Country: Senegal

The development of the world-class Yakaar-Teranga gas fields offshore Senegal will welcome a new partner alongside Kosmos Energy and PETROSEN, the national oil company said today. Earlier this week, Kosmos Energy announced it was increasing its working interest in the Cayar Profond Block from 30% to 90% and assuming operatorship after the exit of bp. Both fields were discovered in 2016 and 2017 and hold some 25 Tcf of low carbon, high quality gas, making their development attractive for transportation and liquefaction. Kosmos Energy said it was working on a 550 MMscf/d development concept that would provide gas to the domestic market to replace heavy fuel oil in power plant, and export the rest via a new floating LNG (FLNG) unit. PETROSEN clarified that it would increase its interest to 35% once the fields start producing. Long-term, the view is for Kosmos Energy and PETROSEN to both farm down their interests to a new partner so that the partnership includes PETROSEN (34%), Kosmos Energy (33%) and a new partner that would hold the remaining 33%. “This structure marks a turning point in the growing influence of the national company who will play a growing role in the ventures in charge of developing the country’s hydrocarbon resources,” PETROSEN said in a statement.

The reopening of some refineries in Africa and the gradual commissioning of new facilities will mark the recovery of the continent’s downstream industry in 2023, according to Hawilti’s African Refineries Watch published today. While sub-Saharan Africa’s refining capacity is still under-utilised at some 40%, recovery is on the horizon with the re-opening of South Africa’s Astron Energy Refinery (100,000 barrels per day – bpd) and Ghana’s Tema Oil Refinery (45,000 bpd). Once both facilities are back in operations, the sub-continent will be able to utlise about half of its installed refining capacity. Refining capacity to get a boost in West Africa Ghana is also expecting to commission soon the Sentuo Oil Refinery, a 3 train multi-product crude oil refinery built within the Tema Industrial Zone with a targeted production capacity of 120 000 bpd. Its initial phase will have a capacity to produce 2 million tonnes per year (tpy) of petroleum products, almost doubling the country’s refining capacity. This is welcome news for Ghana who has seen its imports bill soar in recent months, reaching almost $4 billion in 2022 in premium and gasoil imports, according to the Bank of Ghana. But much larger change is currently happening in Nigeria, with the upcoming commissioning of the 650,000 bpd Dangote Refinery. The facility is scheduled to be inaugurated on May 22nd just before President Buhari leaves office and will cement Nigeria’s position as Africa’s leading refiner. Hawilti expresses cautious optimism on the commissioning of the Dangote Refinery, pointing to the complex and lengthy process required to reach full production. In its most recent report on Nigeria, the IMF for instance did not expect the refinery to reach full capacity right away, assuming a production of only 100,000 bpd in 2024 and 200,000 bpd in 2025. Meanwhile, Nigerian modular refineries have managed to navigate the country’s challenging business environments and found ways to secure new feedstock options to run small-scale facilities. Both the 1,000 bpd Edo Refinery and the 2,500 bpd Duport Midstream Refinery for instance are currently receiving crude oil by trucks from a marginal field in the Niger Delta to support their operations. The Edo Refinery is also undergoing significant expansion, with owner AIPCC Energy expecting to reach a capacity of 30,000 bpd at the end of this year and up to 100,000 bpd in 2024. “The drive to develop downstream assets with emphasis on refineries in emerging economies coupled with global energy volatility and evacuation challenges in some African countries is fueling the interest in the development of modular refineries,” declared Souheil Abboud, Managing Director at VFuels LLC. “The benefits of decentralizing refining infrastructure are one of the main reasons for the growth of modular refineries in Africa, and especially Nigeria. We are surely witnessing a growing demand for more sustainable infrastructure assets and an interest from Nigerian developers to integrated low-carbon electrification options within their future refining infrastructure. VFuels is proud to have completed an engineering FEED package that integrates renewable power solution for a refinery project in Nigeria.”

