January 2020

All stakeholders must focus on the above-ground landscape to unlock the transformative potential of Grand Tortue Ahmeyim

As Africa’s most exciting and technically advanced ultra-deep offshore oil and gas project, Grand Tortue Ahmeyim (GTA) is set to put Mauritania and Senegal on the map for the energy sector. There are significant differences between the two countries, yet there is no doubt that GTA has the potential to transform both nations’ economies, serve as an anchor for strong bilateral relations, and drive standards on transparency and resource governance.

Given the one-off nature of resource endowments, there is no room for error. Governments, companies, civil society and the international community in both Mauritania and Senegal must be as pioneering in their approach to above-ground issues as the companies will be in their design and implementation of the project engineering.

Civil society in Senegal will drive transparent management of the petroleum sector

Senegal enjoys a reputation as West Africa’s most stable investment destination with a relatively well-developed economy. President Macky Sall was re-elected in February and has been boosted by recent additional gas discoveries, which have generated even more excitement about the country’s offshore deposits and mean it is set to receive gas for domestic consumption sooner than expected.

In many ways, the above-ground landscape in Senegal is one of the best in the region. President Macky Sall is a former geological engineer and seen as a good interlocutor for investors. Senegal’s Strategic Orientation Committee for Oil and Gas (COS-PETROGAZ) is a good management structure. The body is open to civil society and opposition groups and its permanent secretary Ousmane Ndiaye is seen as an effective and non-partisan leader.

There is particular pressure on transparency and governance issues. The Petro-Tim scandal in early 2019 increased perceptions of opacity and corruption in the natural resource sector. The country’s active civil society will continue to exert pressure on these issues and for the benefits to be distributed fairly. This will ultimately push the government to up its game in building support for, and trust in, the sector among the population, to the benefit of investors. A failure to do so risks further scandals in the sector that could badly damage Senegal’s hard-earned reputation for investment.

Resource revenues will arrive as Mauritania is entering a new chapter

For its part, Mauritania is at the beginning of a new chapter in its history. It has successfully navigated its first peaceful and democratic transition of power from one elected president to another, assuaging widespread concerns about stability. President Mohamed Ould Ghazouani is steadily consolidating his position and now needs to develop a strategy to take the country forward over the next five years.

This is not an easy task. The country is faced with huge challenges: it must maintain security amid a volatile regional context and address the high level of youth unemployment, in turn a risk for both insecurity and social unrest. There is growing public and international pressure around transparency, governance and inequality. Mauritania’s political establishment must decide whether it will adopt a less centralised and autocratic style as it moves forward under its new president to provide the space for opposition and civil society to express dissent peacefully.

The arrival of resource revenues will play into all these issues. The Mauritanian government has some good prior experience of managing resource rents from the Chinguetti offshore oil field. However, public understanding of the sector is low and expectations are high. Local content is already a top priority. Companies will need to be proactive to manage expectations. Given the limited number of direct jobs that the industry will generate, early strategic planning to stimulate wider economic development and create indirect employment opportunities will be crucial. Civil society pressure on governance will be less strong than in Senegal, requiring strong political will to ensure transparent management of the sector.

Successful management of AGR is a shared task

It is incumbent on all stakeholders – governments, investors and societies alike – to work together to ensure that their countries’ resources are managed transparently and generate lasting, inclusive benefits. The business case for forward-looking, responsible management of the above-ground landscape is stronger than ever. All over Africa, countries are becoming increasingly assertive in demanding greater shares of rents, in both extractive and other sectors. They are doing so with varying degrees of success and their populations are benefitting to differing extents.

If governments are to maintain their credibility in the debate around benefit-sharing, they must go beyond demanding a fair share in negotiations to ensuring benefits generate equal and inclusive economic growth. This requires careful planning, the right structures and the support of relevant experts. If investors are serious about contributing to positive change, they must actively support their partners in government while respecting their sovereignty. In turn, if the opposition and civil societies are to play their role in effectively holding governments to account, they must ensure their challenges are fact-based and grounded in a nuanced understanding of the sector.

With the best will in the world, successful distribution of benefits and management of extractive sectors will never be easy. There are numerous case studies of how it can go wrong. There are however also examples of how to get it right. International expertise on success factors is growing. Experience shows that the best results are achieved by strong mutual understanding, close multi-stakeholder cooperation and pro-active forward planning. GTA is a huge opportunity for both Senegal and Mauritania – the challenge is to harness its potential to the benefit of all.

Chris Hindle, Associate Director of Critical Resource will be joining the panel discussion on Day 2 of the MSGBC Basin Summit “The Rule Book: The Regulatory Need-to-Know, From the Impact of the Petroleum Code to Adhering to Environmental Standards” Panelists include: