Senegal hopes to find shale gas in its onshore Paleozoic Basin in the next two years having awarded exploration licenses to international companies, the head of state-owned Petrosen said Thursday.
The west African nation, already a small gas producer, also hopes to replicate the success of other west African countries in finding oil and gas offshore with a new international exploration campaign in 2014.
"It is possible that [we will find] shale gas in two years," Petrosen Managing Director Mamadou Faye said in an interview with Platts on the sidelines of the ICEP Senegal seminar in Tokyo.
Faye's optimism is a result of the signing earlier this year of two production sharing contracts -- one with Ireland's Blackstairs Energy, the other with Nigeria's A-Z Petroleum Products.
Under the three-year PSCs, Blackstairs will conduct seismic surveys and drill wells at the Louga block, while A-Z Petroleum will carry out similar seismic and exploration works at the Diourbel block, Faye said.
Blackstairs and A-Z Petroleum each have 90% in the blocks with Petrosen holding the balance.
Petrosen has also begun negotiations with Romania's Tender Group with a view to signing another PSC for the Saloum block and Senegal Onshore South block in the Paleozoic Basin "early next year," Faye said.
"In this basin we have what you call source rocks, which is the same as people are drilling in the US," he said.
Faye said Senegal would have a better idea about its shale gas potential once the seismic and first exploration wells were completed.
"Depending on the first drilling results, you will see what the real potential is," Faye said.
Asked about any potential concern about securing water for shale gas production, Faye said he was not worried. "We have rivers around," he said.
As Senegal expects to upgrade its petroleum law next year, Faye said Senegal would look at aspects of shale developments.
OFFSHORE EXPLORATION
Senegal is not only looking to develop a shale gas sector; it is also hopeful it can make significant finds in its offshore.
Faye said the UK's Cairn Energy will drill two wells -- estimated to cost $200 million -- at the deepwater Rufisque & Sangomar block in March-June next year.
Cairn operates the block with a 40% stake, and is partnered by US major ConocoPhillips (35%), First Australian Resources (15%) and Petrosen (10%).
Faye said he was hopeful Senegal could match other west African countries in making discoveries in its deepwater.
"I think that Senegal may have opportunities to find big reserves deep offshore," Faye said, adding other companies had been interested in joining the hunt.
During his visit to Japan this week, Faye said Petrosen officials met JX Nippon Oil & Gas Exploration, Idemitsu Kosan, Japan Petroleum Exploration and state-owned Japan Oil, Gas and Metals National Corporation to discuss upstream opportunities in Senegal.
Senegal, which ceased oil production in 2001 after starting output in 1987, can currently produce up to 120,000 cubic meters/day of gas, Faye said.
Senegal is home to a small 1.2 million mt/year (25,000 b/d) refinery.
Faye said work was under way to upgrade the plant to boost its capacity to 3 million mt/year through the installation of a hydro-skimming unit.
The upgrade, estimated to cost $200-$300 million, will enable the refinery to process different types of crude, rather than just Nigerian Bonny Light crude, by 2017, he said.
Petrosen holds a 46% stake in the refinery, with the Saudi Arabia-based Binladin Group holding 34% and France's Total the remaining 20%.
With its partners, Petrosen is also looking to build another refinery with a capacity of around 3-4 million mt/year, Faye said, at an estimated cost of $700 million.
"On the new refinery, we need to figure out first the financial aspects because as you know the new refinery will cost a lot of money," Faye said.
