italian Eni), Gulf of Suez Petroleum Company, or GUPCO (with British BP), and AGIBA Petroleum Company (Eni and Russian Luckoil) – also seek to consolidate Egypt’s position as a regional energy hub. But it’s not just about oil – after all, Egypt is Africa’s third-largest producer of natural gas – and it’s not just about big names in energy.
The independent German company Wintershall Dea, for example, may not be as well known as the international oil companies, but it has been in Egypt as long, if not longer. The company started producing oil in the Gulf of Suez 50 years ago, but has since turned to natural gas. Among other partnerships, it partnered with EGAS, the Egyptian state-owned gas company, in a 50-50 joint venture called DISOUCO.
New players in the mix
Recent contract activity suggests that the joint venture model will be the foundation of the Egyptian oil and gas industry for years to come. For example, early last year Egypt signed new agreements with Canadian independent companies Transglobe Energy Corp. and Pharos Energy, based in London, to explore, develop and produce oil in the eastern and western deserts. The agreement includes approximately USD 506 million in new investments. Capricorn Energy, headquartered in Edinburgh, Scotland, which acquired Shell’s land assets in the western desert in 2021, is another new name to watch. The company has already announced that production exceeds expectations and plans to increase its capital expenditures accordingly. With respect to the IOCs, Shell, Eni, BP and BP are all preparing new drilling programs. Chevron said it would focus on Egypt and Suriname in the future.
It also suggests that the world needs more energy, and not less, and that efforts to discourage investment in African energy in the name of global decarbonization have not been as successful as Western climate activists would have liked.
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