Despite a very tight offshore rig supply market, 2023 might set a new 10-year high for Africa’s offshore drilling market as several development, infill, and exploration campaigns get executed this year. According to the Offshore Rigs Tracker released this week by Hawilti and the Caverton Offshore Support Group (COSG) Plc, over 30 rigs are already confirmed to be active offshore sub-Saharan Africa this year, with more in the pipeline. Angola will continue to dominate the market like it has for a couple of years. The country has six floaters already contracted until at least 2024. Based on its pipeline of brownfield and greenfield projects, it will continue to drive deep-water drilling activity until at least 2026. All international oil companies (IOCs) have active rigs in the country, especially TotalEnergies (3), Azule Energy (2), Chevron (1), and ExxonMobil (1). They are actively pursuing infill drilling campaigns and subsea tie-back schemes on their producing FPSO units, while targeting infrastructure-led exploration opportunities. “We continue to witness an upsurge in drilling activity offshore West Africa despite the offshore rigs supply getting tight,” said Capt. Ibrahim Bello, Managing Director of Caverton Helicopters. “More drilling contracts are currently in negotiations across the region for both exploratory and development drilling, which could make 2023 one of the biggest years for offshore drilling activity on the continent since the crisis of 2014.” Nigeria’s offshore industry is also maintaining the momentum of drilling activity it saw in 2022 with at least five offshore rigs scheduled to be active in the country this year. Shell’s subsidiary SNEPCO and TotalEnergies both have floaters mobilized for most of the year on their respective deep-water blocks, OML 118 and OML 130. However, most of Nigeria’s demand is for jack-ups in shallow water, driven by key players such as Chevron, First E&P, General Hydrocarbons, and Damas E&P. After Angola and Nigeria, the Republic of Congo and Gabon are the next most active offshore drilling destinations in sub-Saharan Africa. Both countries are seeking to mitigate their production decline with additional infill drilling, development drilling, and exploratory drilling. Several campaigns are currently taking place there, including exploratory drilling by Eni in Congo and CNOOC in Gabon. Across the rest of the continent, significant development and exploratory drilling campaigns are also on the table this year, including in Senegal and Namibia. While the former is drilling to start producing oil and export LNG, the latter has all the industry’s attention as both Shell and TotalEnergies seek to confirm significant oil and gas discoveries made in the Orange Basin. The Offshore Rigs Tracker Q1 2023 can be downloaded for free here.  

On Wednesday, the African Export-Import Bank (Afreximbank) and Senegalese power company Ndar Energies S.A. signed a Framework Agreement for the development of a 250 MW combined cycle gas-to-power plant in Senegal. The agreement covers the financing, design, construction, and operation of the €430m facility that will be built in Saint Louis in northern Senegal, next to the border with Mauritania. Afreximbank will act as the Lead Project Developer and Mandated Lead Arranger. “The project, which possesses strong climate finance credentials, is in line with Afreximbank’s strategy to support the deployment of just energy transition solutions across Africa,” the bank said in a statement. Senegal is significantly expanding its gas-to-power capacity as domestic gas expects to become available in the coming years from offshore fields operated by bp. Earlier this month, President Macky Sall inaugurated the new 120 MW Malicounda power station which will ultimately run on gas and was co-developed by Africa50. Another 300 MW power plant has also been under construction in Cap des Biches in Dakar by West African Energy since March 2021.

President Macky Sall has inaugurated the new 120 MW Malicounda power plant on February 11th. The project is the result of a development agreement signed in 2017 between Africa50 and state utility Senelec to select a strategic sponsor to develop the facility under a Build, Own, Operate and Transfer model (BOOT). Independent power producer (IPP) Melec Power Gen, part of the Lebanese Matelec Group, was eventually selected, making Malicounda its third power station in the country following the 67.5 MW Kounoune station commissioned in 2008 and the 115 MW Tobene station commissioned in 2016. Malicounda was developed a cost of €154m and has increased Senegal’s generation capacity by 8%. Its construction started a few years ago after the setting up of a €75m (FCFA 50bn) bridge loan with the Orabank Group and a few regional partners. The senior debt was ultimately provided by the African Development Bank (AfDB), acting as the mandated lead arranger, the Arab Bank for Economic Development in Africa (BADEA), the West African Development Bank (BOAD) and the OPEC Fund for International Development (OFID). The power plant will initially consume diesel and HFO but has been designed to switch to natural gas as soon as gas becomes available from Senegal’s domestic offshore fields

Mali, Guinea, Mauritania and Senegal celebrated over the weekend the inauguration of the 140 MW Gouina hydropower plant, whose units were commissioned earlier this year. The facility was built as part of a multi-project plan involving the construction of several hydroelectric stations along the Senegal River, where the hydroelectric potential is estimated at 1,200 MW. The project is owned and managed by the Organization for the Development of the Senegal River (OMVS), which received a loan of $ 110 million from the International Development Association of the World Bank several years ago for this integrated management programme for the region’s water resources. The Gouina plant is the third hydropower project of this type to be commissioned by the OMVS after the 205 MW Manantali plant in 2002 and the 60 MW Félou plant in 2013.

