Senegal: Energy – Oil & Gas

Following recent oil and gas discoveries, Senegal has become a sought-after destination for the oil sector, attracting upstream oil and gas industry players.

The Senegalese sedimentary basin has a proven hydrocarbon potential. Recent work and studies have identified several deep offshore and onshore prospects.

In February 2001, PETROSEN signed a production sharing agreement with Fortesa Corporation to bring the Gadiaga gas field into production and to continue exploration of the Thies block. Within this framework, Fortesa brought on stream the Gadiaga 2 well drilled in 1996 by PETROSEN. Subsequently, Fortesa drilled thirteen (13) gas exploration and development wells that join the six pre-existing wells on the permit. The proven recoverable reserves (P90) calculated from the well data, added to the remaining quantities in the Gadiaga-2 field, have been estimated at nearly 357 million cubic meters (Fekete Associate Inc. Report, June 2009).

In addition, in late 2014, Cairn Energy through its Senegalese subsidiary Capricorn Senegal and its joint venture partners drilled two wells off the coast of Senegal. Oil was discovered in both wells, opening a new oil basin on the Atlantic continental margin. In the Rufisque and Sangomar deep offshore blocks the probable reserves highlighted in 2014, are estimated at more than one billion barrels of oil in addition to natural gas.

Sangomar Project: The Sangomar field (formerly SNE) was discovered in 2014 with the drilling of the SNE-1 well. The association CAIRN Energy, CONOCCOPHILIPS, FAR Limited and PETROSEN undertook, between the end of 2015 and 2018, the evaluation of this deposit with the drilling of 8 wells. The recoverable reserves are estimated at nearly 630 million barrels of oil. The field also contains associated and non-associated natural gas with reserves of about 4 TCF (113 billion Nm3). The Sangomar field will be developed in several phases. The first phase, for which the Final Investment Decision was taken on January 9, 2020, will involve the drilling of 23 production wells, water and gas injection. Oil production will start in early 2023 via an FPSO with a maximum daily production capacity of 100,000 barrels.

Grand Tortue/Ahmeyin Project (GTA): In January 2016, Kosmos Energy announced “a significant gas discovery” off the coast of Senegal. In its press release, the U.S. juniore said it had “discovered 101 meters of gas in two reservoirs of excellent quality” on the Guembeul-1 well.This well is located at a depth of 2.7 kilometers, in the southern part of the Ahmeyim permit (formerly Tortue West) straddling Senegal and Mauritania. In May 2016, Kosmos announced a discovery of 1,400 billion cubic meters of natural gas reserves in the Teranga-1 well and 5 ancillary wells drilled in the Cayar Offshore Profond block, located about 65 kilometers northwest of Dakar, and nearly 100 kilometers south of Gueumbeul 1 in the St. Louis Offshore Profond block. The Grand Tortue/Ahmeyin (GTA) natural gas field was discovered in 2015 with the drilling of the Tortue-1 (Ahmeyin-1) well in Mauritania and the Guembeul-1 well in Senegal. The Grand Tortue/Ahmeyin (GTA) natural gas field contains approximately 20 TCF of natural gas or 530 billion Nm3. LNG and natural gas production for the domestic market (about 35 mmscf/day) will start in 2023. An LNG production of 2.5 million tons per year is expected for the first phase.

Petroleum resources may be explored by any legal entity and exploited by any legal entity under Senegalese law that can demonstrate the technical and financial capacity to carry out these activities, under the following authorizations:

• A prospecting permit for a maximum period of two (2) years, granted by order of the Minister in charge of Hydrocarbons in areas not covered by a hydrocarbon mining title;
• The hydrocarbon exploration authorization granted to the holder by decree for an initial period not exceeding four years;
• The provisional exploitation authorization which is granted, by order of the Ministry in charge of hydrocarbons, to a legal entity that already holds an exploration permit for a period that cannot exceed the maximum period of 06 (months);
• The exclusive exploitation authorization which is granted to the holder following a presidential decree, for a period not exceeding 20 years in accordance with the provisions of Article 30 of the Petroleum Code of 2019.

Regarding the gas industry, the license and/or the concession are granted to any legal entity under Senegalese law that can prove the technical and financial capacities necessary to conduct gas activities, by means of a call for tenders or by direct consultation, by order of the Minister in charge of hydrocarbons.

