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Exploration and investment opportunities in the Mauritanian oil industry (by Matthew Goosen)

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Exploration and investment opportunities in the Mauritanian oil industry (by Matthew Goosen)

In recent years, the Mauritanian government has actively encouraged the development of its onshore oil and gas sector.

DAKAR, Senegal, October 11, 2021 / APO Group / –

By Matthew Goosen, Editor-in-Chief

Following the discovery (https://bit.ly/3luKJbk) of a large natural gas deposit off Mauritania in the Tortue natural gas field in 2014 by the American water exploration and production company In Kosmos Energy, interest in the region’s oil and gas prospects has exploded, placing the Saharan country in the early stages of a hydrocarbon boom. The discovery of Kosmos led to the development of the Big Turtle Ahmeyim project, which is now majority owned by oil and gas giant BP (60%). Comprising the maritime border between Mauritania and Senegal and at a depth of 2,850 m, BP is currently building (https://bit.ly/3FCS1C8) a floating liquefied natural gas installation to tap into the 15,000 billion cubic feet of gas from the field, with a production potential of 30 years which should begin in 2022.

Since the discovery, four large industrial companies have launched exploration activities off the Mauritanian coast, with 19 offshore blocks currently open to tenders. The Mauritanian government is now engaged in the first steps (https://bit.ly/3v0u42A) of the transformation of the port city of Nouadhibou into a hub for the region, with plans to rehabilitate the oil storage capacity of the city by 300,000 tonnes and to increase the capacity of the capital, Nouakchott, by 150,000 tonnes. In recent years (https://bit.ly/3mZtXB1), the Mauritanian government has encouraged the development of its onshore oil and gas sector – with 15,000 km of 2D seismic data for the Taoudenni basin indicating reserve potential – and its petrochemical industry – with plans to build an oil refinery in the country.

The largest oil and gas player in Mauritania is BP, following a 2016 agreement (https://on.bp.com/3DwrDYA) to acquire a direct stake and operation of the Kosmos exploration blocks , which contain important deep-water gas discoveries and exploration prospects. With a direct stake of 62% in offshore blocks C-6, C-8, C-12 and C-13 alongside Kosmos (28%) and Société Mauritanienne des Hydrocarbons et de Patrimoine Minier (SMHPM) (10 %), BP is committed to its partnership with Mauritania to support the sustainable development of its resources. 2018 marked new developments in the multinational Greater Tortue Ahmeyim project following the announcement of the final investment decision for the first phase of the project between BP, Kosmos Energy, SMHPM and the Senegalese national oil company Petrosen.

Given these developments – and with reserves (https://bit.ly/3mF9lhb) of 120 million barrels of oil and 1.2 trillion cubic feet of natural gas – hydrocarbons are expected to overtake iron ore as as a major contributor to the Mauritanian economy, with market opportunities open to investors in oil and gas exploration, hydrocarbon refining and storage facilities, and electricity generation and transmission, as well as opportunities for developers to provide supplies and logistical support to companies where oil has already been discovered. Currently (https://bit.ly/3asIPli), Mauritania has 250 active oil and gas permits and 90 active operators in the country. The share of revenues from petroleum and natural resources is received by the country’s national oil company, SMHPM, these revenues being managed by the National Hydrocarbon Revenue Fund.

Mauritania’s current legal and regulatory framework for its upstream oil sector is its Petroleum Code (https://bit.ly/3DAMEBH), which provides for tax rules and exemptions for sector activities and promotes and regulates production, the import and export, transport, storage and marketing of hydrocarbons. The Petroleum Code is designed to allow the Mauritanian Government to contribute to and benefit from upstream petroleum agreements within the framework of a production sharing contract (https://bit.ly/2YAtpJ5) (PSC), while disclosing the share of SMHPM’s stake in net cash flows.

Contractors operating in petroleum activities are licensed (https://bit.ly/3lsRkTR) by the state to explore, develop and produce oil and gas in the country and are required to enter a PSC, offering to government the possibility of acquiring 10% interest during exploration activities and an additional 10% interest during production. Foreign entrepreneurs operating in Mauritania are required to establish a company or a local branch for exploration, production and service activities. Contract holders, under the code, can also request to extend the exploration phase of field discoveries deemed potentially commercial, encouraging the development of new oil and gas resources.

Given the country’s promising future in its oil and gas industry, a relatively new development strategy, the Accelerated Growth and Shared Prosperity Strategy (https://bit.ly/3v2Uy3B) (SCAPP), prepared by the government and covering the period from 2016 to 2030, was validated by the Council of Ministers of September 17, 2015. Following a detailed analysis of the socio-economic situation of Mauritania, the SCAPP serves to promote inclusive and sustainable development in the country while improving governance, strengthening social development, and facilitating job creation.

The strategy (https://bit.ly/3jaBUlN) aims to foster increasingly green and inclusive high value-added activities that require a significant workforce in order to achieve continued GDP growth of at minus 7% per year until 2030. Corresponding to Mauritania’s 2030 Agenda for Sustainable Development, one of the key principles of the SCAPP is to foster and encourage specialized production areas to promote commercial activities local and generate a workforce with equivalent qualifications abroad. The role that renewable energies can play in developing the country’s energy efficiency has been noted in the strategy aimed at contributing to strengthening Mauritania’s economic resilience and improving the living conditions of the population.

As one of the countries that make up the MSGBC – Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry – Basin, Mauritania has become one of the most promising prospects for investors in the region. With a privileged location on the Atlantic Ocean, connecting North Africa to sub-Saharan Africa, the country is ready to capitalize on its new wealth in hydrocarbons and to strengthen the industry to become an important regional and international market.

In response to the growing demand for renewable energy and the growing interest of international stakeholders to invest, develop and succeed in Africa, Energy Capital & Power will own the MSGBC Oil, Gas, & Power (https://bit.ly / 3BAnZfY) 2021 conference and exhibition on December 2 and 3, 2021. Focused on strengthening regional partnerships, stimulating investment and development in the oil, gas and electricity sectors, the conference will bring together regional international actors with African opportunities, serving as a growth driven platform for Africa’s energy sector. Learn more about the conference here: https://bit.ly/3AteygN

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