After the major discovery of deposits in 2014, Senegal adopts a new oil code, in order to "safeguard and secure the economic and financial interests" of the country, while preserving the attractiveness and competitiveness of its basin.
Dakar, Seydou Ka
The National Assembly of Senegal adopted, on January 24, the law on the Petroleum Code. If the majority speaks of a " historic day " and a " bright future " for Senegal, the opposition, it denounces " the haste " in which this vote took place - to one month of the presidential elections - and an " umpteenth " of the current regime.
Tenders have been issued to grant one block to African Petrolum. Already, seven of the largest companies in the world have submitted their offers to take back the other lots.
" This Code is a scandal. No transparency! Everything was done to protect Macky Sall and his friends, "denounced a member of the opposition.
Accusations refuted by the Minister of Energy and Petroleum, Mansour Elimane Kane, according to which this Code is the result of a broad consultation of a year and a half; In addition to the ministry and its technicians, it brought together Senegalese civil society and experts from the UN and the IMF.
" And the content of the Code, marked by major innovations, shows that serious work has been done, " says the minister, who ensures that Senegal's oil " is in good hands ."
The new text contains ten chapters covering prospecting, exploration, exploitation, tax provisions, corporate obligations, landowner and landlord relations, penalties and litigation.
It reviews 34 of the 75 articles of the previous Code, the rest of the articles having been simply " reformulated for better understanding and accuracy ".
Thus, the new Code is intended to be a legislative instrument more suited to the safeguarding of national interests " while maintaining the attractiveness of the Senegalese basin to foreign investments ," assures Mansour Elimane Kane.
As in the old text, the State of Senegal, through Petrosen (the national hydrocarbon company), holds 10% of the shares of contracts linking it to the oil companies in charge of the exploitation.
Increase in profits to the state
With the new text, this share can reach 20% in the operating phase, provided that the public shareholder, this time, participates in operating expenses in the same way as its other partners.
" Under the old Code, the state earned more than 50 percent of project-generated oil revenues through three channels: its share of revenue sharing, Petrosen's share, and taxes. With the new ode, Senegal will earn between 65% and 75% of revenues, thanks to the increase in Petrosen's shareholding, the limitation of annual oil cost recovery rates, the introduction of the royalty rate are applied directly to gross production , "summarizes Mansour Elimane Kane.
The method of distributing oil revenues is also clearly set in the new text - in the former, this allocation was fixed by agreements between parties - while the period of exploration is reduced from two years to six months.
In addition, the new legislation introduces a " provisional operating license ", which allows the permit holder to carry out additional tests. Obtaining an environmental clearance is now a necessary condition for progress in the implementation of projects.
Exceed the limits of the old Code
According to Idrissa Bodian, oil expert and former technical adviser to the Minister of Energy (2000-2006), this revision of the Petroleum Code is justified by the change of context in the oil industry sector, both at national level internationally.
Although it has attracted many companies, with the key oil discoveries from 2014, the previous text, which dates from 1998, presented, according to this expert, " deficiencies " at the technical levels, regulatory and especially fiscal, but also in terms of obligations for oil companies.
However, the new Code will not be retroactive for certain aspects (legal, economic and fiscal) covered by the stability clauses.
Conversely, " it is not excluded that a company holding an oil contract concluded with the State under the old Petroleum Code, requests to be subject to the provisions of the new Code, within a set by law, "says Idrissa Bodian.
First consequence, concerning one of the two contracts awarded to Total E & P: Mansour Elimane Kane announces that the French company will return 55 000 of the 65 000 km2 it had acquired under the 1998 Code. Indeed, the new Code provides that No enterprise may exploit an area of more than 10,000 km2.
Better local benefits
In addition to the Petroleum Code, the National Assembly has also passed the law on local content in hydrocarbons. It was one of the major demands of civil society to maximize the social and economic benefits of this resource.
The new legal framework aims to promote the free flow of goods and services and the development and participation of local labor, technology and capital throughout the oil and gas value chain. . A National Local Content Monitoring Committee (CNSL) to coordinate the development of the strategy document will be established, as well as a
fund to fund training and job creation in oil and gas activities. Companies operating in the oil and gas sector will now be required to submit a local content plan to this committee each year, including the achievements and initiatives planned for this purpose.
FACTBOX
The main innovations
The new Code, which repeals and replaces the 1998 Code, renews the measures to " stimulate " the exploration, development and exploitation of hydrocarbons, while introducing certain innovations that can be grouped into five categories.
The first innovation addresses transparency requirements in extractive resource management, in line with the EITI (Extractive Industries Transparency Initiative) standard and the 2016 Constitution, which states that natural resources belong to the people (Article 25).
To be noted, the definition of a new regulation of oil operations, which will be annexed to the Code, the reinforcement of the regulation relative to the transport of the production sites to the zones of big consumptions, the storage and the wholesale marketing of petroleum products and pretreated or liquefied gas ( midstream ) gas , in particular by introducing applications for authorization for natural gas storage and liquefaction operations.
The text provides for other measures relating to the distribution of revenues from the exploitation of hydrocarbons, the expansion of local content provisions and the consolidation of environmental protection provisions, "in accordance with the standards and practices in force in the international oil industry ".
Regarding the allocation of blocks, the new Code favors the call for tenders, except for blocks with low profitability, marginal fields that do not attract large companies, where direct consultation could apply.
Hydrocarbon mining titles are now granted exclusively to legal entities, with stricter selection criteria for foreign companies. Finally, "in order to better optimize the state's earnings ", the new text introduces a non-recoverable signature bonus, as well as the carrying of Petrosen's stake in the exploration and development phase, the increase in rents. superficiaries, etc.
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