Yes, the oil and gas codes do not differentiate between onshore and offshore activities.

Oil Sector

The 2019 petroleum code has reconsidered all the positive aspects of the previous code of 1998 and made other improvements including the abolition of the petroleum concession contract; it is now referred to as a petroleum contract (production sharing contract).

The production sharing contract is an agreement concluded in accordance with the terms of the legislation in force in the field of hydrocarbons covering a given perimeter which, in the long term, allows the distribution of the hydrocarbons produced between the State and the State’s co-contractor under a pre-established distribution mechanism.

The provisions of the contract are determined following negotiations between the applicant and the representatives of the State on the basis of a standard contract previously approved by the Government.

Furthermore, you will note that the production sharing contract consists in two parts:

• the provisions relating to hydrocarbon exploration/research
• provisions relating to the exploitation/production of hydrocarbons

As regards the exploration/research part, it is covered by the exclusive exploration authorization which is granted as a result of the signature of the production sharing contract and confers on its holder an exclusive right at his own risk and expense to carry out the research work defined in the production sharing contract.

The exclusive exploration authorization comprises three distinct periods, the duration of which is established by negotiation on the basis of the minimum work commitments but within the maximum period provided for by the laws and regulations in force.

• The first period of exploration generally consists of studies to confirm the oil operator and enable him to decide whether to continue oil activities. If the commitments made have been respected, the transition to the next period is authorized by the authorities in accordance with the terms of the contract.
• The second exploration period generally consists of the drilling of oil wells in order to certify the studies carried out during the first exploration period. If the commitments made have been respected, the transition to the next period is authorized by the competent authorities (Direction des hydrocarbures/ MPE) subject to the contract notice.
• The third exploration period consists of the drilling of oil wells in order to confirm all the hydrocarbon potential in the assigned perimeter.

In case of discovery of a new deposit, the holder will have to submit within 6 months of the notification of the discovery an application for an evaluation authorization.

Also, partial or total relinquishment is authorized provided that a notification period provided for in the contract is respected. The work commitments and financial commitments provided for remain in effect upon relinquishment.

The exclusive operating license can only be interrupted for reasons of force majeure or by renunciation. If interruption occurs during a given period (six months) without the agreement of the government, the latter may withdraw the authorization and oblige the holder to carry out the abandonment work; but this does not necessarily entail the termination of the contract in the case of multiple operating areas.

Such termination does not terminate the obligations arising before or on the occasion of the termination or expiration.

If exploitation is possible at the expiry of the authorization, the government may have it exploited by another operator without any consideration for the contract holder.

The granting of the exclusive exploitation authorization obliges its holder to carry out, at his own expense and financial risk, all useful and necessary petroleum operations for the exploitation of the deposit.

Also, upon relinquishment of all or part of the perimeter subject to the contract, all movable or immovable property used by the perimeter holder is transferred free of charge to the State unless it is used by the contract holder for the needs of its petroleum operations. If the government decides not to accept the transfer it must notify the contract holder within the contractual period following the

Gas sector:

The Gas Code provides for a license or concession regime, depending on the gas operations envisaged. These licenses or concessions are granted by order of the Minister in charge of Hydrocarbons.

The license:

The Minister in charge of Hydrocarbons implements the policy defined by the Head of State for the activities of the intermediate and downstream segments of the gas sector (Article 4 of the Gas Code).

The exploration and/or exploitation of gas resources are subject to the prior obtaining of a license by a legal person under Senegalese law issued by the Minister in charge of Hydrocarbons. In addition, a prior environmental assessment must be carried out and an operating permit obtained in accordance with the regulations on classified installations for environmental protection.

In addition, the construction and operation of gas infrastructures are subject to the approval of the Minister in charge of Hydrocarbons.

This license is required for the import, export, re-export, aggregation, processing, storage or supply of natural gas, as well as for the transportation and distribution of liquefied and compressed natural gas (Article 7 of the Gas Code).

In addition, this license is granted only to any Senegalese legal entity and this, by way of a call for tenders or direct consultation by order of the Minister in charge of hydrocarbons according to rules to be set by decree.

The concession:

In accordance with the provisions of Article 10 of the Gas Code, the concession must be granted for the transport or distribution of natural gas by pipeline is also granted only to any legal entity under Senegalese law that can justify the necessary technical and financial capacities.

