On a sunny afternoon in Saint-Louis, in the northern part of Senegal, the Langue de Barbarie beach is a hive of activity. This stretch of land, adjacent to Senegal's most important fishing town, is home to numerous colorful wooden boats, known as pirogues, resting on wooden rollers. They wait their turn to take on the Atlantic waves in the background.
Two young men, visibly sweating, stand on one of the pirogues, carefully transferring ice cubes from large sacks into a wooden chest. "We use this ice to keep our catch fresh," one of them explains. "Sometimes we're at sea for several days." Their colleagues soon join them, and together they push the boat into the water using the wooden rollers. It's a physically demanding task, made all the more difficult by the lack of modern equipment.
Fishing has a long tradition in Saint-Louis, where an estimated [20,000] people are involved in the industry, including fishermen, traders, women involved in fish processing and transporters who bring seafood to the entire Sahel region. The exact number of people dependent on fishing throughout the supply chain remains uncertain, but for sure it is huge.
The new challenge of LNG production
However, the fishing industry here is facing growing challenges such as overfishing, the effects of climate change and the emergence of fishmeal factories. Recently, a new challenge has emerged: Offshore Liquefied Natural Gas (LNG) production off the coast of Senegal. Significant gas reserves were discovered in 2014 and production is expected to begin in early 2024. On a clear day, the offshore infrastructure is visible to the naked eye, a sign of the changing landscape of this coastal region.
When Moustapha Dieng, the 71-year-old general secretary of the fishermen's union, thinks about the offshore drilling platform off the coast of Saint-Louis, his frustration is palpable. "They are taking the last piece of bread from our table," he says. A tall man in colourful traditional dress with a penetrating gaze, Moustapha has long championed the rights of the region's fishermen, setting up the union as an independent body to represent their interests.
Moustapha's reflections on the past reveal a once-thriving fishing industry. "It has always sustained us. We followed in the footsteps of our fathers, and they followed in the footsteps of our grandfathers. Since the 16th century, our community has lived solely from fishing," he recalls.
Fishing was the lifeblood of the community. Children started with menial jobs, adults ventured out to sea and the old supported the young. But the decline of the industry began 15 years ago, when international trawlers began to deplete coastal fish stocks.
The situation has been dire for some time, but the government's decision to allow gas drilling in the middle of local fishing grounds is something Moustapha finds hard to understand.
"Gas exploration has significantly reduced our fishing area. We're not allowed within 500 metres of the infrastructure. Navy boats patrol to ensure compliance. There have been many incidents. Some of my colleagues have had their boats confiscated. Others are forced to venture further out, risking their lives.“
What's more, Dieng says, the platform is permanently lit, attracting schools of fish to areas where fishermen can't go. But what frustrates him most is the lack of consultation with the people of Saint-Louis. Decisions were initially made without public consultation, and by the time there was consultation, licences had long since been issued.
"In all of Senegal, two million people work in the fishing industry. They don't believe that the money from oil and gas benefits them. It enriches a few while we bear the damage. We feel that our livelihood is being taken away from us.“
Senegal is on the verge of becoming a fossil fuel exporter for the first time in its history, at a time when much of the world is increasingly shifting towards renewable energy. Even setting aside the potential global climate impact - to which Senegal has done little to contribute - the question remains: Is the fossil fuel business beneficial for a country like Senegal?
There is always a risk of environmental damage from drilling rigs, spills and accidents in fossil fuel projects. However, this article focuses more on the political, social and economic background of fossil fuel extraction in Senegal.
Local Communities Already Vulnerable
The vulnerability of the people of Saint-Louis is already very high, as Abibatou Fall, president of ARADES, an independent environmental organization based in Saint-Louis, points out. "Saint-Louis is a climate laboratory," she notes. Life on the Saint Louis spit has become increasingly problematic since the severe floods of 2003. Rising sea levels and coastal erosion have forced some residents off the coast, becoming climate refugees living in shelters further inland. Fish stocks are dwindling and fishing is becoming more difficult. "The climate situation has already accelerated poverty and created a very difficult and vulnerable situation for these populations."
In this context, the construction of the gas platform began in 2019. "The platform limits fishing areas and makes people even more vulnerable. Moreover, people are now expecting significant changes from this project, but the opposite is happening." Obviously, there is nothing positive to report about the gas platform yet, as the gas extraction has not even started. But the pressure on the population has increased. In addition, the political and social climate has already deteriorated.
"There has already been pressure on those who oppose the gas project, including arrests. There has been a lot of noise about the issue. Everyone wants a piece of a product that hasn't even come out of the ground yet. What can we expect in the future? Is all this really necessary?"
