New Petroleum Code for Senegal

The long-awaited Senegalese Petroleum Code has just been enacted as Law No. 2019-03, dated February 1, 2019.

This statute, which replaces its 1998 predecessor, sets out the general legal framework applicable to the carrying-out of petroleum operations in Senegal, from prospecting to marketing, from exploration to transport, from development to storage, from exploitation to the liquefaction of natural gas.

Matters such as the mandatory State participation in the petroleum operations (via Petrosen, the Senegalese national oil company), the terms for the award of blocks and the granting of the corresponding mining rights, the rules on production sharing, the tax and customs framework to which oil companies and their subcontractors / service providers are subject – and the related incentives available to them –, the environmental protection, transparency and local content standards, the foreign exchange guarantees from which both the oil companies and the subcontractors may benefit, or the grandfathering of the existing petroleum contracts are all addressed in and governed by the Petroleum Code.

A number of provisions of this new statute are expected to be the subject of developing regulations, including those setting out the general terms for the award of blocks – competitive tendering procedure or direct consultation.

In tandem with the new Petroleum Code, a new statute on Local Content in the Hydrocarbons Industry was also enacted (Law No. 2019-04, dated February 1, 2019).

Its declared aims are to promote the use of Senegalese goods and services, and to enhance the participation of the national workforce, technology and capital in the entire value chain of the oil and gas industry.

This industry-specific Local Content Law is to apply to all oil companies, subcontractors, service providers and suppliers engaged in petroleum operations. It contains fairly detailed rules and requirements in terms of the hiring of Senegalese personnel (and the training to be provided to them), the procurement of the goods and services required for the petroleum operations (and the rules for the award of the related supply and service contracts), the transfer of technology, or the applicable insurance, reinsurance and financial services requirements.

Law No. 2019-04 institutes the so-called National Local Content Monitoring Committee (CNSCL), tasked with coordinating the preparation of the local content strategy paper which is to define the terms for implementation of State’s policy on the matter. The local content plan which the oil companies, subcontractors, service providers and suppliers directly or indirectly engaged in petroleum operations are required to prepare is to be submitted to the CNSCL.

The provisions of the Local Content Law apply immediately to all petroleum operations carried out in Senegal, although the existing petroleum contracts are to a certain extent grandfathered.

Source: petroleumafrica.com