In Mauritania, a country that has long presented itself as a gateway to the Arab world and North Africa for the nations of West Africa, the people, with an unemployment rate of 10.63% and a population of over 4.7 million, woke up in July 2015 to an economic announcement that renewed their hopes of escaping poverty and improving their living conditions.
The news was announced by the American energy companies Chevron and Kosmos, and it pertained to the discovery of the Greater Tortue Ahmeyim gas field. The Mauritanian Hydrocarbons and Mining Company and the Senegalese Oil Company were involved in this project, as the field is located within the territorial waters of both neighboring countries. This led to the signing of three inter-country agreements: the first, signed in February 2018, was to split the revenues equally; the second, in December 2018, focused on the final investment decision for phase one; and the third, signed in 2020, dealt with gas marketing.
This discovery quickly attracted the attention of global companies and Western governments to Mauritania, especially after the widespread rejection of France in many of its former colonies in sub-Saharan Africa. For instance, the British government opened a new embassy in Nouakchott after British Petroleum (BP) announced in December 2016 that it would replace Chevron in the exploitation of the major gas field.
Significant Energy Reserves and International Integration
Amid the international context shaped by the Russia-Ukraine crisis, Mauritanians are looking forward to playing a significant role in the global energy market, especially for countries seeking to diversify their energy sources in pursuit of clean energy. This is particularly relevant given the large reserves of the Greater Tortue Ahmeyim field, which are estimated at approximately 25 trillion cubic feet of gas.
The Mauritanian government expects this field to generate an annual income of $100 million in the first phase, increasing to $1 billion after the second and third phases, which are expected to span from 2022 to 2027.
Mauritania and Senegal anticipate that revenues from the shared gas field could reach around $14 billion over a decade. Additionally, the production companies have committed to investments in healthcare and educational infrastructure. Kosmos Energy, for instance, has pledged $30 billion in investments in these areas in both countries, with Mauritania set to receive 1,200 schools and 30 hospitals.
The Mauritanian government previously announced that gas revenues would be channeled into the Petroleum Fund, established in 2008 after oil reserves were discovered, which later turned out to be insufficient to significantly impact the country’s economic situation. The government emphasized that these revenues would be used to fund budget deficits, while the remainder would be invested in international markets. This approach has been criticized by some economists, who argue that the country urgently needs to address its difficult economic situation by investing gas revenues to meet pressing needs.
During the visit of Senegalese President Bassirou Youmaye Faye to Mauritania on February 18, 2024, his first visit after being elected, the gas issue was on the agenda. The two countries decided to conduct an urgent financial audit of their shared gas field, which had been delayed by 28 months beyond its original exploitation date.
Mauritania and Senegalese official statements confirmed that the first export of gas is expected in the second half of this year. In a joint press conference in Dakar on January 19, 2024, the energy ministers of both countries reaffirmed their commitment to developing the Greater Tortue Ahmeyim field and announced plans to start production in the field during the last quarter of 2024, as previously stated by the Mauritanian Minister of Petroleum.
The Mauritanian government signed a contract with BP and Kosmos to begin exploration and production in a new large gas field called BirAllah, which was discovered in 2019. Located in Mauritanian territorial waters, 60 kilometers north of the Greater Tortue Ahmeyim field, it is estimated to hold 80 trillion cubic feet of gas. Mauritanian Minister of Petroleum, Mines, and Energy, Nani Ould Chrougha, anticipates that the government will make a final production decision regarding this field next year in 2025.
In its efforts to diversify its economy in the field of clean energy, the Mauritanian government aspires to invest in green hydrogen. Mauritania has an estimated capacity of 4,000 gigawatts, of which 500 gigawatts are developable. This potential has attracted major global companies to explore investment opportunities in this energy sector.
The Mauritanian government has signed memorandums and agreements with British and French companies to develop over 80 gigawatts of this energy for green hydrogen production and its derivatives, with ongoing studies aimed at determining the feasibility of establishing a green steel industry.
International and Regional Prospects for the Small Maghreb Country
Mauritania is expected to become a regional gas-producing country after the start of gas production and export in the last quarter of this year, positioning it among the key players in a strategic industry. This prospect was solidified by its membership in the Gas Exporting Countries Forum (GECF), where gas demand is expected to peak by 2030. The Greater Tortue Ahmeyim field has an estimated operational lifespan of 30 years.
Mauritania officially joined the Gas Exporting Countries Forum as the 13th member during an extraordinary ministerial meeting held in Algeria as part of its efforts to position itself as one of Africa’s gas-exporting countries. The forum, established in 2008, is headquartered in Doha, Qatar, a city with strong and historic ties to Nouakchott.
This situation could generate substantial financial revenues for Mauritania if gas-exporting countries can develop a strategic vision and assert their influence on global gas pricing, which would benefit the country’s development.
Globally, we have seen that some countries have extended their influence beyond their military capabilities thanks to the financial power derived primarily from gas export surpluses. Mauritania could potentially play such a role in the long term, especially as a member of the Sahel region, known for its political and military instability.
