Senegal’s new leader, President Bassirou Diomaye Faye has announced plans plans to revisit the contracts of oil and gas deals developed by BP Plc, Kosmos Energy Ltd. and Woodside Energy Group Ltd. in order to boost revenue for the state.
The West African country is set to open the taps this year on the $4.8 billion Grand Tortue Ahmeyim liquefied natural gas project and Sangomar oil development after numerous delays, setting up the economy to become one of the world’s fastest-growing economies.
Faye drew investor attention days before this week’s presidential election when he pledged to review the projects.
His economic team said he expects to make good on that promise after a surprise victory in the vote.
“To boost the state’s revenue from oil and gas deals, it’s necessary to renegotiate the contracts to increase the state’s shares and change the system of sharing of production,” said Ngagne Demba Toure, an oil adviser to Faye.
“Renegotiating contracts doesn’t mean that the state will impose itself on the companies without taking the law into consideration, but that the two parties agree to discuss some clauses of the contract.”
In a response to questions, Kosmos said it expects a “business-friendly” environment in the West African country to continue. “We remain focused on working with our partners to deliver first gas” at the GTA project later this year, it said.
Gordon Birrell, the executive vice president responsible for production and operations at the London-based company said BP aims to keep a constructive relationship with the incoming president, just as it did with the country’s previous leaders. He plans to meet with Faye when the new government is formed.
However, Woodside didn’t respond to an emailed request for comment.
Faye’s predecessor Macky Sall — who sparked a crisis in the country by postponing the election and trying to hold on to power for an extra year — said in an interview this month that trying to renegotiate existing contracts would be “disastrous” for Senegal.
“Oil and gas contracts can always be improved, but frankly, thinking that we can change the contracts already signed with the companies is not possible,” he said.
The IMF revised its forecast for economic growth in Senegal this year to 8.3% from 10.6% after earlier delays to the projects designed to realize exports of as much as 100,000 barrels of oil a day and at least 2.5 million tons of LNG a year.
