Senegal’s National Assembly approved a new petroleum code on Thursday, which aims to reinforce the preservation of national interests and local content, while increasing attractiveness for international companies to operate on Senegal’s territory.
Law number 01/2019 was approved in the presence of Minister of Petroleum and Energy Mansour Elimane Kane. The previous code drafted in 1998 became obsolete in light of the country’s ground-breaking offshore hydrocarbon discoveries since 2014.
Several key points have been included in the new law, which aims to ensure national interests throughout the development of petroleum fields. Transparency has been a primary objective since Senegal joined the Extractive Industries Transparency Initiative in 2013.
Local content and national interests are effectively comprised in the code with an obligatory signature bonus and a monitoring mechanism of bonuses to make sure they benefit the Treasury. Royalties are calculated on gross production and Société des Pétroles du Sénégal’s (PETROSEN) has a ten percent stake in all contracts, which can be increased to 40 percent in specific situations.
PETROSEN also has to participate in project expenditure in the same way as other operating companies. Pertaining to the code, no tax holiday can be applied from now on and international companies will have to take into account several local content policies.
Environmental aspects are also looked into as Minister Kane stated: “Environmental assessment is a sine qua none condition for project developments to go forward.”
The new code applies to new contracts and ongoing contracts concerned by the 1998 petroleum law will not be revised.
Along with the approval of an interstate cooperation agreement with Mauritania this week, the adoption of the 2019 petroleum code is yet another sign of Senegal’s commitment to developing its highly prospective hydrocarbon sector.