Analysts predict that Mauritania’s significant gas reserves could bolster its regional position in West Africa and the Maghreb region. With substantial financial returns, the country could overcome many local developmental challenges and even address regional issues.
Despite the stable security conditions in Mauritania and Senegal, the unstable situation on Mauritania’s eastern border, particularly in Mali, could impact the country’s security and stability in the medium and long term, in addition to the continuous influx of refugees, which places additional strain on the Mauritanian economy and development efforts. This challenge is a growing concern for the Mauritanian government, which needs a stable regional environment to foster the development of its infrastructure and projects, particularly if the energy sector continues to evolve.
There is also an international and regional factor that, while seemingly less pressing, could pose a serious dilemma in the near term: the lack of experience in Senegal’s political leadership in managing strategic matters. While Senegalese reactions to Mauritania have been largely reassuring, the electoral promises made by the newly elected Senegalese President and his Prime Minister, including the revision of contracts signed by the previous government, could raise concerns in Mauritania and create instability with the companies developing the gas fields.
Exploiting these resources offers economic and political opportunities but also presents security and environmental challenges, especially regarding marine environments. There is a need for constant monitoring and regular studies on the potential environmental impacts of this exploitation. These challenges are significant, particularly given the global emphasis on environmental conservation and combating global warming, in which industrialized northern countries play a central role in producing and polluting the environment, despite the more severe consequences on southern countries due to their weaker economic infrastructure and technological backwardness. Additionally, industrialized countries often attempt to shirk their primary responsibility in addressing these looming risks.
Challenges and Obstacles: Will Mauritania Overcome Them?
Despite the economic opportunities that exporting such significant quantities of gas could provide Mauritania, which could serve as a developmental lever to improve its economy and citizens’ living standards, several structural obstacles and challenges may hinder the optimal utilization of these opportunities. These include:
The International Monetary Fund (IMF) predicts that hydrocarbon revenues could contribute between 0.5% and 3% to the country’s GDP once production begins in the Greater Tortue Ahmeyim field. It also expects these revenues to increase overall government revenues by 6% to 16%.
Dealing with the companies involved in production presents challenges. Although the contracts clearly state that the companies are responsible for production costs, a recent audit by a Tunisian consulting firm revealed unplanned or unaccounted-for expenses. Such unexpected issues can create tension with the project developers and put Mauritania in a difficult position against companies well-versed in the industry.
The lack of expertise and the shortage of specialized personnel also pose significant challenges for Mauritania, potentially leading to substantial financial costs, as occurred with the Tunisian firm responsible for the recent audit. The lack of expertise may also allow the project developers to take advantage of Mauritania or find legal loopholes to gain benefits that they would not have received in the presence of experience and expertise.
The prudent management of gas export revenues is another concern. Unlike Senegal, which has developed a strategic plan for dividing these revenues into specific programs, Mauritania has not yet established a clear plan for managing these revenues. In previous statements, a former Mauritanian Minister of Economy indicated that the country’s ambitions and hopes regarding gas revenues in the short and medium term should not be raised too high. The current Minister of Economy, Abdel Salam Ould Mohamed Saleh, echoed this sentiment at a press conference following a Cabinet meeting, stating that the revenues from the early years would be almost entirely allocated to covering the significant investment costs, which could take several years.
Regarding consumption, Mauritania faces the challenge of integrating gas into its national energy grid. The country currently relies on petroleum derivatives for electricity production. The Minister of Energy, Mines, and Gas has emphasized that the gas produced from the Greater Tortue Ahmeyim field is liquefied and intended for export. The gas that will be used to cover Mauritania’s domestic energy consumption will be derived from the BirAllah field, starting in 2027. Therefore, Mauritania must seek alternative energy sources to meet the growing energy demands during this transitional period.
These challenges and obstacles must be addressed and overcome if Mauritania is to leverage its significant gas resources to achieve sustainable development and improve the standard of living for its citizens. While the country stands at the threshold of significant economic opportunities, careful planning, strategic management, and the development of local expertise will be crucial to realizing the full potential of its gas industry.
References
https://oec.world/en/profile/country/mrt
https://powersofafrica.com/article/72/mauritania-enhanced-growth-thanks-to-gas-production
Five Ways Mauritania can Benefit from its Gas Resources
https://documents1.worldbank.org/curated/en/652481590432527403/pdf/Mauritania-Country-Economic-Memorandum-Accelerating-Growth-Through-Diversification-and-Productive-Cities.pdf
https://en.majalla.com/node/319826/business-economy/offshore-gas-discoveries-help-put-mauritania-map
https://www.worldbank.org/en/country/mauritania/overview
https://www.coface.com/news-economy-and-insights/business-risk-dashboard/country-risk-files/mauritania https://www.researchgate.net/publication/370779083_Gas_reserves_in_Mauritania_are_an_opportunity_to_drive_economic_development_Blog
