The Senegalese government has launched an unprecedented takeover of its extractive sector, particularly hydrocarbons. Under the leadership of Prime Minister Ousmane Sonko, several oil and gas concessions have been terminated, while a comprehensive review of contracts is underway to maximize economic benefits and strengthen energy sovereignty.
A Wave of Terminations in Oil and Gas
Speaking to the press, the Prime Minister confirmed the termination of a significant number of oil and gas blocks deemed incompatible with Senegal’s interests or contractual obligations.
Among the areas concerned are the Diander, Djifer Offshore, Cayar Deep Offshore (Yakaar-Teranga), Cayar Shallow Offshore, Saint-Louis Shallow Offshore, and Rufisque Offshore blocks, as well as other blocks considered unproductive. According to the head of government, these decisions reflect a desire to break with inherited contracts, described as “onerous” or unbalanced to the detriment of the State.
The government states its intention to overhaul the entire concession portfolio to ensure that each block is exploited under transparent and advantageous conditions for the country.
The takeover of the Yakaar-Teranga gas block
As a symbol of this new approach, the government announced the State’s takeover of the strategic Yakaar-Teranga gas block, presented as “100% Senegalese” and with estimated reserves of between 2.7 and 3 trillion cubic feet (TCF).
Ousmane Sonko stated that this recovery should take place “in the coming weeks, without spending a single franc,” suggesting a favorable outcome to the negotiations underway with partners.
This gas field is central to Senegal’s energy sovereignty strategy, as it is intended to contribute to powering electricity plants and reducing dependence on fuel imports. By regaining control of Yakaar-Teranga, the state intends to ensure that the gas produced primarily serves local needs before any large-scale exports.
The Strategic Case of the Grand Tortue Ahmeyim (GTA) Project
Regarding the Grand Tortue Ahmeyim (GTA) mega-gas project, shared with Mauritania, the Prime Minister indicated that contract renegotiations are in an advanced stage.
The stated objective is to revise the profit-sharing formula and the gas marketing clauses to better meet domestic market needs. The authorities anticipate a potential cumulative gain of approximately 1.9 trillion CFA francs for public finances following this overhaul of the main energy contracts.
This anticipated windfall is intended to help finance national priorities, particularly in the social sectors, infrastructure, and the energy transition.
A General Review of Extractive Contracts
Beyond hydrocarbons, the government’s approach encompasses all extractive sectors: mining, phosphates, cement plants, etc. An inter-ministerial committee has drawn up an initial assessment of the renegotiation of contracts and agreements, highlighting significant revenue losses for the State over several decades.
According to the local press, some estimates suggest potential losses of over 1 trillion CFA francs linked to agreements deemed unfavorable or poorly negotiated in the past.
In the mining sector, for example, the State has already announced that it will not renew certain concessions and that it will renegotiate the applicable tax and parafiscal regimes.
Economic sovereignty and new contractual standards
For the government, this contractual initiative is driven by a logic of economic sovereignty. It aims to resize mining blocks (considered too large compared to international standards), renegotiate the State’s shares, adjust tax clauses, and also strengthen the investment and local content obligations imposed on companies.
The new policy aims to ensure that each exploited natural resource generates a greater share of added value for the country, through public revenue, local employment, national subcontracting, and skills transfer.
The government also promises greater transparency and strengthened parliamentary oversight of hydrocarbon and mining contracts.
What are the implications for companies and the Senegalese economy?
For oil and gas companies, this wave of contract terminations and renegotiations increases short-term uncertainty. Some may revise their investment strategy or renegotiate their profitability requirements upwards to compensate for a more favorable revenue share for the state.
For Senegal, the challenge is twofold: to capture more revenue while remaining attractive enough for investors, in a context of competition among producing countries.
If the maneuver is well calibrated, the revision of contracts could constitute a powerful lever to finance development and successfully enter the country into the club of hydrocarbon producers without falling back into the “resource curse”.
