Germany striving to develop gas field with Senegal amid supply uncertainties

Germany plans to work with Senegal on the development of an offshore gas field amid the severe impact the war in Ukraine is having on global energy supply and prices.

The update came as the German Chancellor Olaf Scholz this weekend started his tour of several African nations, including a visit to Senegal, Niger, and South Africa. Germany is looking to deepen its economic relationships with African nations, especially in energy, investment, and trade.

Following Russia’s invasion of Ukraine, which catapulted the issue of energy security to the top of European governments’ agendas, Germany is looking at multiple ways to reduce its dependence on Russian gas and is working on several fronts to achieve that.

Meanwhile, the European Union last week presented its REPowerEU plan, detailing how it is going to rapidly reduce its dependence on Russian fossil fuels and fast forward the green transition.

As part of the visit to the African continent, his first as the Chancellor, Olaf Scholz’s first stop was Senegal. Scholz was welcomed in Dakar on Sunday by Senegalese President, Macky Sall.

“I very consciously chose Senegal as my first stop,” said Scholz on Sunday at the meeting with Senegalese President Macky Sall in Dakar. “The partnership between the two countries is intensive and will continue to become more important,” said the Chancellor.

The two heads of governments then exchanged views on bilateral and international issues. In addition to security issues in connection with global crises, the talks also focused on initiatives for climate protection and sustainable investments, food security and global health.

According to the Federal Cabinet, Germany is striving to work with Senegal to develop an offshore gas field. After the meeting with President Sall, Chancellor Scholz said they wanted to work with the West African country on renewable energies and storage technology.

As reported by Reuters on Sunday, President Sall said Senegal was ready to work towards supplying the European market with LNG. He forecast Senegal’s LNG output to reach 2.5 million tonnes next year and 10 million tonnes by 2030, adding that Senegal is open to working with Germany on gas exploration and project financing.

Energy intelligence group Rystad Energy has recently said that Africa is conservatively forecast to reach peak gas production at 470 billion cubic meters (Bcm) by the late 2030s, equivalent to about 75 per cent of the expected amount of gas produced by Russia in 2022.

Senegal is expected to become a major gas producer in the region. The BP-led Tortue Ahmeyim LNG project, located on the maritime border of Mauritania and Senegal, is already 75 per cent complete.

By BP’s and Kosmos’ estimates, the Tortue field could contain 15 tcf of recoverable gas resource potential. The project is developed in phases and, as part of the first phase, it will have the capacity of 2.5 million mt/year.

Moreover, Rystad is forecasting that the global LNG demand will outstrip supply by the end of 2022 as it is expected to hit 436 million tonnes in 2022, outpacing the available supply of just 410 million tonnes.

Germany also invited both Senegal and South Africa to attend the G7 summit it is hosting in June as guest countries.

“The COVID-19 pandemic, the Russian war of aggression against Ukraine and the climate crisis and its devastating consequences for African countries – all of this has a significant impact on the reality of our lives,” said Scholz after the talks with President Sall.

“They endanger the social and economic achievements that the Global South has achieved. We must act decisively to ensure that these crises do not ignite new sources of fire,” the Chancellor added.

The two leaders also held discussions with German and Senegalese business representatives, hailing the dynamics that will help strengthen the partnership between the two countries.

After these discussions, Olaf Scholz and President Sall opened the extension of a solar power plant in Diass.

Scholz’s second stop on Sunday was Niger where he was received for talks in Niamey by the Nigerien President, Mohamed Bazoum. After that, Scholz will travel to Johannesburg where he will be welcomed by the President of South Africa, Cyrill Ramaphosa.

Earlier in May, Germany made one of its first big steps to cutting the country’s dependence on Russian gas after entering into charter agreements to secure four floating liquefied natural gas (FLNG) terminals. These are expected to offer a rapid interim solution for landing LNG until the first LNG terminals are completed in Germany.

The country’s energy major Uniper will build and operate the first LNG terminal in Wilhelmshaven, investing around €65 million (about $68.5 million).

Germany is also in discussions with Dutch privately-owned exploration and production company ONE-Dyas over a potential natural gas production in the North Sea.

Furthermore, Germany has been renewing its ties with Middle Eastern nations and companies. As a result, the country agreed to deepen clean hydrogen collaboration with UAE and its national oil and gas company ADNOC. More recently, Qatar and Germany have agreed to further cooperate in energy, specifically relating to LNG trade and hydrogen development.