Senegal's Oil Code to Be Applied to New License Holders Only
Senegal's Oil Code to Be Applied to New License Holders Only
(Bloomberg) -- The terms in Senegal’s latest oil code that provide for increased state participation in projects and higher royalties will only apply to new rights holders.
The regulations are not retroactive and the government “doesn’t plan to renegotiate new contractual terms with current license holders,” Oil and Energy Minister Mansour Elimane Kane said Wednesday in an emailed response to questions. Lawmakers approved the code last month.
A string of major discoveries off the West African nation’s coast is expected to make the country an oil exporter in coming years, with supermajors such as BP Plc developing new fields. The previous regulations stood for two decades and were adopted when the nation wanted to attract investment for largely untested resources.
The new code sets a fixed royalty rate on gross production, depending on the nature of the operation, while it also raises the participation of state-owned oil company Petrosen to as much as 30 percent, from 20 percent previously.
The country plans legislation to regulate the transportation and processing of gas, said Kone. To encourage the use of gas as the main fuel for electricity generation, the government will convert existing plants which runs on gasoline and build new ones, he said.
The plan will support Senegal’s strategy to connect all households to the grid by 2025.
The country also wants to partner private investors to build a nationwide gas pipeline network, refinery and petrochemical plants, Kane said, without providing an investment figure for the projects.
Senegal is due to hold presidential elections on Feb. 24, with President Macky Sall seeking a second term in office.
To contact the reporter on this story: Alonso Soto in Dakar at asoto54@bloomberg.net
To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Andre Janse van Vuuren, Jacqueline Mackenzie
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