Following some exciting world-class discoveries, the oil and gas industry’s eyes were all on the MSGBC Basin. Soaring to the top of the list as Africa’s most exciting new E&P hotspot, the basin was the new “cool kid on the block”. However, this excitement has recently been dampened by some disappointing results. Kosmos Energy’s Hippocampe-1 exploration well offshore Mauritania in October 2017 found water-bearing reserves, and earlier on this year in February the Requin Tigre-1 exploration well in Senegal came up dry. With these successive misses in mind, many might opt to dismiss the basin’s attractiveness, seeing it as a “one-trick pony”, a lot of buzz over what may turn out to be nothing of great stature. But here’s why you might want to hold back that judgement for now, and why the MSGBC Basin should still be on your radar in 2018:
The MSGBC Basin is still massively underexplored. When Cairn Energy took its chances on Senegal, the result was the world’s biggest offshore oil discovery that year. The basin also provided for Kosmos’s discovery of the largest offshore gas deposit in West Africa. Placing the region firmly on the map for oil and gas production, these discoveries are hugely indicative of the basin’s potential. As the oil price strengthens this year, the industry is witnessing a renewed energy, optimism and focus on high-risk, high-reward E&P activity in Sub-Saharan Africa. The highly prospective MSGBC basin appears to be high up on the list for many majors, as more and more are entering the region.
TOTAL, previously present in the Senegalese downstream sector, is expanding its presence in the region with new upstream activities. Along with an E&P contract with Petrosen in the Rufisque Offshore Profond block, TOTAL has also signed up to conduct studies of the Senegalese ultra-deep offshore to assess its exploration potential. The French major’s activities aren’t limited to Senegal either, as it also entered agreements with ONAP to study around 55000 sq kms of deep and ultra-deep blocks off Guinea over the space of a year. Other new entrants include Exxon Mobil which entered agreements with the Mauritanian government with three deep-water offshore blocks. Alongside BP and Kosmos’s on-going developments in their Greater Tortue project with the potential for an FID later on this year, other projects to keep an eye on include Petronas and FAR Ltd’s drilling activities in two blocks off The Gambia. This drilling will lead to the country’s first well since 1979. FAR Ltd are also preparing plans with Svenska Petroleum to start drilling a wildcat well off Guinea Bissau next year. These projects, amongst others, are reason enough to keep an eye on the Basin, and continue to highlight the amount of acreage that’s yet to be explored.
On top of the E&P activities taking place, many other exciting developments are moving forward on the regulatory and governmental side. Take for instance the signing of the inter-governmental cooperation agreement between Mauritania and Senegal earlier this year, allowing the development of the Tortue gas field, is a huge step forwards and a fantastic illustration of effective and productive intra-regional collaboration. This cross-border unionisation provides a mechanism for fair allocation of resources and revenues. But what will this collaboration look like moving forwards? What will the real consequences of this deal be? And if Senegal can reach agreements with Mauritania, can the same be done amongst the other MSGBC countries? Finding the resources is only part of the challenge. Avoiding the “oil curse” is on everyone’s mind, and all eyes are on Senegal to see what kind of precedent it will set for its surrounding neighbours. With its prior experience in the industry limited to small-scale projects, the country is building its regulatory framework almost entirely from scratch. A new law is set to pass before the end of the summer which will outline a breakdown of how resource-generated revenue will be used and distributed. This, along with a strong focus on promoting local content, and the launch of the new petroleum institute (INPG), is creating the building blocks towards a strong and sustainable framework for the development of the oil and gas industry in-region.
To get exclusive updates on the above mentioned projects and hear directly from the local governments about these recent developments, come along to our annual Africa Assembly (5-6 June, Paris) which includes an MSGBC Basin focused panel, with confirmed speakers from Petrosen, ONAP, Woodside Energy and Impact Oil & Gas. We will continue the conversation in Dakar later on in the year, as representatives will gather once again at this year’s MSGBC Basin Summit & Exhibition and MSGBC Local Content Forum, taking place on the 22nd – 23rd – 24th of October in Dakar, Senegal. With the already confirmed support of the regional NOCs and Ministries, this year’s Summit will provide a platform to highlight the many opportunities in what is still Africa’s most exciting E&P hotspot. For more information, please contact Esme Till, EMEA Portfolio Manager ([email protected]).