When German Chancellor Olaf Scholz arrived in Senegal on May 22, he made clear that his country views energy, and natural gas specifically, as an important component of future relations between Europe and Africa.
Following a meeting with Senegalese President Macky Sall, Scholz announced that his government was ready to pursue work with the West African state and was already discussing gas development and LNG projects with Dakar. "It is a matter worth pursuing intensively," he said at a joint press conference with Sall.
The chancellor didn't offer any specifics, but it's easy to see why Senegal's gas has attracted his attention.
In a general sense, Scholz is interested in Senegal because the European Union is interested in every possible avenue for obtaining more gas at the moment.
That is, European leaders have been devoting a great deal of thought to energy-related issues since Russia's invasion of Ukraine in late February. The reason for this preoccupation is obvious: now that Moscow has shown itself willing to trample over internationally recognised borders, Brussels is finally getting serious about helping the European Union break free of its dependence on Russian gas.
Its efforts must, of necessity, involve a search for other suppliers. As the International Energy Agency (IEA) has noted, Russia provided no less than 155 billion cubic meters (bcm) of gas to the bloc in 2021. That's equivalent to 45 per cent of all imports and 40 per cent of all consumption, and it's simply too much to replace or drop all at once. Therefore, the EU needs to find other sellers – and a combination of them, since no other gas exporter is big enough to substitute for Russia.
Senegal happens to be one of the potential suppliers under consideration for inclusion in this new constellation of suppliers of gas to Europe. It has enough gas to merit this consideration, as more than 1.13 trillion cubic meters (tcm) in proven reserves were discovered in its offshore zone between 2014 and 2017.
But in a more specific sense, Scholz is interested in Senegal because it, along with Mauritania, is very nearly ready to begin gas exports to Europe. It's not just open for business in a general sense. It's open for business in a real sense, in that it's already laid the groundwork for developing its offshore fields, processing part of what it extracts from those fields into liquefied natural gas (LNG), and then exporting the LNG to Europe. It's taken so many steps in that direction, in fact, that production is due to start next year.
Not in five years. Not in a decade. Next year.
Because that's when Senegal and Mauritania are due to bring Greater Tortue/Ahmeyim (GTA), a large cross-border offshore gas field, online: 2023. The third quarter of 2023, to be more specific.
That's excellent timing for the European energy market, given that Brussels has been talking since March about reducing the amount of Russian gas that the EU buys by two-thirds by the end of this year.
As I've already noted, Senegal and Mauritania won't be filling the gap left by Russia single-handedly. The GTA block is certainly large, holding reserves of about 425 bcm. That's large enough to support the production of about 2.5 million tonnes per year of LNG in the first phase, perhaps rising later to 5 million tonnes per year if BP, the block's operator, and its US-based partner Kosmos Energy decide to double the capacity of their floating LNG (FLNG) infrastructure.
That may not seem like much, in comparison to the huge volumes of gas Russia has been sending. After export to Europe and regasification, the 2.5 million tonnes of LNG that Senegal and Mauritania can provide from the first phase of GTA would be equivalent to about 3.69 bcm of natural gas, while second-phase production of 5 million tonnes would amount to around 7.37 bcm. That comes to just 2.4% and 4.8%, respectively, of Russian deliveries to the EU in 2021.
But these West African volumes will be coming to Europe in addition to extra volumes that EU member states have secured from existing suppliers. (Remember, for example, that Italy has been busy making arrangements to buy more gas from other providers such as Egypt, Algeria, and Azerbaijan.) So they won't just be a single drop into a bucket that's running empty for lack of alternative. They'll be part of a wider and more diversified new system for filling the bucket — and as such, they will make a difference.
But is it purely a matter of fortunate timing? Are Senegal and Mauritania just lucky enough to be in the right place at the right time? Are they going to benefit merely because they happen to be starting production on the right side of the EU's self-imposed deadlines?
On the one hand, no, of course not. Really, BP and Kosmos would probably have preferred to start production earlier, but they had to revise their first-phase work schedule in 2020 because of delays stemming from the COVID-19 pandemic. If they had been able to bring GTA online earlier, they might already be in a position to export LNG to Europe, where demand and prices are high.
On the other hand, no, it's not just a matter of luck. The governments of Senegal and Mauritania have worked hard to make sure that the GTA project can succeed. Senegal, as described in the African Energy Chamber's soon-to-be-released Petroleum Laws – Benchmarking Report for Senegal and Mauritania, has made a point of updating its 1998 Petroleum Code, to take the discovery of GTA and other large offshore fields into account. Most of this process played out during the period between 2012 and 2019, though there were some updates to the legal regime governing local content in 2021. Mauritania, meanwhile, has set goals of remaining as open as possible to foreign investment and cooperating closely with international financial institutions (IFIs) such as the World Bank and the International Monetary Fund (IMF). It's involved in an ongoing process of reform, and it's ready to work with the rest of the world to make the most of its energy resources.
These efforts are about to start paying off. Mauritania and Senegal have laid the groundwork necessary 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. That complex is already more than 75 per cent complete, and by this time next year, it will be nearly ready to start operating.
And by this time next year, I imagine the EU will be only too happy, after enduring another winter of questions about what role Russia can and should have in its energy mix, to anticipate the arrival of the first LNG cargo from Senegal and Mauritania.