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.
