Concentrate on the enormous risk of destruction that entails all investments in Senegal’s oil and gas

Arrêt financement des énergies fossiles: Zoom sur le lourd risque d’anéantissement qui pèse sur tous les investissements sur le pétrole et le gaz sénégalais

“complete stoppage or delay of projects”

When contacted by PressAfrica, Sheikh Fatma Diop, economic-financial analyst, immediately explained the consequences of this decision. According to him, this would be as the first consequence of a “complete stoppage or delay of investment projects in the hydrocarbon sector”. And to this delay, he said, would be added in the case of Senegal, which was already coincided with the health crisis, which “pushed back the period of commercial production from 2020-2021 to the end of 2023”.

“Therefore, if these countries decide to stop the project, our state, being highly dependent on foreign investment for hydrocarbon fields, will find it difficult to develop this sector. And as a result, the forecasts made by them in the oil sector Because of that they will have a terrible shortage,” Mr. Fall said.

Senegal, for example, has been heavily indebted in recent years, and according to financial analysts, debt has increased from 43% to 66% of GDP between 2012 and 2020. He said a part of this loan was done on the basis of forecast for commercial production and marketing of oil and gas. So this will have “terrible consequences” for the budgets of our states because the budget, in forecast terms, depends on the share of revenue generated from marketing of hydrocarbons.

Unite to convince these countries that gas is less polluting than coal

Faced with this situation, analysts did not fail to provide some possible solutions. First, states should try to convince donors and prove to them that the gas is less polluting. “Our governments are very limited in terms of budgetary revenue. The hydrocarbon sector is, by definition, a precarious sector, as we can invest in wells, oil and gas projects without finally exploring hydrocarbons. Therefore, the state budget cannot be raised for this. We should probably try to convince these countries and banks. Show them that gas is a less polluting energy than coal, which is still used as an energy source by developed countries. In my opinion, countries should be more united. Senegal alone cannot be heard. This ECOWAS and even the African Union, producers or producers of all African countries, to come oil and gas, can unite and be heard as one”.

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develop renewable energy

Continuing, he argued that “it is entirely possible for African countries to try to further develop renewable energy. In the case of Senegal, for example, Mr. Diop points out that “access to the sun, to the air throughout The year is very broad”. “We need to develop a real production policy for renewable energy that will allow us to establish a certain energy autonomy. And at least to offset part of these investment losses in the conventional hydrocarbon sector”.

“In 2023, Senegal will experience the first m3 of barrels of gas and oil”, according to Finance Minister Abdoulaye Daoua Diallo. According to him, these resources will not be exported. They will be made available to Senegal to finance projects, start-ups and young entrepreneurs (men and women) to establish the country’s economic balance. Domestic demand has to be satisfied across the national territory. Projected double-digit growth rate at 13.7% by 2023, “with the beginning of the exploitation of hydrocarbons”.

There is reason to be afraid with the consequences this decision can lead. In the case of Senegal, oil and gas would produce “the equivalent of 6 to 7% of GDP” over 20 to 30 years of operation. For Mr. Deop, this expected financial unpredictability will increase and thicken state budgets and therefore enable states to more effectively deal with socio-economic emergencies in terms of health, education, infrastructure and the environment. “If this money does not come, and hydrocarbon projects are not developed, the states will continue to be in the difficulties they are currently in. What is further exacerbated by the coronavirus health crisis.”

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