The granting of a license or concession for downstream gas activities, including the construction of gas infrastructure, is subject to the completion of a prior environmental assessment and the obtaining of an operating permit under the regulations on facilities classified for environmental protection.

The downstream distribution activity is subject to obtaining a license if it concerns liquefied and compressed natural gas (Article 7, Gas Code), or to obtaining a concession if it concerns the distribution of natural gas by pipeline (Article 10, Gas Code).

Unless mistaken, we are not aware of any unconventional hydrocarbon resources being discovered.

To date, there is no legislation on the regulation of unconventional hydrocarbon resources.

The main regulatory bodies in the oil and gas sector are:

• The Ministry in charge of Hydrocarbons;
• The Directorate of Hydrocarbons;
• The National Hydrocarbons Committee (CNH);
• The Cos-Petrogas;
• The National Committee for Local Content Monitoring (CNSCL)

The government is directly involved in the oil industry through the SOCIETE PETROLIERE DU SENEGAL, known as PETROSEN HOLDING, which acts in its name and on its behalf and its subsidiaries:

• PETROSEN E&P (Exploration/Production) specialised in upstream and midstream hydrocarbon activities;
• PETROSEN T&S (Trading and Services) focused on oil trading and services. The subsidiary, which is positioned on the downstream segment of hydrocarbons

Following the recent discoveries in the hydrocarbon sector in Senegal, the State of Senegal has initiated a reform of texts related to the hydrocarbon sector.

Among these texts adopted, the law n°2019-04 on local content in the hydrocarbon sector and its numerous application decrees formalized the Government’s will to set up an ambitious local content system with the objective of reaching 50% local content by 2030.

Among the guiding principles of the local content law is the obligation for any investor wishing to act as a subcontractor, service provider or supplier to create a company under Senegalese law registered with the Senegalese Trade and Personal Property Credit Register (Article 8.3). This law also establishes a classification of oil and gas activities into three regimes: exclusive, mixed and non-exclusive. The classification of an activity in each of these regimes will have consequences on the percentage of national staff and on the ownership of capital by nationals. This law requires, among other things, that each company operating in the hydrocarbon sector promote local labor and the acquisition of local goods and services, and undertake training and knowledge and technology transfer programs.

Decree No. 2020-2065 establishing the terms and conditions for the participation of Senegalese investors in companies involved in oil and gas activities defines the following concepts:

• Activity under the exclusive regime: activity of supply of goods and services that the national private sector is able to perform immediately in compliance with the norms and standards of the oil industry;
• Activity under the mixed regime: activity directly or indirectly related to oil and gas operations, which the national private sector is not able to carry out immediately in compliance with the norms and standards of the oil industry;
• Activity under the non-exclusive regime: activity directly or indirectly related to oil and gas operations that the national private sector is not able to carry out immediately in compliance with the norms and standards of the oil industry.

The characteristics of the exclusive regime are specified in article 4 of the decree and are as follows:

• The share capital of the companies whose activities are classified in the exclusive regime is held up to 51% at least by natural persons of Senegalese nationality or by legal entities controlled by natural persons of Senegalese nationality;
• More than 80% of the management of these companies is ensured by natural persons of Senegalese nationality;
• At least 51% of the staff working in these companies are Senegalese nationals.

Please note that these are minimum thresholds that the classification table provided for by Decree No. 2021-249 of February 22, 2021 may increase. Indeed, the classification table provided for by decree n°2021-249 classifies the activities according to the mixed or exclusive regime and provides for minimum thresholds of ownership of share capital by nationals and percentage of national staff for each type of activity according to its regime.

With respect to the mixed regime, Article 5 of the decree provides that a foreign company carrying out an activity subject to the mixed regime must form an association in the form of a company under Senegalese law with a local company (meeting the criteria mentioned above) which would hold at least 5% of the capital. The form of association will be defined by the guidelines of the National Committee for Monitoring Local Content (CNSCL). This is a minimum that will be subject to change depending on the study of the socio-economic fabric of the hydrocarbon sector in Senegal.

Finally, activities under the non-exclusive regime are open to free competition between foreign and local companies.

The general framework of environmental law in Senegal is composed of

• the law n°2001-01 of January 15, 2001 on the environment code
• Decree n°2001-282 of April 12, 2001, implementing the Environmental Code

From a general point of view, the environmental regulation is based on a system of classes according to the danger or the seriousness of the inconveniences that the operation of the installations can present, they are subjected either to authorization, or to declaration (article L10 of the environmental code).