Senegal’s Petrosen Trading & Services, a subsidiary of the country’s national oil company, has signed a Memorandum of Understanding (MoU) with Turkey’s Çalık Enerji and Japan’s Mitsubishi for the pre-feasibility study of an ammonia and urea manufacturing unit. The agreement was signed in the presence of Senegalese President Macky Sall during the 8th Tokyo International Conference on African Development (TICAD8) held in Tunis on August 27th and 28th. The production of fertilizers is one of the option Senegal is exploring to monetise its offshore gas reserves, currently being developed by bp and Kosmos Energy for the export market. The Greater Tortue/Ahmeyim (GTA) project that straddles the Senegal-Mauritania border will start exporting LNG next year, but has an allocation of 35 MMscf/d reserved for the domestic market. Such allocation is expected to increase once the second phase of GTA is sanctioned, leaving Senegal with plenty of gas to process domestically. While the country’s strategy relies on switching several of its thermal power plants from diesel and HFO to natural gas, additional industries could also benefit from the processing and transformation of gas reserves. The pre-feasibility study for a gas-based ammonia and urea plant will be financed by the Ministry of Economy, Trade, and Industry (METI) of Japan and conducted by Mitsubishi Corporation and Nippon Koei.

Actis and Mainstream Renewable Power have sold Lekela Power to the Infinity Group of Egypt and the Africa Finance Corporation (AFC). With an installed wind power capacity of 1 GW, Lekela Power is Africa’s largest pure-play renewable energy independent power producer (IPP). The platform was until now owned at 60% by Actis and 40% by Mainstream Renewable Power Africa Holdings. It currently owns five operational wind farms in South Africa (624 MW), one in Egypt (252 MW), and one in Senegal (159 MW). “This acquisition marks an important milestone in our journey to build a 3GW renewable energy platform. Working together with our partner, Infinity, we aim to more than double the capacity of our joint operating assets over the next 4 years, which stands at 1.4 GW after the Lekela acquisition,” said Samaila Zubairu, CEO of the AFC. Several projects are already in Lekela Power’s pipeline including the expansion of Senegal’s 159 MW Taiba Ndiaye Wind Farm by 100 MW and the addition of 175 MWh of battery storage. In Ghana, the platform is also planning the Ayitepa Wind Farm in two phases of 150 MW and 75 MW.

On June 29th, TechnipEnergies Country Director for Senegal, Franck Pliya, announced the holding of the last Steering Committee meeting of the ACATBS project at the SAR Refinery in Dakar. The contractor had been involved in a significant upgrade and expansion of the refinery over the past months, which culminated in a facility shutdown in Q1 this year to synchronise several new units. The ACATBS project (projet d’Augmentation de Capacité et d’Adaptation des unités pour le Traitement du Brut Sénégalais) notably targeted the expansion of the refinery’s capacity from 1.2m to 1.5m tonnes per year (tpy). It consisted of the installation of a pre-flash column to increase production capacity by 30%, and the extension of the reforming unit to enable the processing of domestic crude oil from the Sangomar offshore field, where first oil is expected in 2023. “Through this project, we have achieved 1.2m hours without accident, remained on budget, and managed to ensure an 80% participation from Senegalese companies with a local workforce of over 500 mobilised on site during the peak of the project,” Franck Pliya wrote.     SAR mostly imports crude oil from Nigeria (especially Erha and Bonny Light) before refining it for distribution in Senegal and the landlocked subregion, especially in Mali. Its facilities include distillation units, a catalytic reformer and a MEROX unit to treat kerosene. The facility was initially commissioned in 1963 and is owned at 46% by the state-owned national oil company PETROSEN. Full details on the African refining sector can be found in Hawilti’s Quarterly Refineries Watch, available within your Hawilti+ research terminal (plus.hawilti.com).

