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Senegal revokes 71 mining licences over “unfair” gas contract
…as Guyana maintains ‘sanctity of contract’ with ExxonMobil
(Kaieteur News) – Prime Minister of Sénégal, Ousmane Sonko has revoked 71 mining licenses after declaring a BP gas contract “unfair”, freezing the accounts of a major Indorama subsidiary until it settles approximately 380 million euros ($438 million).
Reuters reported that the prime minister vowed to lay out more sweeping reforms, signalling the most decisive measures yet from a government that came to power in 2024 with a pledge to audit and potentially renegotiate resource deals in the West African nation and restore its financial stability.
“The contracts that have been signed are unfair contracts, which we intend to discuss in detail,” Sonko said in a televised statement.
The government review found that a gas contract for the Greater Tortue Ahmeyim project operated by BP was one-sided and unfair. As such, Sonko said he would publish a document with the details of the contracts studied, which also included fishing and infrastructure, but did not provide specific details about any discussions with BP.
BP did not respond to a Reuters email seeking comment.
Review to boost Senegal’s economy
Sonko said the renegotiations would rebuild Senegal’s finances and boost the economy by delivering cheaper gas to industries as well as the population.
Senegal is grappling with debt that reached 132 per cent of gross domestic product at the end of 2024, according to the International Monetary Fund (IMF), which froze its lending programme after a government audit discovered misreported debt.
Sonko has previously said the country will not need to implement a restructuring plan, despite what he referred to as a difficult and painful repayment schedule.
Senegal has announced a plan to close 19 government agencies to save money. Tensions have risen at universities over the government not paying students promised financial aid. Meanwhile, teachers’ unions have held nationwide strikes over shortages, salaries and taxes.
Sonko said talks to nationalise the Yakaar-Teranga gas project, operated by Kosmos Energy were nearly concluded and Senegal would retake the block at no cost in the coming weeks. Kosmos Energy, which has a 90% stake, became the operator of the Yakaar-Teranga gas field in 2023 after BP decided to exit.
Kosmos said in an email it was withdrawing from the block and that its licence expires in July 2026. “We have not been able to attract a suitable partner and agree a commercially attractive development concept with the government of Senegal,” Kosmos spokesman Thomas Golembeski said.
Senegal became an oil-producing nation when the Sangomar field began production in June 2024.
Sonko said the government has also cancelled the licences of several blocks such as Diender Offshore, Differe, Cayar Offshore Shallow, St Louis Offshore Shallow and Rufisque Offshore. He said the government was discussing the resizing of blocks, as the previous perimeters were too vast and did not meet international best practices.
Senegal has frozen the accounts of Industries Chimiques du Sénégal (ICS) until the phosphate and fertiliser company pays the state 250 billion CFA francs (380 million euros), Sonko said.
The government has also revoked 71 mining licences, including 14 gold licenses, because the companies failed to abide by contract terms.
More broadly, Sonko said many infrastructure projects had overcharged Senegal by an average of 15%, costing the indebted country hundreds of millions of euros.
“We are still a long way from having completed this work,” he said, adding that the review would likely continue through his term in office. “We’re going to completely change the way of doing things.”
While the west African nation has taken a stern approach on its resource deal as a newcomer to the sector, Guyana maintains its commitment to “sanctity of contract” insisting that the lopsided Stabroek Block deal with ExxonMobil cannot be improved.
Stakeholders have argued that due to the drastic changes in the Stabroek Block, Guyana would be well within its right as a sovereign nation to demand greater benefits for its resources. In 2016 when the agreement with ExxonMobil and its partners were made, the country’s oil reserves stood at a just three billion barrels. Fast forward to 10 years, the Stabroek Block is now estimated to hold more than 11.6 billion barrels of oil.
Map of the Stabroek Block showing a few discoveries announced by Exxon.
Previously, President Irfaan Ali made it clear that he has no intention on writing Exxon to seek a renegotiation of the lopsided contract.
He explained, “No, we don’t need an official response (from Exxon). We have made our position very clear that future PSAs, and we have stuck to that and existing PSAs, the sanctity of contract, we respect that. You know this, we have discussed this, many times before.”
The PSA requires the prior written consent of the contractor for any amendments to the terms.
Article 32 states, “Except as may be expressly provided herein, the government shall not amend, modify, rescind, terminate, declare invalid or unenforceable, require renegotiation of, compel replacement or substitution, or otherwise seek to avoid, alter, or limit this agreement without the prior written consent of contractor.”
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Kaieteur News, do you all realize that the circumstances are completely different as Senegal does not have a border problem and has a population and army large enough to defend its territory.
Guyana on the other hand does not enjoy that luxury and Exxon Mobil our “friend” is looking out only for their shareholders and the exorbitant salaries that their executives get based on income derived from places like Guyana.
I have said this several times in comments across social media, Exxon is holding Guyana’s oil hostage with the promise that the American government will defend us if Venezuela attacks. However the narrative may have changed because America now owns Delcy Rodriguez and there are no guarantees that they will step in to assist Guyana