(A) The first class concerns installations presenting serious dangers or inconveniences and whose construction and operation are therefore subject to prior authorization by the Ministry of the Environment and to compliance with a set of measures to be undertaken (i.e., in particular, a prior investigation) (these measures are provided for by specific ministerial decrees) (articles L11 and L13 of the Environmental Code).

(B) The second class concerns installations that do not present serious inconveniences but which must respect general prescriptions provided by the Ministry in charge of the environment. In addition, before their construction and operation, a declaration must be made to the Ministry in charge of the environment and a receipt must be issued to acknowledge receipt of this declaration (article L11 of the environmental code).

There is also a prescribed environmental assessment (article L48 and following of the environment code). The objective is to analyze the possibilities and capacities of resources, natural systems and human systems in order to facilitate the planning of sustainable development, to manage the negative impacts and consequences of these projects.

Environmental Impact Assessment (EIA) is the process of examining the consequences, both beneficial and adverse, that a proposed development project or program will have on the environment and ensuring that these consequences are adequately addressed in the design of the project or program.

It should be noted that the impact assessment is part of an existing authorization, approval or concession procedure; the main actors involved in the environmental impact assessment procedure are the developer and the competent authorities. The impact study is prepared at the developer’s expense and submitted to the Ministry of the Environment, which issues a certificate of authorization after receiving a technical opinion from the Directorate of the Environment and Classified Establishments (Article L49 of the Environmental Code).

Depending on the potential impact, nature, scale and location of the project, the types of projects are classified in one of two categories determining the type of environmental assessment that the project owner must undertake (Article R40 implementing decree of the Environmental Code): (a) An in-depth environmental assessment when projects are likely to have significant impacts on the environment or; (b) when projects have limited impacts on the environment or the impacts can be mitigated by the application of measures or design modifications; this category is subject to an initial environmental analysis.

More specifically from a petroleum sector regulatory perspective, Article 20 of the Petroleum Code provides that the Production Sharing Contract (PSC) includes among its provisions the obligation to conduct an environmental and social impact assessment. Article 53 of the Petroleum Code provides that oil operations are conducted in accordance with the Environmental Code and other national and international laws relating to the hygiene, health and safety of workers and the public, as well as environmental protection.

Thus, the companies carry out their work using proven techniques of the oil industry and take the necessary measures :

prevention and control of environmental pollution

• to treat waste;
• to preserve the flora and fauna heritage;
• the preservation of water in the soil and subsoil; and
• the respect of the applicable regulations in the field of hygiene and health. It is also provided that the costs of the work required to protect the environment are to be borne by the oil contract holder.

(i) The State of Senegal benefits from the resources of the oil and gas industry through various means:

• The participation of the national oil company in petroleum operations by associating itself with the holders of an oil contract or a prospecting authorization. The shares of the national oil company are fixed as follows in the case of an oil contract (article 9 of the oil code):
• A minimum of 10%, carried by the other co-holders of the hydrocarbon mining title, in the exploration and development phases, including redevelopment;
• An option to increase this interest up to an additional 20% in the development and exploitation phases not carried by the other co-owners of the hydrocarbon title.
• Under a production sharing contract (Article 34 of the Petroleum Code), the hydrocarbon production is shared between the State and the contractor, in accordance with the stipulations of the said contract. The balance of the total hydrocarbon production, after deduction of the ad valorem royalty and the share of the oil costs, called “oil profit”, is shared between the State and the contractor, according to the terms and conditions fixed in the production sharing contract. The State’s share of this “oil profit” cannot be less than 40% and varies according to a factor known as the “R factor”, the calculation of which is provided for in the code.
• A royalty on the value of the hydrocarbons produced is provided for in the Petroleum Code (Article 42). The holder of a provisional or exclusive hydrocarbon exploitation authorization is subject to the payment of a royalty on the value of hydrocarbons produced. The royalty is calculated on the basis of the total quantities of hydrocarbons produced in the exploitation area and not used in petroleum operations. The royalty is payable, in whole or in part, either in kind or in cash, at the option of the State upon each payment. The royalty rates applicable to the production of crude oil or natural gas are fixed as follows :
• Liquid hydrocarbons exploited onshore: 10%;
• Liquid hydrocarbons exploited in shallow offshore: 9%;
• Deep offshore liquids: 8%;
• Ultra-deep offshore liquid hydrocarbons: 7%;
• Gaseous hydrocarbons exploited onshore, shallow offshore, deep offshore and ultra-deep offshore: 6%.

