Senegal’s President Aims to Revise Lucrative Mining and Oil Contracts for Local Gain

Senegal’s President Bassirou Diomaye Faye has announced plans to renegotiate mining and oil contracts for the benefit of local communities. The gas and oil deposits are projected to generate around 700 billion CFA francs ($1.1 billion) annually over three decades. The country sees these resources as crucial for its economic development, but the current government criticizes the terms of the agreements signed by the previous administration as highly unfavorable.

Woodside Energy, an Australian company operating in Senegal’s Sangomar oil field in partnership with Petrosen, acknowledges governments’ authority to set legal and regulatory frameworks for the oil and gas sector. However, former President Macky Sall has stated that altering existing contracts with companies is not feasible. Previous government sources and Extractive Industries Transparency Initiative reports indicate that up to 60% of future oil and gas revenues are designated for the Senegalese state.

Ibrahima Bachir Drame, an oil expert and former communications manager at Petrosen, mentioned that oil contracts typically lack explicit renegotiation clauses but include provisions for resolving potential disputes. He highlighted the case of the Greater Tortue Ahmeyim (GTA) liquefied natural gas field, a project involving BP, Kosmos Energy, SMH, and Petrosen.

Senegal’s constitution asserts that natural resources are owned by the people and should serve their interests. The country, facing challenges due to the Covid-19 pandemic and the conflict in Ukraine, allows oil companies to seek resolution through international tribunals in case of disagreements regarding contract renegotiation.