German Chancellor Olaf Scholz made it clear upon his arrival in Senegal on May 22 that his nation sees the future of relations between Europe and Africa as heavily reliant on energy, particularly natural gas.
Following a meeting with the president of Senegal, Macky Sall, Scholz declared that his administration was prepared to collaborate with the West African nation and that Dakar and Dakar were actively talking about LNG and gas development projects.
At a joint press conference with Sall, he stated, “It is an issue worth investigating intensely.”
Despite the chancellor’s lack of information, it is clear why Senegal’s gas has captured his interest.
In general, Scholz is drawn to Senegal because the European Union is currently interested in exploring every option for acquiring more gas.
That is, ever since Russia invaded Ukraine in late February, European leaders have given a great deal of thought to energy-related issues.
This concern’s evident source is as follows: Now that Moscow has demonstrated its willingness to trespass on internationally recognized borders, Brussels is seriously considering aiding the European Union in weaning itself off of its reliance on Russian gas.
Its efforts will unavoidably include looking for alternative suppliers. Russia supplied the union with no less than 155 billion cubic meters (bcm) of gas in 2021, according to the International Energy Agency (IEA).
It would be impossible to replace or eliminate all of that at once because it represents 40% of consumption and 45% of all imports. As a result, the EU needs to find several suppliers because no other gas exporter is significant enough to take the place of Russia.
One of the prospective suppliers being considered for participation in this new network of gas suppliers to Europe is Senegal. Given that more than 1.13 trillion cubic meters (tcm) of proved reserves were found in its offshore zone between 2014 and 2017, it has enough gas to be taken into account.
However, Scholz is particularly interested in Senegal because, along with Mauritania, it is just about ready to start exporting gas to Europe.
It’s not just generally open for business. In a true sense, it has already started setting up shop to develop its offshore assets, turn some of the resources it collects from them into liquefied natural gas (LNG), and then export the LNG to Europe.
In fact, there have been so many advancements in that area that production is scheduled to begin in 2019.
Not in five years, then. not in ten years. coming year.
Because Greater Tortue/Ahmeyim (GTA), a sizable cross-border offshore gas resource, is scheduled to go online in 2023 by Senegal and Mauritania. Specifically, the third quarter of 2023.
Start of GTA 2023 and EU Deadlines
Given that Brussels has been discussing cutting the quantity of Russian gas that the EU purchases by two-thirds by the end of this year, that comes at a perfect time for the European energy market.
Senegal and Mauritania won’t be able to completely cover the void left by Russia, as I’ve already mentioned. Given that it has reserves of roughly 425 bcm, the GTA block is undoubtedly big.
That’s big enough to support the initial production of 2.5 million tonnes per year of LNG, with the potential to increase to 5 million tonnes per year if the operating company for the block, BP, and its partner Kosmos Energy in the United States decide to double the capacity of their FLNG infrastructure.
Considering the enormous amounts of gas Russia has been supplying, that might not seem like much.
The 2.5 million tonnes of LNG that Senegal and Mauritania can produce from the first phase of GTA would be equivalent to roughly 3.69 billion cubic meters of natural gas after export to Europe and regasification, while second-phase production of 5 million tonnes would equal roughly 7.37 billion cubic meters.
That amounts to only 2.4 percent and 4.8 percent of Russian deliveries to the EU in 2021, respectively.
However, these volumes from West Africa will be added to the additional volumes that EU member states have purchased from current suppliers to arrive in Europe.
(Keep in mind, for instance, that Italy has been actively setting up new gas purchases from suppliers like Egypt, Algeria, and Azerbaijan.) They won’t just be a drop in a bucket that is emptying because there is no other option.
They’ll make a difference since they’ll be a part of a new, larger, and more varied system for filling the bucket.
Simply a Question of Timing?
But is it just a matter of luck of the draw? Are Senegal and Mauritania simply fortunate enough to have been present at the appropriate time? Will they gain anything just because they happen to begin manufacturing after the EU has already set its own deadlines?
No, of course not, on the one hand. In reality, BP and Kosmos undoubtedly would have preferred to begin production sooner, but delays brought on by the COVID-19 outbreak forced them to change their initial work plan in 2020.
They could already be able to export LNG to Europe, where demand and prices are high, if they had been able to bring GTA online earlier.
On the other side, it’s not all luck, though. To ensure the GTA project’s success, the governments of Senegal and Mauritania have put up a lot of effort.
According to the Petroleum Laws – Benchmarking Report for Senegal and Mauritania, which will be published soon by the African Energy Chamber, Senegal has made a point of amending its 1998 Petroleum Code to take the finding of GTA and other significant offshore fields into account.
The majority of this procedure took place between 2012 and 2019, however significant changes to the legislative framework governing local content were made in 2021. Mauritania, on the other hand, has established objectives to maintain a favorable environment for foreign investment and work closely with IFIs like the World Bank and the International Monetary Fund (IMF).
It is engaged in a continuous reform process and prepared to collaborate with the rest of the globe to maximize its energy resources.
The results of these efforts will soon become evident. For BP, Kosmos, and their contractors to establish an offshore production complex with development wells connected to a floating production, storage, and offloading (FPSO) vessel, as well as the FLNG ship and the structures that will support it, it is necessary that Mauritania and Senegal lay the foundational elements.
By this time next year, the complex will be almost ready to begin operations since it is already more than 75% finished.
And by this time next year, I expect the EU will be eagerly anticipating the arrival of the first LNG cargo from Senegal and Mauritania after suffering through another winter of concerns about what role Russia may and should have in its energy balance.