The terms of recovery are specified in the production sharing contract.

• The Petroleum Code also provides for an application fee of USD 50,000 for the granting, renewal or extension of a hydrocarbon mining title. These fees are non-refundable and non-recoverable as part of the oil costs and are paid in a single instalment (Article 46 of the Petroleum Code).
• As regards surface rent (Article 47 of the Petroleum Code), provision is made for full payment of surface rent for each period due from the signing of the petroleum contract, the renewal of the hydrocarbon mining title or the extension of its period of validity. The amounts applied are as follows:
• Initial exploration period: 30 USD / km2 / year
• First exploration period: 50 USD/km2/year
• Second exploration period: US$75/km2/year

(ii) However, the Petroleum Code also provides for a tax exemption and suspension regime:

• Customs exemptions (Article 49 of the Petroleum Code): With the exception of the statistical royalty (RS) and community levies, the holder of an oil contract is exempt during the exploration, appraisal and development periods from all customs duties and taxes, including the Senegalese Shippers’ Council levy (COSEC) for:
• Materials, supplies, machines and equipment, as well as spare parts and consumables neither produced nor manufactured in Senegal, specifically and definitively intended for oil exploration operations and whose importation is essential to the realization of the exploration program;
• Fuels and lubricants for fixed installations, drilling equipment, machines, utility vehicles, machinery and other equipment intended for oil operations.

The subcontracting companies of the oil operations benefit from the exemption of the customs duties and taxes for the realization of their services during the same periods. In order to benefit from the exemption from duties and taxes referred to above, the beneficiary companies shall submit an exemption certificate issued by the Minister in charge of Finance, on the basis of an administrative certificate approved by the Minister in charge of Hydrocarbons. The exemption is granted only when the said capital and consumer goods are not available in Senegal under equivalent conditions of quality, quantity, price, delivery time and payment.

• Suspension of import duties and taxes (Article 50 of the Petroleum Code): Equipment, materials, supplies, machines, utility vehicles, machinery and equipment, as well as spare parts, products and consumables, intended directly for petroleum operations, imported into Senegal by the holder(s) of the petroleum contract or by companies subcontracting petroleum operations, and which may be re-exported or transferred after use, are declared in total suspension of import duties and taxes. In the event of release for consumption, the duties and taxes payable are those in force on the date of filing of the retail declaration of release for consumption, applicable to the real market value of the products on that same date.

Regarding local content obligations, see question 7. However, we can add that any contractor, subcontractor, service provider and supplier involved in oil and gas activities is required to submit a local content plan and a procurement plan to the CNSCL (Decree No. 2020-2047 of October 21, 2020 on the organization and operation of the CNSCL in the hydrocarbons sector).

The products resulting from the exploitation of hydrocarbon deposits are intended either for local consumption or for export.

On export restrictions: It is provided that the share of production accruing to holders of exclusive exploitation authorizations, after satisfaction of the country’s domestic needs, may be exported freely after payment of an exit customs duty set at 1% of the value of the said share of production, deductible for the determination of the profit subject to corporate income tax (Article 59 of the Petroleum Code).

On the obligations of national supply: Under the conditions fixed by the oil contract, the holders of exclusive exploitation authorizations must allocate, in priority, the products of their exploitation to cover the needs of the domestic consumption of the country. In this case, the transfer price reflects the international market price. The unit selling price of crude oil and natural gas, taken into consideration for the calculation of the ad valorem royalty, direct profit tax, oil cost and oil tax, is the market price at the point of delivery of the hydrocarbons. This price, which is in line with the current international market price, is calculated in accordance with the terms and conditions specified in the oil contract (Article 59 of the Petroleum Code)

The dismantling of facilities appears in the definitions of “abandonment” and “site restoration” in the Petroleum Code.

Abandonment is defined as all activities of plugging and sealing wells, dismantling facilities, cleaning up hazardous substances, as well as rehabilitation and decontamination of sites, in accordance with national legislation and international oil industry standards and practices.

