The companies "Kosmos" and "BP", which signed the contract to exploit the "Turtlefa/Ahmim Al-Kabir" field, expected that production in it would actually begin at the end of 2021 (Mauritanian press)

Nouakchott -

Six years ago, Mauritania and Senegal signed the final decision to invest in the “Turtle/Ahmim Al-Kabir” gas field discovered on their common maritime border, whose reserves amount to about 25 trillion cubic feet.

At that time, the companies “Cosmos” and British Petroleum (BP), which signed the contract to exploit the field, expected that production in it would actually begin at the end of the year 2021, and the peoples of the two neighboring countries, thirsty for wealth, raised their hopes high and anticipated promising horizons and opportunities.

But today it was disappointed after the project recorded a clear delay in production by more than two years, its development costs have doubled, and some have begun to underestimate its economic value and development benefits, especially in Mauritania, whose Minister of Economy stated more than once that his country’s revenues are from the Turtle/Ahmim Al-Kabir field. “It will not have an early impact on the Mauritanian economy.”

The British company BP, which owns 56% of the project, had announced a delay in starting production at the site several times, which led to a rise in costs that dissatisfied Mauritanian and Senegalese officials, who found themselves in embarrassment after they had already incorporated the expected revenues. From the project in the 2023 finance bills.

Declining returns

The revenues that would have entered the treasury of the Mauritanian state alone from the Turtle/Ahmim Al-Kabir project were estimated at $100 million annually in the first phase of production, while in the second and third phase they would have reached $1 billion annually, as the production capacity would exceed the threshold of 10 million tons annually.

Mauritanian revenues alone from the project were estimated at $100 million annually in the first phase of production (Shutterstock)

But these numbers may shrink by 50% after the project’s repeated stumbles and the insane rise in its costs, which was described as a coup that took place in secret against the project, prompting Mauritanian and Senegalese officials to unite to put pressure on the implementing company to review the costs.

Mauritanian journalist Sidi Mohamed Belamesh, editor-in-chief of the “Mursaloun” news website, described to Al Jazeera Net what happened as “a great Mauritanian-Senegalese disappointment,” stressing that “the project costs rose from 3.8 to 10 billion dollars, which affects the annual revenues that the street expects.” Instead of $100 million annually in the early stages, we will now earn at best $60 million annually, which is less than what we earn from the fishing agreement with the European Union.”

Ould Belamash considers that, “The unfortunate conclusion is that there is no economic prospect now for gas, and hopes from this particular project have evaporated and we are in the dark.”

Investigation and audit

After the significant delay in works in this field, the high costs, and the decline in expectations regarding financial returns, Mauritania and Senegal intensified efforts to remedy the situation.

The Minister of Petroleum, Mines and Energy said in a previous statement, “The extraction of gas was delayed for technical reasons related to the complex nature of the project, as well as the Corona pandemic, but these reasons do not justify all this delay.”

The minister confirmed that Mauritania and Senegal are studying the reasons for the high costs announced by the companies.

Speaking to Al Jazeera Net, the advisor to the Mauritanian Minister of Energy, Ahmed Val Mohamedan, said, “The export of gas from the Ahmeem field was 28 months behind schedule, and that the officials of the two countries noticed an increase in its costs, and they have already resorted to hiring an international office to study and financially audit the costs and evaluate the overall impact of this recorded delay.” In implementing the project and its high cost.

The advisor denied that there was a dispute or disagreement between BP and the Mauritanian state, adding that the company is still fulfilling its obligations related to developing the project and extracting gas, and work is continuing, and the arrival of the floating platform for liquefying natural gas to the facility last Thursday is clear evidence of the imminent completion of the works, which exceeded its percentage. 90% barrier.

Journalist Ould Belamash does not hide his pessimism about the ongoing reviews and negotiations, and he does not expect them to have tangible results, such as keeping revenues as they were previously. He added that when BP announces that there are additional costs, it means that it has prepared well for this file and prepared an answer for the question, and it cannot To come from this side and all its justifications will be convincing.

In addition to these factors, for the two companies operating in the field, there is another option to resort to using international pressure, and it will tend in their favor, especially since they belong to the British and American world powers.

There is hope despite the challenges

In the midst of these challenges, the Mauritanian and Senegalese authorities continue their consultations to ensure the sustainability and economic feasibility of the project while preserving the interests of the citizens of both countries.

According to what Counselor Ould Mohamedan said, despite the challenges, the Mauritanian state “is still seeking to invest in this project to support its local development and improve the living conditions of its citizens, and is planning to implement important projects in the field of gas and energy and exploit the amount allocated for local consumption, estimated at 35 million cubic meters, which will be allocated to production.” Electricity and clean energy.

Also, according to the same advisor, Mauritania “adopted a strategic vision for energy in order to create integration between the three sectors, gas, electricity and minerals, which is represented by valuing gas resources and exploiting them in order to produce powerful, high-quality electricity at reduced prices and directing it towards mineral poles in order to provide opportunities for manufacturing industries.” “Which will achieve the desired general goal, which is to create an economic and social transformation for the country.”

The joint Ahmeem field with Senegal is the first gas project exploited by Mauritania, which alone owns fields with huge reserves amounting to 100 trillion cubic feet, including the reserves of the “Turtle” field, which it shares with its neighbor Senegal.

The volume of gas exports from Turtle in the first phase of exploitation will reach about 2.5 million tons annually, of which about 70 million cubic feet per day will be allocated for local consumption within the two countries.

With the completion of the works on the Turtle Project and the export of the first shipment of Mauritanian gas at the end of this year, Mauritanians are betting on gas and hoping for the success of this experiment in order to change their living conditions and develop their country.

Source: Al Jazeera