Examining the economics of Senegal's oil and gas projects
To answer this question, it's crucial to take a closer look at the economic and contractual details of Senegal's fossil fuel projects.
The so-called "Greater Tortue Ahmeyim" (GTA) LNG project, a collaboration between Senegal and Mauritania, is gearing up for its first phase in early 2024, with an initial production capacity of 2.5 million tons of LNG per year for global export, to be increased to up to 10 million tons in subsequent phases. The project is expected to last 20 years, although reserves could theoretically last for 50 years. For context, Qatar, the world's leading LNG producer, currently produces nearly 80 million tons per year.
Major players are involved in the project, including British Petroleum (BP) and US-based Kosmos Energy, with BP holding a majority stake. In February 2018, Mauritania and Senegal signed an intergovernmental cooperation agreement, paving the way for this cross-border gas project. In July 2021, the presidents of both countries elevated the GTA project to the status of a "national project of strategic importance."
The GTA project is just one component of Senegal's broader strategy to transform itself into an oil and gas producing nation. Slightly to the south of the GTA site is the Yakaar-Teranga gas field, which is scheduled to begin production in 2027 at the earliest. Further south, about 100 km south of Dakar, is the Sangomar deepwater oil field, which is expected to begin producing oil by mid-2024.
A Fossil Fuel Perspective
One man intimately familiar with Senegal's oil and gas development plans is Ibrahima Bachir Dramé. He offers his insights from the rooftop of a Dakar hotel, having taken a taxi across town for this interview.
"I am an expert on everything related to oil in Senegal. I'm often the one called upon to shed light, to explain to people what's going on," he says. A former employee of TotalEnergies, Dramé is now director of communications and public relations for PETROSEN, the national energy company. "This is the first time that fossil fuels have been found in Senegal. The population has no experience with it, so we have to explain a lot, even in simple language. We work a lot with civil society and communities.
But what makes it so attractive for the Senegalese government to invest in the exploitation of fossil fuels? According to Dramé, the answer lies in the need for capital to drive investment, industrialization and economic development.
"Europe developed by relying on natural resources, which were financed by exploitation. We are following a similar pattern here; it allows us to inject resources to create industries with a good territorial distribution, which can curb rural depopulation, etc. So there are huge opportunities.”
Another part of the truth is that since Russia's war on Ukraine began, many European countries have been looking for alternatives for their gas needs. As a result, Senegal's production plans have suddenly found themselves at the center of geopolitical discussions. Since 2022, leaders such as Germany's Chancellor Scholz and France's President Macron, as well as prime ministers from several other European countries, have visited to discuss Senegalese gas with President Macky Sall.
"Today, everyone is interested in Senegal because we are an alternative," says Bachir M. Dramé.
Dramé stresses the importance of the country using its oil and gas revenues wisely. While some goes into the general budget, another part is earmarked for a fund modeled on the Norwegian approach to long-term investment in the country's development. "But there is also a third part reserved for future generations, to ensure that even if the resources dwindle, those who come after can still benefit."
A first lesson: The danger of over-optimism
Listening to Bachir Drama, one might be reassured that the fossil fuel business is in good hands under the stewardship of experts like him. But are these projections realistic?
In order to assess the potential benefits of oil and gas exploitation for Senegal, it's crucial to examine the contracts and legal frameworks that govern these ventures. All contracts are published in an "Extractive Industries Transparency Initiative" that is accessible to all - a democratic achievement compared to other (often autocratically governed) African petro-states.
The 2019 "Code Petrolier" stipulates that the national oil company, Petrosen, will receive a 10% stake in oil and gas fields during the exploration and development phase, without having to contribute to development costs. This stake can be increased to a further 20% during the exploitation and operation phases, but this increase is accompanied by an obligation to co-finance these costs accordingly.
Petrosen currently holds a 20% interest in the GTA gas field and an 18% interest in the Sangomar oil field. While this increases the potential profits from resource sales, it also increases the risk of long-term debt if profits don't flow as expected due to project start-up delays or falling world market prices. For the GTA gas and Sangomar oil projects, the International Monetary Fund estimates these investment costs for Petrosen at a total of $1 billion.
A study by the US think tank Natural Resource Governance Institute (NRGI) warns:
"The first key lesson we identify is the risk of over-optimism. Senegal's discovery of significant oil and gas reserves will not make the country rich overnight.”
The report continues: „The risks highlighted above may lead to governments over-estimating the revenues they can expect from natural resources. This may lead to overly ambitious public spending and borrowing, which in turn can create unsustainable levels of public debt if and when natural resource revenues do not materialize.“
In a 2019 study, the International Monetary Fund (IMF) estimated the contribution of oil and gas revenues to national GDP at 0.5 percent at the start of extraction, rising to a maximum of three percent during peak production. However, the NRGI study notes that projects in Senegal have relatively high breakeven prices.