Site rehabilitation includes all operations of any kind necessary to ensure the reclamation of sites, in particular the securing and permanent abandonment of wells, the complete or partial dismantling of installations and the dumping or disposal of materials or waste resulting from dismantling, as well as all work related to the abandonment of deposits that have not been exploited. The said operations are carried out according to the highest standards in force in the hydrocarbon industry at the time of their realization in order to ensure optimal protection of the environment.

In the event of renunciation of the exploration authorization or the exclusive exploitation authorization, the holder must carry out the abandonment work necessary to protect the environment (Articles 25 and 33 of the Petroleum Code). Similarly, in the event of expiration or termination of an oil contract or in the event of total or partial renunciation thereof, if the State does not take back the installations and equipment, the holder must carry out, at its own expense, their dismantling and removal as well as all other abandonment and site rehabilitation work. In the event of failure to do so, the Minister in charge of Hydrocarbons shall order the necessary steps to be taken at the expense of the holder out of the consigned funds (Article 64 of the Petroleum Code).

Article 37 of the Petroleum Code provides that any pipeline construction project for the transport of hydrocarbons is subject to prior approval by the Minister in charge of Hydrocarbons. The route and characteristics of the pipelines include the collection, transportation and evacuation of the production of hydrocarbon deposits. In addition, Article 57 of the implementing decree of the Petroleum Code specifies that the construction of any infrastructure for the transportation and/or storage of hydrocarbons and/or, where applicable, the liquefaction of natural gas, produced from an exclusive exploitation permit or an exploitation area is subject to prior approval by the Ministry in charge of Hydrocarbons. The holder of an exclusive hydrocarbon exploitation authorization shall address his request to the Minister in charge of Hydrocarbons.

Finally, it is important to specify that the construction of onshore and offshore rigid pipelines and risers is subject to the mixed regime defined above (see q. 7) in accordance with the classification table of decree n°2021-249. Consequently, an association with a local company holding at least 5% of the share capital is mandatory to carry out these activities in Senegal.

With respect to the liquefaction of natural gas, Article 39 of the Petroleum Code provides that the provisions of this law concerning the transportation of hydrocarbons apply mutatis mutandis to the liquefaction of natural gas.

Thus, as far as the transport of hydrocarbons is concerned, an authorization system is provided for, issued by order of the Ministry in charge of Hydrocarbons. However, for transport facilities in the maritime zone, the authorization to transport hydrocarbons is issued by a joint order of the Minister in charge of Hydrocarbons and the Minister in charge of Maritime Affairs (Article 35 of the Petroleum Code). Article 57 of the implementing decree of the Petroleum Code referred to above (q. 12) is also applicable to the liquefaction of natural gas.

Two LNG terminal construction projects are currently underway:

• on the GTA site, the construction of the first offshore LNG export terminal;
• construction of the gas terminal at the Port Autonome de Dakar, which will receive, store, regasify and deliver LNG.

Law 2020-06 of February 7, 2020 on the Gas Code in Senegal establishes the regulations for the development of gas resources, in compliance with the standards of quality of natural gas, safety, preservation and protection of the environment. However, there are still no decrees of application to this Code but we consider it necessary to use it.

Article 43 of the Gas Code provides that any legal entity planning to carry out storage activities must first obtain a license from the Minister responsible for hydrocarbons.

This storage license is granted for a maximum period of fifteen years and may be renewed in the same manner for a period not exceeding five years provided that the holder has fulfilled its obligations.

Pursuant to Article 44 of the Gas Code, any company planning to carry out a gas storage activity must undertake to build minimum storage capacities defined by order of the Minister in charge of hydrocarbons.

In addition, the holder of a storage license is required to make available to the network operators, for the balancing of the networks and the continuity of routing on these networks, the storage capacities not used and technically available in the storage infrastructures. The terms and conditions for making this storage capacity available are set by decree.

In case of failure to comply with this obligation, the Minister in charge of hydrocarbons may impose the necessary sanctions on the advice of the Regulatory Body.

Articles 7 et seq. of the Gas Code establish the provisions relating to licenses and concessions issued by the government for the transportation and distribution of gas in the country.

Thus, in accordance with Articles 7 and 8 of the Gas Code, a license is granted to any legal entity under Senegalese law that can demonstrate the technical and financial capacity necessary to carry out the activities of importing, exporting, re-exporting, aggregating, processing, storing, supplying natural gas, and transporting and distributing liquefied and compressed natural gas.

