Senegal: A Call to Save the Emerging Oil and Gas Sector

By Abdoul Kambane Diedhiou – A&A Oil and Gas Support Service Manager

Dakar, Senegal – Senegal, long regarded as a beacon of political and economic stability in West Africa, stands at a crossroads. As the country prepared to solidify its position among emerging players in the oil and gas industry with flagship projects such as Sangomar Phase 2, Yakaar-Teranga, and the national gas pipeline network, a cloud of uncertainty now hangs over its energy future. The unexpected postponement of the MSGBC 2024 Oil, Gas & Power Conference, originally scheduled for December 2024, has cast a shadow over the sector, threatening to derail years of efforts to establish Senegal as a regional hub.

A Sector on the Brink

Since March 2024, local companies in the oil and gas sector—the backbone of Senegal’s local content strategy—have been navigating turbulent waters. Many of these firms, already weakened by delayed payments, suspended partnerships, and limited access to financing, were banking on the conference to rejuvenate their activities, secure critical contracts, and reposition themselves in a rapidly evolving industry.

However, this postponement, more than just a delayed event, is being felt as an abandonment. For many small and medium-sized local enterprises, this event was a last hope to secure their place in key upcoming developments: the second phase of the Sangomar project, the revival of the Yakaar-Teranga blocks abandoned by BP, and the ambitious launch of the national gas pipeline network. The desperate plea of these local actors cannot be ignored.

Halliburton and the Withdrawal of Major International Players

A symbol of Senegal’s ambition in the oil and gas sector, Halliburton—the American oilfield services giant—had invested in West Africa’s largest logistics base in MBAO, spanning 35,000 square meters, and Liquid Mud Plant and Cement Bulk Plant at the Port of Dakar. This facility served as a catalyst for the sector, attracting other major players such as Schlumberger, Subsea7, and Baker Hughes and actively supporting the development of local capabilities.

However, the gradual demobilization of these major companies, including Halliburton, has had devastating consequences. The partial or complete closure of such facilities has resulted in the loss of hundreds of jobs, disproportionately affecting young Senegalese professionals. These skilled workers, who made up nearly 46% of employees and more than 400 local suppliers, were trained to meet the industry’s high standards. Today, they are unemployed, jeopardizing the future of an entire generation of highly qualified professionals.

The Intrinsic Delays of Oil and Gas Resumption

It is crucial to acknowledge the inherent complexities of restarting oil and gas operations. Unlike other industries, relaunching oil and gas activities involves a non-negotiable timeline of 24 to 36 months to account for feasibility studies, mobilization, heavy infrastructure installation, and financing arrangements. Realistically, this means that activities are unlikely to resume until the second quarter of 2026, leaving the country with over 24 months of inactivity.

This prolonged downtime, in a fiercely competitive sector, endangers Senegal’s hard-earned achievements and raises a pressing question: Will Senegal manage to maintain the confidence of investors?

An Energy Future in Jeopardy Beyond local enterprises, the entire economic and energy trajectory of Senegal is wavering. Since the discovery of oil and gas resources in 2014, Senegal has worked to lay the foundation for an industry capable of competing with giants like Nigeria and Angola while staying true to its commitment to local inclusion.

However, the accumulated delays, coupled with the absence of a proactive framework to support local businesses, threaten to stall these ambitions. Foreign investments, critical for the development of this industry, may be redirected away from Senegal to other emerging markets like C?te d’Ivoire or Liberia, which are making significant progress with better-aligned strategies and clearer timelines.

Risks to Cutting-Edge Financing Mechanisms

A cornerstone of Senegal’s oil and gas strategy lies in the development of innovative financing mechanisms, established in collaboration with leading financial institutions. These tools, including partnerships with the African Development Bank (AfDB), Ecobank, Crédit du Sénégal, and Bridge Bank, were designed to support local businesses. Additional tailored initiatives such as the Investment Fund launched by FGI and the FI NATANGUE Fund, specifically crafted to empower local companies, further underscore Senegal’s commitment to its local content agenda.

Yet, these sophisticated tools risk becoming obsolete without active projects to leverage these mechanisms. What will Senegal do with these robust financing frameworks if local enterprises cannot utilize them? The country cannot afford to let these resources go to waste, nor can it jeopardize its attractiveness to international investors who might turn to more dynamic and operational ecosystems elsewhere.

A Strategic Engine to Protect

Oil and gas were envisioned as the primary driver of Senegal’s Strategic Plan 2050, a critical lever for diversifying the economy, strengthening energy sovereignty, and generating mass employment. Ignoring this crisis is tantamount to jeopardizing this ambitious vision. If the Senegalese government fails to act decisively and swiftly, the country risks being sidelined in an industry where timing is a crucial factor for success.

A Call to Action

There is still time to act, but the urgency is palpable. The Senegalese government must take decisive measures to safeguard and revitalize its oil and gas sector. Here are three immediate priorities:

1. Preserve achievements: Protect jobs, local talent, and established infrastructure to avoid an irreversible loss of expertise and competitiveness.
2. Restore investor confidence: Engage in active dialogue with financial and technical partners to secure their commitments and reassure them of Senegal’s capacity to deliver on its projects.
3. Stimulate recovery efforts: Accelerate key national projects, provide emergency financial support to local businesses, and ensure a clear timeline for resumption.

A Defining Moment for Senegal

History will not judge Senegal based on the discovery of its resources, but on how it managed to harness them for the benefit of its people. The current crisis presents an opportunity for the government to demonstrate its commitment to local content, bolster the resilience of Senegalese enterprises, and reaffirm its strategic vision for the future.

This nation, rich in potential and talent, deserves more than a destiny of wasted opportunities. Now is the time for Senegal to prove it is ready to rise to the challenge and ensure a future where its oil and gas resources are not merely untapped wealth, but a shared source of prosperity.

Because if Senegal fails to support its local stakeholders today, who will build its industry tomorrow?

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