Senegal’s Downstream in Motion
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The Senegalese oil distribution market in Dakar is dominated by French company Total, followed by large companies such as Eydon, Elton and Vivo Energy. Oil distributors are represented by two associations; the Senegalese Association of Petroleum and the Senegalese Association of Petroleum Professionals.
The prospect of first oil from the offshore Sangomar field in 2023 is expected by many operators in the downstream sector. However, in order to efficiently manage such a strategic resource, it is necessary to modernize the sector framework from a legal and regulatory point of view. The National Hydrocarbons Committee (CNH) – which is a regulatory body – aims to put the right tools in place to clarify the market structure while ensuring equality between players, regardless of their size and history in the market.
The oldest and only refinery in West Africa is the Société Africaine de Raffinage (SAR), inaugurated in 1952. The processing capacity currently reaches 1.2 million tons per year and plans are in the pipeline to increase that number. Since its inception, the SAR supplies the Senegalese domestic market with butane gas, super gasoline, regular gasoline, kerosene, diesel, diesel oil and fuel oil. It also exports petroleum products to neighboring countries, namely Mali, Mauritania, The Gambia, Guinea and Guinea Bissau.
Refined and imported products are sold on the basis of the price calculated every four weeks by the CNH in accordance with the stipulations of Decree 2014-1562 of December 3, 2014, which states the price calculation method.
In 1998, market liberalization took place covering all import, storage, transport and distribution of petroleum products. Since then, independent operators moved into the markets alongside majors such as Total, Vivo and Ola Energy.
PETROSEN Enters Fuel Distribution
The State of Senegal is seeking to increase and diversify its revenues. Minister of Oil and Energy Makhtar Cisse is currently putting a number of initiatives in place aiming to support Senegal’s growth as a global oil and gas player, namely a new oil and gas code, a gas-to-power masterplan and a licensing round.
In line with first oil productions expected in 2023, national oil company PETROSEN entered a restructuring process in late 2019. PETROSEN is now officially in a holding with three separate entities; PETROSEN Holding who will oversee all operations, PETROSEN Aval, in charge of the downstream sector, and PETROSEN E&P Amont, in charge of exploration and production. The restructuring was performed in order to strengthen the national oil company, clarify its position with regards to local operators and stakeholders, as well launch fuel distribution activities.
On January 20, 2020, two managing directors were appointed: Joseph Oufam Medou, previously head of exploration at PETROSEN, to lead PETROSEN’s upstream entity, while El Hadj Manar Sall was appointed to manage the downstream business. Sall was previously involved at the Ministry of Oil and Energy to develop the presidential vision in the downstream sector.
The government is aiming to imminently open a dozen gas stations across the country under the PETROSEN brand. The first gas station in the capital will be built in the suburbs. The rest will be scattered throughout the territory, in accordance with President Macky Sall’s territorial equity policy. Some rural areas are often left out by private players, as a result, PETROSEN Aval is targeting those areas in order to offer a stable supply of fuel to concerned citizens.
While exploration in Senegal developed very quickly after first discoveries in 2014, the downstream sector has been lagging behind due to insufficient reforms and a lack of clarity in the market structure. National oil company PETROSEN’s restructuring is a definite sign that the leadership has acted to modernize the sector and build the foundation of a stable, prosperous downstream sector.