Petroleum Africa
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Wednesday, December 20, 2017
The government of Senegal has failed to renew a license renewal for a small independent explorer. Industry experts and media rumors explain the lapse on the government wanting an exit of small independent E&P firms.
Senegal has seen tremendous success over the past few years on the exploration end with a number of significant discoveries made. Given that the leaders of these discoveries are not in the “major” size category, one wonders exactly what the government wants, size wise, in its explorers
One firm that could lose out if this policy plays out is African Petroleum. The company currently sits in limbo waiting for word on its application. As previously revealed by the company the term of the current first renewal phase of the Senegal Offshore Sud Profond (SOSP) production sharing contract (PSC) expired on December 15.
At a recent meeting with the newly appointed Minister of Energy, the company was advised that all decisions pertaining to amendments to PSCs held by all companies in the country are being deferred until the new Petroleum Code is issued, which is expected to be in Q2 2018. Whether this will affect the company’s application is unknown, but it did say it was “disappointed and frustrated” with this latest development.
Prior to the expiry of the current phase, and in accordance with the terms of the PSC, the company submitted an application to enter into the second renewal phase of the contract, and also requested to exchange the outstanding well commitment in the current phase for a 3D seismic acquisition program, and to transfer this revised outstanding commitment to the second renewal phase.
Both prior to and after submitting the PSC Application, African Petroleum held several meetings with the relevant authorities in Senegal to discuss the application. According to the company it believed that the meetings would result in a favorable outcome for the PSC application. African Petroleum said it is reviewing its options under the PSC in order to protect its contractual rights and to expedite the decision-making process.
Jens Pace, African Petroleum’s CEO, comments: “We are disappointed and frustrated that our application to move into the next phase of the PSC on SOSP has become complicated by the introduction of a new hydrocarbon code, and changes to government policy built on the success of a region in which the company took a pioneering position. Whilst we still hope for an amicable solution that sees us move into the next phase of the SOSP PSC, we will be seeking advice and reviewing our options to protect our considerable investment in the Senegal licenses. We will provide shareholders with a further update as soon as we have more clarity on the situation.”
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