GAS Entec, a subsidiary of Singapore-based Atlantic Gulf & Pacific International (AG&P) has completed the conversion of a 125,000 m3 LNG carrier for KARMOL, the joint-venture of Turkey’s Karpowership and Japan’s Mitsui OSK Lines. The converted 84 MMscf/d modular floating storage and regasification unit (M-FSRU) is a first in the world and will be delivering LNG to the 236 MW Karadeniz Powership Aysegul Sultan in the Port of Dakar. “Gas Entec’s proprietary, patented RegasTainer® technology offers flexibility to scale the capacity of the FSRU up and down from 15 to 300 mmscfd with minimized downtime, allowing the vessel to be repurposed as power requirements grow in a market,” AG&P said in a statement today. Karpowership’s Ayşegül Sultan power barge was relocated offshore Dakar from Ghana in 2019. It has run on heavy fuel oil (HFO) until the arrival of the KARMOL LNGT Powership Africa FSRU in 2021, and currently represents 15% of Senegal’s electricity supply. In 2021, the Mauritius Commercial Bank (MCB) announced a $140m syndicated project finance facility to convert the facility to natural gas.

On Monday this week, Senegalese President Macky Sall laid the foundation stone for the new $1.13bn Ndayane deep-water port, 50km south of Dakar. The project is led by a joint-venture of DP World of Dubai and the Dakar Port Authority and represents so far the biggest private investment in Senegal. According to DP World, the first phase will include 840 metres of quay and a 5 km marine channel designed to handle 366-metre vessels, with a second phase adding 410 metres of container quay and further dredging to handle 400-metre vessels. The Dubai-based logistics giant will notably develop and operate the 300-hectare container terminal, as well as finance and design the land and maritime infrastructure for the port. In October last year, the UK’s development finance institution and impact investor CDC Group (CDC) announced a partnership with DP World to invest into Africa’s trade and logistics infrastructure. Under this long-term partnership, DP World had notably committed to invest a further $1bn into existing ports in Dakar (Senegal), Sokhna (Egypt) and Berbera (Somaliland).

Just after Christmas, President Macky Sall of Senegal inaugurated the long-delayed railway line linking Dakar to the new city of Diamniadio. The new service can transport over 100,000 people across the 36km between Dakar and Diamniadio, and currently counts 14 stations. It will ultimately link Dakar to the Blaise-Diagne International Airport (AIBD) in less than 1h. The €1bn project is a cornerstone of Macky Sall’s infrastructure development strategy and is seen as critical to decongest Dakar’s peninsula. The service is called “Train Express Regional”, or TER, after the commercial brand of France’s railway company SNCF. It is the first such train to operate in Africa. France’s participation via the SNCF and the RATP had been announced by President Macky Sall back in 2016. A Framework Agreement had eventually been signed covering the operations & maintenance of the TER by both French companies. The new operating company, called SETER, counts SNCF’s subsidiary Keolis and RATP’s subsidiary RATP Dev. as shareholders. The project was built by a consortium of Eiffage of France, Yapi Merkezi of Turkey and Senegal’s Compagnie sahélienne d’entreprises (CSE). Its systems and technology were conceptualized and developed by French companies Engie and Thales and include the ERTMS2, one of the world’s most sophisticated rail traffic management system. The trains themselves were manufactured and delivered by French contractor Alstom.

Lekela has announced the signature of a grant agreement with the United States International Development Finance Corporation (DFC) to fund a feasibility study for an extension of its Parc Eolien Taiba N’Diaye (PETN). The 158.8 MW wind farm started commercial operations in December 2019 and is West Africa’s biggest wind energy facility. “The feasibility study, which is expected to be completed within 15 months, will be jointly financed by Lekela and DFC. The study covers an area west of the existing wind farm and will consist of a wind measurement campaign, a network study, an environmental impact study and other on-site surveys,” Lekela said in a statement. In September 2020, Lekela had also been awarded a grant from the U.S. Trade and Development Agency (USTDA) to fund a feasibility study in partnership with state-utility Senelec for Senegal’s first grid-scale battery electric storage system at PETN wind farm. The initial Taiba Ndiaye wind power project already benefited from strong government support and financial backing, especially from the U.S. Government, Denmark’s Export Credit Agency and the World Bank. This allowed its quick development, and commissioning in late 2019. More importantly, the facility has a base tariff equivalent to $0.11/kWh, hence contributing to the reduction of electricity generation costs in Senegal, where prices can go as high as $0.30/kWh. Details on the Taiba Ndiaye Wind Farm are available in the “Projects” section within your Hawilti+ research terminal.