„If prices fall again, while companies are likely to proceed with projects in accordance with their past investment and contractual obligations, even after taking steps to cut costs, they will see reduced profits from these projects. Corporate income tax, the main source of government revenues, is also dependent on project profitability and would likely be significantly affected.“
An unequal rally
Critical perspectives on Senegal's efforts to establish itself in the international fossil fuel market are not uncommon. Johnny West, a British analyst and government advisor, brings years of experience analyzing global fossil fuel deals through his non-profit consultancy, OpenOil.
In 2020, West published a detailed analysis and model calculation that initially assumed a global shift to renewables and a consequent decline in oil and gas demand. But geopolitical shifts in Europe have changed that trajectory: "Obviously, the price environment has changed dramatically since the Russian invasion of Ukraine. So that's a fundamental change." While a higher gas price could increase Senegal's revenue, West questions whether the change is substantial enough to fundamentally alter the government's budget: "Even these higher amounts are still far below the expectations created by the political discourse in the country."
West argues that a country's revenue from fossil fuels depends largely on its market position, which is not particularly strong for a developing African country like Senegal. With every promise of what oil and gas sales could finance - jobs, infrastructure projects, development - the country's dependence on the actual success of the projects grows and its market position weakens. Johnny West believes that countries like Norway have succeeded because they developed before selling fossil fuels. OPEC countries, on the other hand, can influence the global market. Neither scenario applies to Senegal.
Moreover, large companies like BP use large budgets, complex modeling, and international expertise to ensure the profitability of their projects. Small countries that lack this expertise have little to offer in return.
"The devil is always in the details. It stays there because the details are never examined." Modeling the economics of a fossil fuel project is complex, involving numerous interrelated factors. "You've got 20 different ingredients interacting, and you don't know what the bottom line is until you model it. Companies have always modeled. Governments, these kinds of governments, hardly ever do."
So how much revenue from oil and gas sales actually ends up in Senegal's coffers? "I have a high degree of confidence that, starting from 2% in the initial phase, it wouldn't go higher than 6-7% of the government budget. And then we could have a debate about whether we think that is transformative or not. Arguably, in a country with massive infrastructure needs, high population growth, etc., I would say it's probably not transformative.”
Good governance questionable
What's more, it's unclear whether the revenues that do come in will be managed effectively and transparently. Concerns about this are considerable, given Senegal's mixed record in this area. Despite being a democratic state, the administration of President Macky Sall has regularly faced serious allegations of corruption. A 2019 BBC documentary revealed that the awarding of exploration rights to a Romanian businessman, Frank Timiș, was tainted by corruption. The businessman later sold his rights to oil giant BP in a deal worth billions. These allegations have never been cleared up.
Such circumstances cast doubt on the likelihood that Senegal will suddenly embrace good governance as fossil fuel extraction begins. A look at other African producing countries reveals the pervasiveness of government dysfunction. The intersection of newfound wealth from natural resources with existing governance structures often leads to disastrous scenarios.
Even when good governance is achieved, there is considerable doubt as to whether fossil fuel revenues actually lead to greater development. Fadhel Kaboub, a Tunisian economist and researcher with PowerShift Africa, is skeptical about the fossil fuel path chosen by countries like Senegal.
"If the fossil fuel industry were the source of development, Nigeria would be an economic powerhouse. Today, Angola would be an economic powerhouse on the continent, providing economic aid and technical assistance to its neighbors."
The danger of entrapment
Kaboub argues that the development argument is a narrative heavily promoted by the fossil fuel lobby and aimed directly at developing country governments.
"This narrative tells them that you have a right to development. It says you have natural resources, fossil fuels, that you can extract and export and make billions of dollars. And that's going to be the source of funding or development. So the counter to that is that it's precisely because we have the sovereign right to development in Africa that we should not choose a path of entrapment.”
For Kaboub, fossil fuels are a trap. They lock countries like Senegal into long-term commitments. Infrastructure built at great expense must first be paid off, and contracts must be honored. Meanwhile, the global shift to renewable energy is likely to accelerate, potentially leaving Senegal with limited participation in this development - a fossil fuel lock-in.
Fadhel Kaboub points in a different direction: "All our resources and capabilities should push us to leapfrog into a reliable renewable energy system, a high-tech industry that should be our opportunity to industrialize on this continent."
This article is part of our current reporting project "Dismantling the Fossil Fuel Industry".