The license is awarded to legal entities under Senegalese law through a call for tenders or direct consultation, by order of the Minister in charge of hydrocarbons. The modalities of implementation of the call for tenders and direct consultation as well as the conditions of admissibility of the request are fixed by decree. The license is accompanied by specifications defining the operator’s obligations.

Similarly, a concession may be granted to any legal entity under Senegalese law that can demonstrate the technical and financial capacity to carry out natural gas transportation or distribution activities through pipelines, by means of a call for tenders or direct consultation. The terms and conditions for the implementation of the call for tenders and direct consultation as well as the conditions for the admissibility of the application are set by decree.

The concession contract is signed by the Minister in charge of Hydrocarbons and the applicant(s) for the concession and is approved by decree and published in the Official Gazette. The Minister in charge of hydrocarbons grants or rejects the concession applications provided for by this Code, after receiving the opinion of the Regulatory Body (Articles 10 to 13, Gas Code).

In addition, Article 27 of the Senegalese Gas Code now provides that operators of gas transmission and distribution networks and storage facilities must guarantee freedom of access for third parties.

Law 98-31 of 14 April 1998 on the import, refining, storage, transport and distribution of hydrocarbons abolished the monopoly of the Société Africaine de Raffinage (SAR). This reform has allowed the Senegalese market to register the entry of several players (mostly nationals) in the segments of distribution, import and transport of gas. Today, the midstream and downstream market of the gas sub-sector is competitive and liberalized among several private players for the storage, transport and distribution of gas on the territory thanks to the Gas Code. As noted above, the implementing decrees for the Gas Code have not yet been adopted.

Articles 7 et seq. of the first chapter of the Gas Code establish the provisions relating to licenses and concessions issued by the government for the transportation and distribution of gas in the midstream and downstream sectors in Senegal (see answers 14 and 15 above).

At the beginning of 2020, the Senegalese National Assembly adopted a new Gas Code following important discoveries of natural gas resources on the national territory, planned to be in operation from 2022. With this text, the country integrates a new device by opening the way to a valorization of gas for the benefit of the national economy, to the reinforcement of the energy mix, to the energy independence.

More recently, the Senegalese legislator has by Law No. 2021-32 of July 09, 2021 on the creation, organization and powers of the Commission of the Regulator of the Energy Sector (CRSE) (Commission de Regulation du Secteur de l’Electricité) reformed the regulatory authority of the sector so that the Commission of Regulation of the Electricity Sector (CRSE) is for this purpose modified in its composition and its operation, in order to act as a regulatory body in the sector of hydrocarbons and the sub-sector intermediate and downstream gas. To our knowledge, this CRSE is not yet operational.

One of the difficulties identified in the previous legislation was that the previous legislative framework organizing the gas sector did not take into account the specificities of the midstream and downstream segments of the gas sector. These difficulties were raised on the occasion of successive reforms and in particular in the new Gas Code of 2020. However, there are still no implementing decrees.

Regarding the impact of the Covid-19 pandemic on this sector, it is certain that the outbreak of the coronavirus has severely affected the continuation of development work on oil and gas projects as well as the finances of companies in the sector. The impact of the pandemic is such that even if the industry was expecting a slight recovery in 2021, some exploration and production projects could not start as planned this year.

Despite this delicate health crisis, Senegal’s new Minister of Petroleum, Sophie Gladima, has assured that natural gas production projects, notably in partnership with Mauritania, will be launched as initially planned.

In the regulations, and more specifically in the Gas Code, carbon neutrality is not mentioned in relation to oil and gas. However, Article 14 of this text provides that the applicant for a license or concession must provide information on the company’s beneficial owners. The granting of a license or concession for intermediate and downstream gas activities, involving the construction of gas infrastructures, is subject to the completion of a prior environmental assessment and the obtaining of an operating permit under the regulations on classified installations for environmental protection.

In addition, Article 22 of the Gas Code provides that any licensee or concession holder shall conduct its activities in accordance with the laws in force and in compliance with international standards, in particular those relating to environmental protection, hygiene, health, social aspects and safety. The licensee or concession holder takes all necessary measures to prevent and fight against environmental pollution by avoiding the discharge or leakage of any polluting product into the environment; but also to ensure, in the event of pollution, the management, decontamination, treatment of waste and rehabilitation in accordance with the provisions of the environmental and social management plan. However, there are still no implementing decrees.