Vivo Energy has announced it has reached an agreement on the terms of a recommended cash offer under which Vitol will be acquiring the entire issued and to be issued share capital of Vivo. Vitol will only be acquiring the shares it does not already own in Vivo Energy, via a BidCo, a company indirectly owned by Vitol Investment Partnership II Ltd. The total cash value of the deal is valued at $2.3bn. In December 2020, Vivo Energy’s key shareholders included Vitol (36.1%), Helios Investment Partners (27.23%) and Petronas Marketing International (3.93%). The announcement follows several attempts by the Vitol Group to acquire Helios Investment Partners’ shares in Vivo Energy. “Following a series of negotiations, BidCo and Helios agreed a price at which both parties would be willing to transact at a purchase price of US$1.79 per Vivo Share,” Vivo Energy said in a statement. Both companies were partners and founding shareholders of Vivo Energy, a company born of Shell’s divestment from all its African fuel retailing business in 2011. Vivo eventually completed an initial public offering in May 2018, pursuant to which its shares were admitted to trading on the Main Market of the London Stock Exchange and admitted to listing on the Official List, with a secondary listing on the Main Board of the JSE.

Nigerian energy infrastructure conglomerate, Sahara Group, has announced an investment of $1bn into Africa’s liquefied petroleum gas (LPG) value chain during the African Refiners and Distribution Association (ARDA) conference 2021 in South Africa this week. “Sahara, through its subsidiary, WAGL Energy Limited is already working towards investing $1 billion to ramp up its LPG fleet and terminal infrastructure over the next five years. In addition to the vessel fleet, Sahara is in the process of building over 120,000 metric tonnes of LPG storage in eleven countries,” he said. In October 2020, Sahara and Côte d’Ivoire’s national oil company PETROCI notably broke ground on a new 12,000 MT LPG storage terminal on the outskirts of Abidjan. The company has also earmarked additional such projects in Nigeria, Senegal, Ghana, Tanzania and Zambia while considering additional investment elsewhere on the continent.

The UK’s development finance institution and impact investor CDC Group (CDC) is partnering with DP World of the UAE to invest into Africa’s trade and logistics infrastructure. The long-term partnership will see DP World investing a further $1bn into existing ports in Dakar (Senegal), Sokhna (Egypt) and Berbera (Somaliland). On its side, CDC is initially committing approximately $320 million and expects to invest a further $400 million over the next several years. The additional investment into Berbera aims to turn the port into a regional trading hub boosting economic growth in Somaliland and supporting the growth of Ethiopia by offering an alternative export and import route for the country. In West Africa, the expansion of the Dakar port will be adding capacity as other ports are increasingly being stretched and unable to serve the hinterland. “The port expansion will support trade with landlocked Mali and help Senegal become a hub of economic activity for the region,” CDC explained. The partnership is expected to create 138,000 jobs by investing in origin and destination ports, inland container depots, economic zones and broader logistics infrastructure.  

Fugro has been awarded a monitoring contract by Saipem that will see it deploying its InclinoCam® vision technology for the Greater Tortue-Ahmeyim gas project offshore Senegal and Mauritania. The project involves the development of 15 trillion cubic feet (Tcf) of gas discovered on the maritime border between Senegal and Mauritania via a 2.45 million tonnes per annum (mtpa) floating LNG (FLNG) unit in Phase 1 where first gas is expected in Q3 2023. Fugro will start executing its contract with Saipem from December this year and will install more than 190 piles over 6 months from a jack-up barge. “Fugro’s rapid precise positioning will provide actionable Geo-data on the monopile inclination to accelerate the project schedule and a touchless solution that is much safer than conventional monitoring,” the company said in a statement today. Full details on the Greater Tortue Ahmeyim (GTA) LNG project are available in the “Projects” section within your Hawilti+ research terminal.

The Senegalese government has recruited 10,000 people for its “green employment” program, the Minister of Environment and Sustainable Development, Abdou Karim Sall, has announced. “These new recruits will pass a two-year test period and then we will assess before signing them CDI”, he added, specifying that 7,000 will be assigned to the National Agency of the Great Green Wall and 3,000 remaining in the various services of his ministerial department. The minister also indicated that these new recruits would intervene in the fight against deforestation, the protection of the environment, but also in the fight against bush fires. According to him, these new agents will undergo training before their deployment in the field. Senegalese President Macky Sall reiterated last March his decision to reorient budget allocations, with funding of at least 450 billion CFA francs ($800m) for a period of three years, including 150 billion in 2021. According to the Senegalese Head of State, these resources will be used to finance the Emergency Program for the employment and socio-economic integration of young people.