German Chancellor Olaf Scholz made it clear upon his arrival in Senegal on Might 22 that his nation sees the way forward for relations between Europe and Africa as closely reliant on vitality, notably pure gasoline.
Following a gathering with the president of Senegal, Macky Sall, Scholz declared that his administration was ready to collaborate with the West African nation and that Dakar and Dakar have been actively speaking about LNG and gasoline improvement initiatives.
At a joint press convention with Sall, he said, “It is a matter value investigating intensely.”
Regardless of the chancellor’s lack of knowledge, it’s clear why Senegal’s gasoline has captured his curiosity.
Normally, Scholz is drawn to Senegal as a result of the European Union is at present concerned with exploring each choice for buying extra gasoline.
That’s, ever since Russia invaded Ukraine in late February, European leaders have given an excessive amount of thought to energy-related points.
This concern’s evident supply is as follows: Now that Moscow has demonstrated its willingness to trespass on internationally acknowledged borders, Brussels is critically contemplating aiding the European Union in weaning itself off of its reliance on Russian gasoline.
Its efforts will unavoidably embrace searching for various suppliers. Russia provided the union with a minimum of 155 billion cubic meters (bcm) of gasoline in 2021, in line with the Worldwide Vitality Company (IEA).
It could be inconceivable to switch or remove all of that directly as a result of it represents 40% of consumption and 45% of all imports. Consequently, the EU wants to search out a number of suppliers as a result of no different gasoline exporter is critical sufficient to take the place of Russia.
One of many potential suppliers being thought of for participation on this new community of gasoline suppliers to Europe is Senegal. Provided that greater than 1.13 trillion cubic meters (tcm) of proved reserves have been present in its offshore zone between 2014 and 2017, it has sufficient gasoline to be taken into consideration.
Nevertheless, Scholz is especially concerned with Senegal as a result of, together with Mauritania, it’s nearly prepared to start out exporting gasoline to Europe.
It’s not simply typically open for enterprise. In a real sense, it has already began organising store to develop its offshore property, flip among the sources it collects from them into liquefied pure gasoline (LNG), after which export the LNG to Europe.
In reality, there have been so many developments in that space that manufacturing is scheduled to start in 2019.
Not in 5 years, then. not in ten years. coming yr.
As a result of Higher Tortue/Ahmeyim (GTA), a large cross-border offshore gasoline useful resource, is scheduled to go surfing in 2023 by Senegal and Mauritania. Particularly, the third quarter of 2023.
Begin of GTA 2023 and EU Deadlines
Provided that Brussels has been discussing slicing the amount of Russian gasoline that the EU purchases by two-thirds by the tip of this yr, that comes at an ideal time for the European vitality market.
Senegal and Mauritania gained’t have the ability to fully cowl the void left by Russia, as I’ve already talked about. Provided that it has reserves of roughly 425 bcm, the GTA block is undoubtedly huge.
That’s sufficiently big to help the preliminary manufacturing of two.5 million tonnes per yr of LNG, with the potential to extend to five million tonnes per yr if the working firm for the block, BP, and its accomplice Kosmos Vitality in the USA resolve to double the capability of their FLNG infrastructure.
Contemplating the large quantities of gasoline Russia has been supplying, which may not look like a lot.
The two.5 million tonnes of LNG that Senegal and Mauritania can produce from the primary section of GTA can be equal to roughly 3.69 billion cubic meters of pure gasoline after export to Europe and regasification, whereas second-phase manufacturing of 5 million tonnes would equal roughly 7.37 billion cubic meters.
That quantities to solely 2.4 p.c and 4.8 p.c of Russian deliveries to the EU in 2021, respectively.
Nevertheless, these volumes from West Africa will likely be added to the extra volumes that EU member states have bought from present suppliers to reach in Europe.
(Be mindful, as an illustration, that Italy has been actively organising new gasoline purchases from suppliers like Egypt, Algeria, and Azerbaijan.) They gained’t simply be a drop in a bucket that’s emptying as a result of there isn’t any different choice.
They’ll make a distinction since they’ll be part of a brand new, bigger, and extra diversified system for filling the bucket.
Merely a Query of Timing?
However is it only a matter of luck of the draw? Are Senegal and Mauritania merely lucky sufficient to have been current on the applicable time? Will they achieve something simply because they occur to start manufacturing after the EU has already set its personal deadlines?
No, in fact not, on the one hand. In actuality, BP and Kosmos undoubtedly would have most well-liked to start manufacturing sooner, however delays introduced on by the COVID-19 outbreak pressured them to vary their preliminary work plan in 2020.
They might already have the ability to export LNG to Europe, the place demand and costs are excessive, if that they had been capable of carry GTA on-line earlier.
On the opposite facet, it’s not all luck, although. To make sure the GTA venture’s success, the governments of Senegal and Mauritania have put up loads of effort.
In keeping with the Petroleum Legal guidelines – Benchmarking Report for Senegal and Mauritania, which will likely be printed quickly by the African Vitality Chamber, Senegal has made some extent of amending its 1998 Petroleum Code to take the discovering of GTA and different important offshore fields into consideration.
The vast majority of this process happened between 2012 and 2019, nonetheless important adjustments to the legislative framework governing native content material have been made in 2021. Mauritania, alternatively, has established aims to keep up a positive atmosphere for overseas funding and work intently with IFIs just like the World Financial institution and the Worldwide Financial Fund (IMF).
It’s engaged in a steady reform course of and ready to collaborate with the remainder of the globe to maximise its vitality sources.
The outcomes of those efforts will quickly grow to be evident. For BP, Kosmos, and their contractors to ascertain an offshore manufacturing advanced with improvement wells linked to a floating manufacturing, storage, and offloading (FPSO) vessel, in addition to the FLNG ship and the buildings that can help it, it’s essential that Mauritania and Senegal lay the foundational components.
By this time subsequent yr, the advanced will likely be nearly prepared to start operations since it’s already greater than 75% completed.
And by this time subsequent yr, I anticipate the EU will likely be eagerly anticipating the arrival of the primary LNG cargo from Senegal and Mauritania after struggling by one other winter of considerations about what position Russia could and may have in its vitality stability.