Senegal: the complex equation of hydrocarbon revenues.

Although Senegal has been propelled into the select circle of African producers of oil and liquefied natural gas (LNG) thanks to the major oil companies Woodside and BP, it is struggling to turn this historic breakthrough into a genuine driver of development. Caught between structural constraints, the imperatives of national sovereignty and the need to attract investment, Dakar is still groping its way towards defining the economic model that will enable it to reap the full benefits of its hydrocarbon windfall.

After years of waiting and repeated delays, offshore production has finally got off to a flying start. In 2024, Australia’s Woodside began production at the Sangomar oil field, followed in 2025 by Britain’s BP at the Grand Tortue Ahmeyim (GTA) gas field, located on the maritime border with Mauritania. The GTA’s floating production, storage and offloading (FPSO) unit symbolically illustrates this new era: Senegal has moved from being a country of hope to a concrete producer.

However, the initial euphoria has given way to a more nuanced reality. The country is struggling to capture the full share of the revenue generated. The historic contracts, signed under the previous regime, are deemed insufficiently favourable to Senegal by the new government. The presidential duo of Bassirou Diomaye Faye and Ousmane Sonko made the renegotiation of these agreements a top campaign priority. The stated aim: to increase local content, secure a larger share of resources for the domestic market and rebalance the fiscal terms.

But talks are progressing slowly. Prime Minister Ousmane Sonko himself acknowledged this recently at a press conference: the priority remains to “reach a compromise” with the partners, notably BP and Kosmos Energy on GTA, without jeopardising the viability of the projects. Renegotiations are stalling due to the legal complexity of public-private partnerships and the need to maintain the confidence of international investors.

At the same time, the government is focusing on strengthening its national capacity. The Société des Pétroles du Sénégal (Petrosen) aims to transition from being a minority partner to becoming an integrated operator. At the government’s instigation, it has announced an onshore exploration budget of $100 million and intends to launch ambitious onshore campaigns, where the potential is said to be comparable to that of the offshore sector. Alioune Gueye, CEO of Petrosen Holding, sees this as an opportunity to create a “regional energy champion”.

These ambitions, however, raise legitimate questions about Petrosen’s technical and financial capabilities. Moving from words to action will require massive investment, the development of human resources, and stronger governance to avoid the pitfalls seen elsewhere on the continent (Nigeria, Angola, Ghana).

Senegal thus finds itself at a strategic crossroads. On the one hand, it must maintain an attractive environment for major oil companies in order to accelerate the development of additional fields (notably Yakaar-Teranga). On the other hand, it must assert its sovereignty to ensure that hydrocarbons are used primarily to finance infrastructure, promote economic diversification and combat poverty.

Is there a winning formula? It will likely involve striking a delicate balance: a tax system that is competitive yet fair, ambitious yet realistic local content requirements, and greater transparency in revenue management. In the meantime, the clock is ticking. Every year of production without maximum optimisation represents billions of dollars in lost revenue for a country which, let us not forget, is one of the most dynamic economies in West Africa.

Senegal has the resources. The challenge now is to find a model that will turn this wealth into sustainable prosperity for its 18 million inhabitants.